Dan Walters: Are blackouts in our future?

(Published March 5, 2001)

California's electric utility crisis embraces many specific issues and each, seemingly, takes its turn in the public eye.

With the state spending more than $1 billion a month on power purchases, the immediate threat of blackouts has eased. Gov. Gray Davis and other principal players have turned, therefore, to the precarious financial condition of the state's three major private utilities and Davis' very controversial plan to save them from bankruptcy.

Davis announced an "agreement in principle" with Southern California Edison on a multifaceted financial rescue plan, centered on state purchase of Edison's share of the intercity power grid, and is seeking similar agreements with San Diego Gas & Electric Co. and Pacific Gas and Electric Co.

While negotiations on what critics call a "bailout" continue, however, an even more ominous aspect of the crisis looms: whether California will be hit by major blackouts this summer as power demand surges.

California's peak demand these days is less than 30 gigawatts, but when air conditioners are turned on, it will climb as high as 50 gigawatts. And meeting that demand, regardless of the cost, is a huge, perhaps insurmountable, problem.

Davis had hoped to nail down enough power on long-term contracts to meet the extra summer demand, but power generators and brokers are less than eager to sign such contracts, especially in the price range that the state wants to avoid ratepayer shock. Unpaid bills from past supplies are also a thorny factor in the slow progress of long-term contract negotiations.

The governor is also counting on 10 percent savings from conservation, and power from some new generators -- promising to have 5 gigawatts of new generating capacity on line by summer. But outside experts are extremely skeptical that either conservation or new generation will produce the results the governor insists will happen.

So far, the conservation program has consisted of asking sheriffs to devise a plan to encourage or force businesses to turn off unneeded lights and a low-scale advertising program urging householders to use electric appliances during non-peak hours.

Experts say it takes years to implement an effective conservation program, and that it must involve extensive -- and expensive --retrofitting, perhaps real-time pricing of power and other concrete steps. California, moreover, is already one of the nation's lowest per capita users of power, which makes further savings uncertain.

Both the state Energy Commission and the Independent System Operator, which manages the state power grid, see a shortage during peak demand periods in August of at least 5 gigawatts -- unless the 5 gigawatts of new generating capacity Davis has promised is actually fired up. But that also assumes there will be no unplanned generator shutdowns, and that there will be some easing of air pollution controls on existing plants to allow them to run for more hours than current permits allow.

It will be a very close call at best, and most authorities believe that it's highly unlikely that California can get through the summer, especially if it's a hot one, without some outages. And under a worst-case scenario, the blackouts could be lengthy and widespread, not the one-hour rolling blackouts that California experienced briefly in January.

The prospect looms so large that legislation to designate which power users would be exempt from blackouts is already being drafted in the Capitol, and it could become a messy special-interest scramble. Some municipal utility lawyers, meanwhile, are circulating opinions that publicly owned systems --which cover about 30 percent of Californians -- might refuse to participate in blackouts if they have enough juice of their own.

DAN WALTERS' column appears daily, except Saturday. Mail: P.O. Box 15779, Sacramento, CA 95852; phone (916) 321-1195; fax: (781) 846-8350

E-mail: dwalters@sacbee.com

-- Swissrose (cellier3@mindspring.com), March 05, 2001