A rush to duck power outages: About half of the state's electric users already have been exempted from rolling blackouts.

By Carrie Peyton, Terri Hardy and Clint Swett Bee Staff Writers

(Published May 31, 2001) Up and down California, businesses, government agencies, campuses and others are scrambling to join the millions who will escape this summer's predicted waves of rolling blackouts.

Some have gotten state regulators to change blackout rules. Some have given different versions of their needs to utilities, changing their stories in ways that satisfy exemption standards. Some have persuaded legislators to propose laws just for them.

"People that have political power or economic power are going to find ways of getting exempted. It happens all the time," said Richard Bilas, one of five appointed members of the state Public Utilities Commission.

Every addition to the largely confidential list of those exempt from outages boosts the frequency of blackouts for everyone else.

While a few thousand institutions -- including hospitals, fire departments and prisons -- are deemed "essential" users who should not be blacked out, nearly half the state is spared outages because millions more share circuits with those exempt facilities.

In Sacramento, for example, the electric utility will not cut power to a water treatment facility along the American River for fear of endangering water quality. But sheltering that circuit also spares the sprawling California State University, Sacramento, campus nearby.

If exemptions grow, "at some point, you lose the ability to reliably have rolling blackouts," said PUC commissioner Carl Wood. He has estimated that fewer than 1,000 more institutions can be exempted without compromising the system that rolls outages from one part of the state to the next when the electric grid can't supply power for everyone.

With close to half of the state sitting out outages, "that means the other half is going to get blacked out twice as often. It's basically unfair to the rest of the community," said Paul Perkovic, who sits on the board of the Montara Sanitary District, which provides sewer, garbage and other services to a San Mateo County community.

Perkovic urged the PUC last week to make more government agencies, including his tiny district, eligible for blackouts, arguing that they should be prepared for other emergencies anyway.

The deluge of exemption requests has created a dilemma of values and numbers. Should nursing homes be placed on the essential list? What about outpatient surgical clinics or transit agencies or schools? And when, if ever, should someone review existing exemptions to see if they're still needed?

Utilities and regulators say they try to apply the rules fairly. But inconsistencies appear, and the rules keep changing as the realization sinks in that many more blackouts could await California.

The state's two biggest utilities are close in size, but one shields about 25 percent more customers than the other from outages.

The Sacramento Municipal Utility District, which sets its own outage standards, exempts only 21 of its 530,000 customers.

Pacific Gas and Electric Co., which applies rules set by the PUC, is much more generous, giving 2,600 of its 4.8 million customers the "get out of blackouts free card."

Southern California Edison is even more open handed in its interpretation of the same rules, doling out 3,600 exemptions among its 4.3 million customers.

The roads to getting an exemption are varied. There are at least three places to start for those who want to stay cool and bright when all around are going dark.

Businesses or governments can apply to their utility, which determines whether they fit rules for a public safety exemption.

Or if their utility is regulated by the PUC, they can apply directly to a new program set up to examine their petition for exemptions.

Finally, they can go to the state Legislature, where lawmakers have introduced a range of bills that would protect schools, nursing homes, refineries -- even Universal Studios.

But in the attempt to quickly piece together a system to grant exemptions, critics say, a haphazard process has been developed.

Dan Johnson, associate vice president for facilities development and operations at San Jose State University, said he has sought an exemption from PG&E and is still waiting, while campuses with similar circumstances have succeeded. Now he wonders about the fairness of what seems to him a murky decision-making process.

"Each utility has its own way of dealing with exemptions," he said. "If it appears that the decision is arbitrary and capricious, we hope that when we appeal to the PUC some sanity prevails."

One person in PG&E's tariff's department has done nothing but process exemption requests since March, officials said, after the job became too big to be absorbed in another worker's duties.

About 200 requests have come in since early this year, and PG&E has approved 45 of them and denied 72, with 79 still pending.

The process is aimed at being a straightforward evaluation of whether an entity fits into existing PUC categories of "essential" customers.

But it isn't always that simple, said Roland Risser, PG&E director of tariffs and compliance.

Sometimes, said Risser, a customer will say it has adequate backup generation, and PG&E will let the customer know the backup disqualifies it from an exemption. Later, the customer calls back and says "we've re-evaluated" and the backup generator won't supply all its needs.

"We just take their word for it," Risser said. "We don't police."

From universities to transit agencies, a wide range of customers worry that as different utilities apply PUC standards, those regulations don't always yield the same results.

So far, at least eight campuses within the University of California and CSU systems will not be subject to rolling blackouts, including UC Davis.

In a letter to PG&E asking for an exemption, UC Davis stressed the potential danger to animals in its veterinary hospital and the possible destruction of research. But PG&E spokesman Ron Low said health and safety arguments are the only ones that matter. PG&E granted the exemption because the campus does not have generators for its airport and its radio station -- which is part of the emergency broadcasting network.

Transportation officials say they're frustrated by the mixed signals sent by utilities.

While the PUC has declared the Bay Area Rapid Transit District exempt from blackouts, Edison says Los Angeles' Municipal Transportation Authority is not. Ralph de la Cruz, deputy executive director of operations for the MTA, doesn't understand that logic. True, BART travels under the bay. But the MTA's Green Line runs down the middle of the I-105 Century Freeway. Some MTA rail lines are elevated, and passengers trying to extricate themselves from a stalled train could plunge to the ground.

The MTA asked Edison to reconsider and has appealed to the PUC.

"We are anxious to see this resolved as quickly as possible, before blackouts occur," de la Cruz said. "My God, we don't want to be in the position of our lines experiencing the prospect of stranded passengers."

The San Francisco Giants also have appealed to the PUC to be exempt during games. A blackout at Pacific Bell Park would "pose major operational challenges," said Staci Slaughter, a Giants' spokeswoman.

Electric turnstiles wouldn't work. Concession stands could only accept cash only for hot dogs and beers. The field would go dark and night games would have to be canceled.

The PUC has been so swamped with bids to escape blackouts that it has hired a scientific and engineering consulting firm to study who else should be added. Meanwhile, it has asked utilities to look into ways to reconfigure the wiring so that each essential customer won't take so many nonessential ones out of the blackout pool. A report on those efforts is due Friday.

"We've been deluged at the commission by individual requests that do have a broader public policy good," said PUC president Loretta Lynch, including one from the lone U.S. maker of a blood-clotting agent for hemophiliacs.

The PUC has hired Exponent, a Menlo Park consulting firm, for $615,000 to analyze who else should be exempt.

Exemption applications are due Friday and will be reviewed by people with specialties ranging from toxicology to environmental sciences to electrical engineering, said Robert Caligiuri, an Exponent vice president.

The company will rank applicants based on safety risks, and it will work with utilities to determine the potential impacts of adding each one to the exemption pool. It will report to the commission in July, and Wood expects a decision in early August. He hopes the new rules can be implemented by utilities soon after.

But no one within the PUC is taking an equally rigorous look at those who are already exempt, and the commission is split on whether such a study is necessary. Wood, who specializes in the blackout issue, believes that the commission simply doesn't have the time for such an effort during the current emergency.

Unsure of their prospects with utilities or the PUC, some are taking their cases to the Capitol.

State Sen. Sheila Kuehl, D-Santa Monica, said lawmakers are scrambling to draft energy policies that help all Californians, and at the same time, look after interests in their districts.

One example is Kuehl's bill that would allow 15 businesses -- including Universal Studios -- which straddle the boundary between Edison and the Los Angeles Department of Water and Power to get their electricity from DWP. Not only would that deal provide them with cheaper rates, but it would likely exempt them from blackouts.

The Los Angeles city utility is not part of the region controlled by the state Independent System Operator, and so it functions independently when the ISO orders utilities to impose blackouts.

Kuehl said the proposal is fair because those businesses were harmed by a "geographic quirk," where parts of the park are in DWP territory but they are solely an Edison customer.

"These are already DWP customers," Kuehl said. "They should be able to draw all their energy from DWP."

Other lawmakers are carrying bills for public schools, oil refineries and customers in areas where there are extreme temperatures. Sen. Richard Polanco, D-Los Angeles, is proposing a law that would ensure municipal utilities -- such as his district's DWP -- don't have to participate in blackouts.

Sen. Debra Bowen, D-Marina del Rey, chairwoman of the Senate energy committee, said the state has to realize that not everyone can be exempt.

"All these bills that seek to put one group of folks in a better position than someone else do is Balkanize the issue," Bowen said. "Unfortunately, instead of having people come together to try and share the pain equally, we're seeing folks rushing for their own lifeboat without regard for who gets thrown overboard in the process."

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The Bee's Carrie Peyton can be reached at (916) 321-1086 or cpeyton@sacbee.com.

http://www.capitolalert.com/news/capalert01_20010531.html

-- Martin Thompson (mthom1927@aol.com), May 31, 2001