Lawmakers weigh planned outages By Will Shuck From our Sacramento Bureau SACRAMENTO Legislative leaders Thursday floated the idea of planned daily outages to drive down electricity costs and remove the gnawing uncertainty of rolling blackouts. "People have to get as much notification as possible," Assembly Speaker Robert Hertzberg, D-Van Nuys, said during a joint meeting of the Assembly and Senate energy committees. "We could just have a 'powerless Tuesday' or a 'powerless afternoon.' "

Officials said the state could institute an odd-even system in which certain blocks of power users could face blackouts as often as every other day. The reduced demand, they think, would reduce price.

It's a risky game, since every blackout exacts a financial toll on California businesses, and a political toll on lawmakers who unleash it. But it could help stem the tidal flow of cash from California's bank accounts into the hands of generators and energy traders.

'Economic war' "We have to let people know we are in an economic war," said Sen. Debra Bowen, D-Marina del Rey, chairwoman of the Senate Utilities Committee.

If the state planned to buy only a fixed amount of power, and accepted blackouts to balance out any unmet demand, it would take uncertainty out of power failures and could drive down the price of power, Bowen said.

"But," said Bowen, "it requires a 180-degree turn in terms of how we think about power in this state."

Switching gears It would mean abandoning the practice of buying "everything and anything to try and keep the lights on at all costs."

The state is spending about $50 million a day as surrogate power buyer for its credit-poor or bankrupt utilities. So far, those daily purchases, vulnerable to a wild spot market, have cost nearly $7 billion.

"We need to have a real discussion about (planned outages)," Bowen said. "The way to break the back of this cartel is to reduce demand."

Hertzberg, too, used the same phrase: "It could break the back of the cartel."

Gary Ackerman, of the energy trade group Western Power Trading Forum, said there's no cartel to be broken.

"There is no evidence of a cartel, no history of a cartel, no proof, no reason to believe there is a cartel," Ackerman said. "It's a politician's fantasy that doesn't bear any resemblance to reality."

However, said Ackerman, it might be worth a try.

"Limiting consumption because the price is too high in their opinion is an appropriate response," he said. "I don't think it should be dismissed."

No guarantee But Ackerman said there's no guarantee it would have the intended effect of dropping prices. It could, he said, "in theory," but not necessarily in a super-heated energy market in which power rejected by California could be sold to Oregon or Nevada.

"It doesn't mean the seller is going to look at you like a deer gazing in the headlights," he said. "Traders are only interested in one thing, 'What can I get for this commodity? And if you're not going to pay my price, I'll try and find someone else.' "

Or, he added, companies could just "back off their generation" and produce a small enough amount to keep prices high.

James Sweeney, an economist at Stanford University, called the idea "a tremendous game of chicken."

The state would have to play its hand carefully, being cognizant of time-of-day demands in neighboring states, Sweeney said.

"If you're getting quoted $200 a megawatt hour and it's 2 a.m., you can be reasonably confident that Arizona is not willing to pay more," he said. "You're going to have to be an educated chicken if you want to play."

A last choice He said deliberately orchestrating blackouts is a last choice. "I'd much rather use time-of-use metering, or higher prices ... but it's much better to find ways of fighting back than to just sit and take whatever is going to happen."

No sooner had Hertzberg mentioned the idea, than Sen. Jim Battin, R-Palm Desert, said that residents of his parched and sweltering district wouldn't stand for routine outages.

"When it's 120 degrees, your house heats up real fast," Battin said. "If you turn off the power there every day, I don't think they can survive it."

Lawmakers questioned state energy officials on the viability of the plan during a joint meeting of Senate and Assembly energy committees Thursday.

A lot of outages It could be done, they were told, but it would mean a lot of outages for a lot of people. Nearly half of the energy use in the state is in sections of the power grid that are exempted from rolling blackouts. That's because with every fire station that isn't subject to outages, hundreds of nearby homes and businesses hooked to the same section also avoid power failures.

With so many people exempt, said Public Utilities Commissioner Carl Woods, there aren't a lot of ways to split up the pain.

"It could be the state would be worse off economically with planned outages," he said, "because they would be more frequent and more widespread."

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-- Martin Thompson (mthom1927@aol.com), May 11, 2001