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Stage 2 alert called, but California gets a break from blackouts

Posted at 2:01 p.m. PDT Thursday, May 10, 2001

BY JAMES JELTER

SAN FRANCISCO (Reuters) - Cooler weather lifted some of the load from California's straining power grid Thursday, sharply reducing the likelihood of rolling blackouts, state energy officials said.

But electricity supplies were still far from healthy. The ISO went to a Stage Two alert shortly after 1 p.m. (2000 GMT) when reserves dropped to a precariously thin 5 percent of demand -- well below the ideal 15 percent reserve margin.

Should reserves drop to just 1.5 percent, triggering a top level Stage Three alert, the ISO will call on utilities to start rolling blackouts, cutting power to blocks of customers in a bid to avoid collapsing the grid.

``Generator outages have crept up but the temperatures are cooler so we don't expect to have to call for blackouts today,'' Stephanie McCorkle, a spokeswoman for the California Independent System Operator (ISO) said.

The ISO, the agency that manages most of the state's electricity transmission grid, ordered two consecutive days of blackouts on Monday and Tuesday as the state's power crisis again resulted in critical energy shortages.

Blackouts were narrowly averted Wednesday, in part because temperatures began to fall. Lower temperatures mean a drop in air conditioning, which on hot days accounts for about a third of overall electricity demand from the state's 34 million residents.

``Temperatures are especially lower in the (San Francisco) Bay Area and Los Angeles, but the inland areas are still really hot,'' McCorkle said.

Central Valley cities like Sacramento, Fresno and Bakersfield were all expected to see afternoon temperatures Thursday around 88-100 degrees Fahrenheit (31-38 C).

BETTER, BUT NOT GREAT

ISO operators, locked in a minute-by-minute battle to balance supply and demand on the system, said about 13,000 megawatts of generation were offline for repair or maintenance Thursday, roughly enough to serve the needs of 13 million homes at any given moment.

`That's about 1,000 megawatts more than yesterday,'' McCorkle said.

California, the nation's most populous state and the world's sixth largest economy, endured two days of rolling blackouts earlier this week, the fifth and sixth days so far this year the lights have gone out.

State energy officials warn the number and duration of these outages will likely rise through the summer, depending on how hot it gets, how much Californians can conserve, and how much power can be added to the grid through the state's accelerated power plant construction program.

Though blackouts look unlikely over the next few days, the ISO warns May remains a tough month, with many power plants shut for maintenance needed to put them in top shape for the hot summer months ahead.

``We're at that point where we can't afford to defer outages any longer. We're trying really hard to get as much generation ready and on line for June,'' McCorkle said.

Another 600 megawatts is shut for financial reasons, the result of the state's cash-strapped utilities failing to pay plant owners for the power they desperately need.

ROCKETING PRICES

Prices in California's volatile wholesale power market have exploded tenfold over the past year, the result of failing to keep pace with its citizens' rapidly growing power needs and a badly flawed bid to deregulate its electricity industry.

California is currently spending $50-90 million a day buying emergency power. On Wednesday, state legislators approved a $13.4 billion bond issue to covert this staggering cost.

Gov. Gray Davis, after months of accusing independent power generators of using California's energy crisis to line their own pockets, met Wednesday with executives of several of those companies to discuss a way out of the mess.

The four-hour, closed door meeting produced no concrete results, but gave Davis an opportunity to ask producers to accept a 30 percent cut in payments they are owed by California.

Enron Corp. , Mirant Reliant , Dynegy Inc. and other merchant generators at the meeting reiterated they have done nothing wrong and that their steep wholesale prices fairly reflect rising fuel costs and the financial risks they bear by continuing to do business in California's volatile power market.

-- Swissrose (cellier3@mindspring.com), May 10, 2001

Answers

As a retired energy consultant it always amazes me at how few people understand the economics of the electrical power business.

Sometimes I feel like I have wasted a lifetime.

-- TJ (tjrabinall@thehook.net), May 11, 2001.

Has anyone yet drawn the correlation between the four days in the first quarter when California experienced rolling blackouts and the sudden demise of the nation's productivity? It went into the minus column, down one tenth of one percent.

Was this coincidence? Or, did it have something to do with Silicon Valley's having to cut back due to energy output? We all know that our great productivity gains of the late 90's were powered by high tech.

Interesting, isn't it? If there is a correlation, this summer could trigger a tremendous fall that would throw the entire economy into disarray.

-- Frank (flane@multimedia.com), May 11, 2001.