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Managers scramble to cover summer power demand

Celia Lamb Staff Writer Hang onto your flashlights. The rolling blackouts that surprised Californians this winter could become a regular feature when air conditioners click on this summer.

Most municipal utilities have all the energy they'll need this summer lined up in advance, and they have the credit to buy the rest. But the state's investor-owned utilities aren't so fortunate. They sold most of their power plants under deregulation and weren't allowed to negotiate long-term contracts for power until last fall. On top of that, power generators have been reluctant to sell electricity to cash-strapped Pacific Gas and Electric Co. and Southern California Edison.

"It's going to be a very tight summer," said PG&E spokeswoman Staci Homrig. "Everybody's concerned."

While state officials are trying to stave off the crunch by securing power contracts for the summer, the California Independent System Operator and utilities are seeking ways to cut power use without rolling blackouts.

The Folsom-based ISO manages transmission lines owned by PG&E, Southern California Edison and San Diego Gas and Electric, and makes sure there's enough reserve electricity to keep the grid stable. It orders utilities to cut use if reserves get low.

Shortage: The state Energy Commission estimates that the state's power demand plus reserve needs could top out at 61,125 megawatts if this summer is as hot as 1998. Under those conditions, the state could squeak by, if:

No more than 3,050 megawatts of power generation is offline at peak demand. That figure is roughly equal to the historic summer peak average, but in recent weeks the amount of generation offline has been 250 percent above historic averages.

State power generators produce 5,053 megawatts more this summer than they do now. It would come from "peaker" plants, new power plants, and upgrades to existing plants.

Water supplies for hydroelectric power in the state are about average.

California gets 4,834 megawatts from the Pacific Northwest.

The ISO predicts that in its service area, which includes about three-fourths of the state grid, demand could outstrip supply by up to 6,815 megawatts in June and 5,297 megawatts in August.

Gov. Gray Davis said this month that the state has secured contracts for about 7,000 megawatts this summer, about 55 to 70 percent of the amount that investor-owned utilities were short last summer.

But up to 45 percent of the shortage will probably have to be bought on the spot market if it can't be secured in advance -- and if it's available.

Another question is how PG&E might cut its power demand now that 140 of its 170 interruptible customers have fulfilled their contracts. The contracts, with big commercial users, end after users rack up 100 hours of power interruptions in a year. Without interruptible customers, PG&E is more likely to need rolling blackouts.

Public utilities like Sacramento Municipal Utility District and Roseville Electric have long had mutual agreements with PG&E to cut power when storms and other crises create shortages. They've cut their power use in proportion to PG&E when asked, even to the point of blackouts.

But municipals question whether those agreements apply to a shortage caused by financial problems, not by bad weather.

"It's going to be a potent political issue that will develop over the next couple of months," said George Fraser, general manager of the Northern California Power Association, which manages transmission lines and power plants for several municipal utilities, including Roseville Electric.

Gov. Davis plans a program of conservation incentives to cut demand by 3,700 megawatts. Most utilities call big customers in emergencies and ask them to voluntarily reduce power. And energy managers and utilities are working on their own programs to leverage voluntary conservation with financial incentives.

PG&E has been working on a plan to let some big industrial customers avoid rolling blackouts in exchange for saving power.

Instead of being turned off, customers would be asked to cut power use by 5 percent to 20 percent in increments of 5 percent. PG&E would charge penalties to participating customers who didn't reduce use according to plan.

The "Optional Binding Mandatory Curtailment Plan" program would be open to customers that pull their power directly from transmission lines, and single, big customers or groups of smaller clients that can cut 5 percent of the load on a particular distribution circuit on demand.

The ISO has formalized a summer demand relief program, first tried last year, that resembles PG&E's interruptible program but gives users flexibility to cut just part of their demand, not all of it. So far the ISO has about 600 megawatts of demand relief contracted through the program, and is working on another 800.

Utilities and large commercial and public power users receive $20,000 per megawatt they agree to cut per month, from June 1 to Sept. 30. They also get $500 per megawatt-hour when they actually cut power. Contracts expire after 96 hours of cutbacks.

Northern California businesses in other areas, including some in PG&E's territory, can join in the ISO's program through companies that clump businesses into large groups and, acting as an intermediary for utilities, bid their combined savings to the ISO in exchange for a cut of the fees the ISO pays the utilities.

One such company is Planergy International, a subsidiary of Xcel Energy Inc. of Minneapolis. Planergy has joined about 200 large north state commercial power users into a contract for 99 megawatts of power curtailment, said Planergy International vice president Tom Doughty. He wouldn't name the companies. The utilities tell Planergy when they need to cut power, and Planergy alerts customers.

SMUD has two other curtailment programs that it expects to have running by June 1, aided by a $882,750 state grant.

The first would pay customers who can cut their loads by at least 250 kilowatts in power emergencies. SMUD buys about 4 percent of its power on the spot market, and prices tend to rise in emergencies.

"Basically we're going to share the market opportunity with the customer," said Harlan Coomes, SMUD's senior demand-side specialist.

The second program links with a customer's buildings so the utility can remotely turn up the air conditioning a couple degrees, or dim lights 30 percent. SMUD tested the system in a building at its 59th Street headquarters and workers rarely noticed, Coomes said. SMUD is recruiting companies willing to test the system.

Copyright 2001 American City Business Journals Inc.

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