San Diego Firms Say Energy Cost a Threat

Thursday May 3, 10:43 PM EDT

SAN DIEGO (Reuters) - Most small businesses in San Diego, California's second-largest city, say high energy costs threaten their ability to stay afloat and have forced them to raise prices, according to a survey released on Thursday.

"The energy crisis will lead to the extinction of neighborhood business districts," said Joe Mannino, chairman of the local business lobby that sponsored the survey. "The majority of businesses in San Diego are small businesses and they cannot continue to shoulder the burden of energy price hikes."

Of the 477 firms that responded to the mail survey, 54 percent said higher energy costs could force them to shut down and 66 percent said they have had to hike prices, the San Diego Business Improvement District Council said.

Restaurants have been particularly hard hit, with many reporting their utility bills have risen by more than $1,000 per month and 29 percent reporting they are considering laying off staff to cut expenses.

Construction firms stand to lose the most when blackouts hit as expected this summer, with most saying that each two-hour power outage will cost them more than $2,000, according to the survey.

San Diego Gas & Electric, a unit of Sempra International (SRE), which provides power to three million residents in the area, said on Thursday it had asked regulators to approve a plan for some additional power output during the summer.

Under the plan, San Diego Gas & Electric would pay some large industrial customers to turn on their own back-up generators if the city faced rolling blackouts.

The proposal, which must be approved by the California Public Utilities Commission, would add 50 megawatts of generating capacity, enough to supply power to about 50,000 homes, the utility said.

The company estimated that additional power would save some $1.6 billion in lost revenue and property damage from the cost of rolling blackouts.

The Independent System Operator, which operates the electric grid, has estimated that California could face 30 to 35 days of blackouts across the state this summer. ©2001 Reuters Limited.

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-- Martin Thompson (mthom1927@aol.com), May 04, 2001