Published Friday, June 30, 2000

California's growth gulps its power supply By Mike Taugher TIMES STAFF WRITER

Power shortage emergencies are becoming more frequent, and Californians should brace for more of the same this year and next as the state grapples with an increasingly unreliable supply of electricity.

The problem, say state energy officials, is a wicked combination of few new power plants, explosive population growth and, of late, unusually hot weather.

"We're looking at two summers of pretty tight operating reserves," said Stephanie McCorkle, a spokeswoman for the state's new power grid manager, called the California Independent System Operator.

Twice this week, McCorkle's agency declared "Stage 2 emergencies," forcing some businesses that receive energy discounts to shut down their power. The 2-year-old agency has yet to issue a Stage 3 emergency, which would force utilities to institute rolling statewide blackouts.

But in Washington, Energy Secretary Bill Richardson expressed concern this week about the reliability of the electricity grid throughout the country and noted the possibility of rolling blackouts this summer in California and the Northeast.

Already in June, smaller-scale blackouts over two days have affected 100,000 Bay Area residents.

The margin between reliable energy and a system crash has been tightening for a decade. That's because the state's large utilities became reluctant in the 1990s to invest in new power plants when they saw the state moving toward energy deregulation, say state energy officials.

Now, California is subsuming a population the size of Vermont each year, and much of the state's new growth is occurring in warm valleys and desert, where spacious homes are sprouting with ample air-conditioning systems, state energy officials said. On hot days, air conditioning accounts for 28 percent of the electricity use in California, according to the California Energy Commission.

In addition, electricity imported from the coal plants and other generating stations in the Southwest, as well as from hydroelectric dams in the Pacific Northwest, is becoming less reliable for Californians.

The growing Southwest is using more of its homegrown electricity, while the availability of electricity from the Pacific Northwest depends on how much water is behind hydroelectric dams and whether other states are buying that electricity, according to state analysts.

"Reserve margins ... are thin enough in California and the Southwest so that a dry hydro year or outages of any large unit or transmission line in California or the rest of the (Western states ) could seriously threaten system reliability," state energy analysts concluded in a report last year.

This year, the lack of an energy cushion has already led grid managers to declare four Stage 2 emergencies in response to widespread heat waves. Just this week in Northern and Central California, electricity was shut off to 200 large industrial customers of Pacific Gas & Electric Co. The companies agree to service interruptions in exchange for lower electric rates.

"When we have 100-degree-plus weather that hits statewide, and the Pacific Northwest, and the Southwest, all at the same time, and it extends for more than just one day, then our electricity supply can be challenged," said California Energy Commission spokeswoman Claudia Chandler.

Energy officials said there is no way to predict whether they will have to order rolling statewide blackouts, because much of that depends on how well power plants and transmission lines are working and what the weather is like throughout the West.

But they expect to get more breathing room after next summer because new power plants that have been approved since the power generation industry was deregulated in 1998 are scheduled to come online in 2002 and 2003.

"By 2002, the picture is going to look a lot brighter," said McCorkle.

However, that might not be a sure bet.

State analysts noted in their report last year on the state's electricity supply that power plants' completion dates will depend on investors.

The year 2002 is also when state officials expect to lift a freeze on the rate consumers pay for electricity. That action could raise the cost of electricity on hot afternoons nearly 30-fold, as electricity becomes traded on a stock market-like exchange. Prices could skyrocket at times of peak demand.

"People's bills could be higher in the summer," said Chandler.

The state's failure to keep pace with increasing demand for electricity is due to many reasons, but state energy officials single out two: the reluctance of large power companies to build new power plants when it became apparent that the market would be deregulated, and the turnaround in California's economy in the 1990s, which led to a dramatic surge in demand.

"The utilities didn't build any power plants in the '90s," Chandler said. "The first discussion about deregulation occurred in the '90s. That's what made the utilities concerned about how they would be repaid for their investments."

PG&E spokesman Ron Low acknowledged the influence of deregulation. But more important, he said, was that there was an oversupply of electricity in the early 1990s throughout the Western states, and no one expected how quickly California's economy would explode.

"In the late '80s and early '90s, the growth here was flat," he said.

Today, California power plants can generate 55,000 megawatts, hypothetically enough to satisfy the state on its most energy-hungry days if all equipment could run at maximum capacity. But that does not normally happen.

During peak times this week, Californians' power use approached 50,000 megawatts.

California relies on imported electricity, although it is being weaned from this practice as out-of-state sources become harder to come by.

Ten years ago, for example, the state imported one-third of its electricity from the Southwest and the Pacific Northwest. Today, it imports just one-fourth.

Chandler said more efficient use of electricity by customers is a cheaper way to boost the state's energy cushion.

"We may not be able to build our way out of this problem," Chandler said. "We also need to look at how to shave off those peaks between 3 and 6 in the afternoon."

http://www.contracostatimes.com/news/california/stories/power_20000630.htm

-- Martin Thompson (mthom1927@aol.com), June 30, 2000