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Thursday February 8, 7:28 pm Eastern Time

CHRONOLOGY - California power crisis

SAN FRANCISCO, Feb 8 (Reuters) - Here are the key events in California's power crisis, which has its origins in a landmark 1996 law that deregulated the state's power markets.

The law prohibited utilities from passing through all increases in wholesale power costs until spring 2002, and barred them from negotiating long-term supply contracts.

March 31, 1998 - California opens its electricity markets to competition after a delay due to computer glitches.

July 1999 - Customers of Sempra Energy (NYSE:SRE - news) unit San Diego Gas and Electric become the first in the nation to pay free market prices without a safety net after price freeze lifted. Rates remain frozen for customers of the state's two other investor-owned utilities, PG&E Corp. (NYSE:PCG - news) unit Pacific Gas and Electric and Edison International (NYSE:EIX - news) subsidiary Southern California Edison (SoCal Edison).

Late spring 2000 - Wholesale power prices start to soar as supplies struggle to keep pace with surging demand linked to a buoyant economy.

June 2000 - San Diego customers get a harsh free market lesson when higher wholesale power prices triple their rates.

June 14 - A localized series of blackouts is ordered in the San Francisco Bay Area due to a power shortage. California lurches through a series of power emergencies during the summer amid soaring demand for air conditioning during heat waves.

Sept. 6 - Calif. Gov. Gray Davis signs into law a rate cap for San Diego Gas and Electric customers after public outcry.

Nov. 17 - SoCal Edison files with state regulators to raise customers rates by 9.9 percent, effective January 1, 2001, to help recover billions of dollars in uncollected power costs.

Nov. 22 - PG&E files to raise rates by 16.5 percent, effective January 1, 2001.

Nov. 29 - Consumers file a $1 billion class action lawsuit accusing 14 energy companies of manipulating prices.

Dec. 4 - California utilities ask consumers to refrain from turning on Christmas lights until after 8 p.m. to save power.

Dec. 7 - The California Independent System Operator (ISO), which operates most of the state's power grid, issues its first ever highest-level Stage Three alert, but rolling blackouts across the state are narrowly averted after the federal government takes emergency action to boost power supplies.

Dec. 13 - The Clinton administration takes rare action of invoking emergency powers to prevent blackouts in California after a dozen power generators refuse to sell electricity to state utilities due to concerns about credit worthiness.

Dec. 15 - The Federal Energy Regulatory Commission (FERC) orders California utilities to begin negotiating long-term contracts of up to 20 years instead of relying on volatile spot market and rejects calls for a regional wholesale price cap.

Dec. 27 - U.S. natural gas futures hit a record high $10.10 per million Btu, about four times above year-ago prices.

Dec 28. - Green party leader Ralph Nader says the state's financially strapped utilities should be allowed to fail.

Jan. 4, 2001 - The California Public Utility Commission (PUC) orders independent audits of PG&E and SoCal Edison and approves an average 10 percent increase in retail rates. But action seen as too little, too late on Wall Street.

Jan. 5 - Moody's Investors Service and Standard & Poor's downgrade PG&E and SoCal Edison credit ratings to one level above junk bond ratings. Fitch cuts ratings even lower.

Also, the state treasurer proposes long-term plan to create a new state authority able to issue up to $10 billion in bonds to help utilities build power plants and transmission lines.

Meanwhile, U.S. Energy Secretary Bill Richardson extends through Jan. 10 emergency order mandating that power generators and marketers sell power to California to prevent blackouts.

Jan. 5 - SoCal Edison says it will cut 1,450 jobs, or 13 percent of its workforce, over the next few months, bringing to 1,850 the total number of job cuts for the company since the California power crisis began.

Jan. 8 - In his State of the State address, Gov. Davis calls the state's electricity deregulation a ``colossal and dangerous failure''. He vows to save the state's two biggest utilities from bankruptcy, proposing a new California power authority and a crackdown on price-gougers.

Jan. 9 - Davis flies to Washington to press his plan with utility executives, federal regulators and the Clinton administration's top economic officials. Washington calls the meeting to prevent reverberations throughout the U.S. economy from California's severe power shortage. PG&E and SoCal Edison have run up some $12 billion in power costs in recent months.

After the meeting, a vaguely-worded statement is issued for ways to solve the crisis, including helping utilities negotiate long-term contracts to buy electricity.

Jan. 10 - PG&E asks Gov. Davis for help to buy natural gas for customers, saying it does not have enough cash coming in to pay its bills. Meanwhile, FERC Chairman James Hoecker, a Democrat, announces his resignation, effective January 18.

Jan. 11 - The California ISO says up to two million residents will lose power in an unprecedented series of rolling blackouts, but the state is rescued by emergency help from Canada and the Pacific Northwest

Jan. 12 - The governors of California, Oregon and Washington urge federal energy officials to impose ``effective price controls'' to stabilize the western states' chaotic wholesale power market.

Jan. 16 - California declares a statewide Stage Three alert for the third time, citing a severe power shortage, but averts rolling blackouts. Meanwhile, SoCal Edison says it cannot pay some $596 million it owes creditors. The state's top two utilities see their credit ratings cut to low junk status by leading rating agencies, putting them in default of bank loans and credit lines and moving them closer to bankruptcy.

Jan. 17 - Rolling blackouts are ordered statewide for the first time ever in a desperate bid to avoid overloading the state's power grid. Also PG&E says it defaults on $76 million of commercial paper, the second California utility to default.

Jan. 18 - A fresh wave of blackouts hit parts of northern and central California for a second straight day. Some two million Californians have experienced rolling blackouts.

Jan. 19 - President Bill Clinton declares a natural gas supply emergency in California and orders out-of-state suppliers to continue selling gas to PG&E after the utility says several energy firms refuse to sell it gas on credit because of fears they will not be paid.

Also, Republican Curtis Hebert is appointed by President George W. Bush to head the FERC.

Jan. 23 - The Bush administration extends emergency orders forcing out-of-state companies to supply electricity and natural gas to California utilities through Feb. 6, but warns there will be no further extensions. The emergency orders were extended several times by the outgoing Clinton administration.

Jan. 24 - California concludes the state's first-ever electricity ``auction''. Weighted average of bids is 6.9 cents per kilowatt hours (kWh), or $69 per megawatt hour (MWh).

Jan. 25 - U.S. Federal Reserve Chairman Alan Greenspan says the California energy crisis could undermine economic growth and affect the rest of the economy if not urgently addressed.

Jan. 28 - President George W. Bush says it is up to the state to dig itself out of a self-inflicted hole.

Jan. 29 - Officials say California has already burned through its $400 million energy emergency fund in less than two weeks, forcing the state to begin scrounging for more public money to keep the electricity flowing.

Jan 29 - The California PUC releases results of audit into SoCal Edison that reveals a company hemorrhaging red ink and deep in debt -- but one which, until recently, still managed to disburse billions of dollars in dividends to shareholders.

Jan 30 - PG&E audit reveals that officers were slow to recognize signs pointing toward the energy crisis and did not act to develop steps to conserve cash until only last month.

Feb. 2. Gov. Davis signs a bill to allow the state to sign long-term energy contracts with suppliers and sell up to $10 billion of bonds to buy power.

Feb. 8. - The state treasurer proposes buying the transmission lines from California's two nearly bankrupt utilities. Lawmakers have also mulled taking over the utilities' hydroelectric plants or having the state issue bonds to ease their debt in return for stock warrants.

Also, Gov. Davis orders an expedited approval process for new power plant construction, saying it would help bring 20,000 megawatts of new generation on line by July 2004. He also eased emissions controls on older plants.

Meanwhile, California faces a Stage Three emergency for the 24th consecutive day.

-- (in@energy.news), February 09, 2001

Answers

Very Nice article

But it mention one very IMPORTANT thing about San Diego: SDGE was freed from the rate pass though limitations, because it had paid off the 'bond debt' it had incurred. PG&E and Edison were still shackled by this debt and thus prohibited from the cost pass on. And now stuck with even bigger debt. OOPS.

-- (perry@ofuzzy1.com), February 09, 2001.