California regulators seek court order to keep power flowing

JOHN HOWARD, Associated Press Writer Tuesday, February 6, 2001 ©2001 Associated Press

URL: http://www.sfgate.com/cgi-bin/article.cgi?file=/news/archive/2001/02/06/state1702EST0185.DTL&type=business

(02-06) 14:21 PST SACRAMENTO, Calif. (AP) -- California power regulators went to court Tuesday to force electricity suppliers to keep selling to the state despite the expiration of federal orders requiring them to do so.

The keeper of the state's power grid said it would seek a restraining order in federal court in Sacramento to force three major electricity suppliers to continue selling to California.

At issue was enough electricity for 4 million homes.

``There are about 4,000 megawatts at stake here,'' said Stephanie McCorkle, spokeswoman for the Independent System Operator. ``We have not gotten confirmation of their intentions come midnight, when the order expires. The outcome of this is going to give us a good indication of the risk of rolling blackouts tomorrow.''

The U.S. Department of Energy's orders requiring power generators and natural gas producers to sell surplus supplies to California were due to expire at midnight PST Tuesday. The orders, first issued in mid-December by the Clinton administration and extended by new Energy Secretary Spencer Abraham, will not be renewed, the Bush administration said.

That left the managers of California's stressed grid -- in the fourth straight week under a Stage 3 power alert -- wondering whether enough electricity would be available to avoid rolling blackouts. The ISO ordered scattered outages twice last month.

Wall Street was also watching.

``Out-of-state sellers in the Pacific Northwest may be less inclined to sell to California markets because of the water conditions there,'' said Susan Abbott, a utilities specialist with Moody's Investor Services, referring to deepening fears of a Western drought.

The deadline, she added, ``is a pressure, a lever that is going to make the state of California want to resolve these issues sooner.''

The ISO's aggressive move to force power sellers to keep the megawatts coming was at odds with the Davis administration's confidence that the state's new role as a power-buyer would fend off blackouts.

A spokesman for Gov. Gray Davis said earlier that the state's power-buying -- the state has been spending $40 million to $50 million a day to keep the lights on despite utility credit problems -- resolved the issues that prompted the federal electricity order in the first place.

``Mainly, it was required because of credit issues, not necessarily supply issues, and those have largely been resolved with long-term contracts and the state getting into the power-buying business,'' said spokesman Steve Maviglio.

He did not immediately respond to a message left at his office by The Associated Press seeking comment on the ISO court action Tuesday afternoon.

The ISO's scramble for power came as lawmakers and the governor continued looking for a way to help Southern California Edison and Pacific Gas and Electric Co. restore their financial health.

Senate leader John Burton said California should buy 26,000 miles of transmission lines -- nearly two-third of the state's grid -- owned by PG&E and Edison in return for helping the cash-strapped companies out of debt.

``If they expect to get money from the ratepayer, the ratepayers get something in return. I give you a dollar, I get a hot dog,'' said Burton, D-San Francisco.

California's electricity crisis is two-pronged.

First, PG&E and SoCal Edison say they have suffered $12.7 billion in losses from spiraling wholesale electricity costs that they have been unable to pass on to their customers because of California's 1996 deregulation law.

Together, the two utilities serve 25 million people. The companies' credit was ruined and the state is crafting short- and long-term bailouts that include $10 billion in power purchases on their behalf.

Second, the state's grid has been stressed by scant reserves, tight imports, high demand and power plants idled for maintenance or repairs. A speeded-up construction program is under way, but the first plant isn't expected to begin generating power until mid-summer.

California has been in a near-continuous Stage 3 emergency since Jan. 9, which means reserves dwindled toward or below 1.5 percent.

Meanwhile, a federal hearing is scheduled Monday in Los Angeles to consider SoCal Edison's request to pass on its costs to its customers. Lawmakes in Sacramento, concerned that the utility may prevail in the case, hope to devise a bailout plan prior to the hearing.

PG&E has a similar, separate suit in the same court.

-- Martin Thompson (mthom1927@aol.com), February 06, 2001