Posted at 10:05 p.m. PST Wednesday, Dec. 6, 2000

Power surprise checks of plant by state BY STEVE JOHNSON AND JOHN WOOLFOLK Mercury News State authorities have launched a series of surprise inspections at California power plants that have been closed for repairs, suspicious that their operators shut them down to manipulate supply and drive up prices.

Power company officials insist they have curtailed operations for necessary maintenance and expressed outrage that state officials were impugning their motives.

The inspections, which began late Tuesday, were triggered by a mysterious series of plant breakdowns that have helped prompt three ``stage-two emergencies'' this week, the latest Wednesday. Such warnings are issued when power supplies are so low that state officials are close to ordering rolling blackouts in some areas to keep the entire power grid from failing.

As was the case Tuesday, Wednesday's alert implored consumers to cut electricity use and to avoid turning on holiday lights until after 7 p.m. But those suggestions haven't gone over well with many people. And on Wednesday, the non-profit group that runs downtown San Jose's popular Christmas in the Park display announced that it was switching on all 30,000 of its lights at 5 p.m.

``People come to expect Christmas in the Park,'' said Ed Bautista, coordinator of the event at Plaza de Cesar Chavez. ``Because a large amount of schoolchildren make plans to visit the park, this would be a disappointment to them, I'm sure, if the whole thing were shut off.''

He added that it might be dangerous to have hundreds of people wandering around a dimly lit park.

The unannounced inspections were carried out by officials with the California Public Utilities Commission, with help from the California Independent System Operator, which oversees most of the state's network of power plants and high-voltage lines.

Power deficit Officials said they initiated the checks, after consulting with Gov. Gray Davis' office, largely because of the amount of power that was unavailable due to plant shutdowns. All together, those shutdowns left the state short about 11,000 megawatts -- enough to supply 11 million homes with electricity.

Of that amount, state officials said, 4,500 megawatts were from plants down for scheduled maintenance. Another 2,500 megawatts were from plants that weren't running because they had reached or exceeded the amount of pollution the state allowed them to emit in a year. The remaining 4,000 megawatts resulted from unscheduled plant breakdowns; those operations were targeted by inspectors.

``We wanted to make sure the plants that were down were down for a good reason,'' said Paul Clanon, director of the Public Utilities Commission's energy division. He said the inspectors went to plants at 10 locations, including two in the Bay Area. One of those plants was at Hunters Point in San Francisco, where officials recently had publicly announced it was undergoing repairs, he said. Clanon declined to identify the other facilities checked, saying that would violate state confidentiality rules.

Clanon said the only other such inspections he could recall were in June, after the Bay Area was hit with blackouts. The current round of checks could continue for some time, he said, adding, ``You can expect us to increase our vigilance.''

So far, inspectors have found ``no smoking guns,'' according to Davis' press secretary, Steven Maviglio. But if they did find evidence of companies shutting down plants that were in good shape just to limit electricity supplies and boost prices, it's unclear what the state could do about it. Maviglio called the state's legal authority over such matters ``a gray area.''

Tracy Bibb, director of engineering and maintenance for the Independent System Operator, said many of the breakdowns stemmed from failures of small but critical parts, such as pumps or motors. He said that many generators had been running flat out since summer and were due for problems.

``Keep in mind that these are 20- and 30-year-old plants,'' Bibb said.

Inspection at night Richard Wheatley, a spokesman for Reliant Energy of Houston, which has five California plants, said officials at Reliant's Oxnard plant were miffed when a state inspector showed up at 9:30 p.m. Tuesday, demanding to check the plant. About 725 megawatts of the plant's capacity is out of commission because of maintenance that stemmed from its having been run at full bore most of the year.

``We have worked very diligently to go the extra mile to keep our units up and running,'' Wheatley said. ``It's kind of amazing to us that we would have a surprise inspection in the middle of the night.''

Power plant operators weren't the only ones bristling at the way state officials have responded to this week's power problems. The plea to shut off their holiday lights until after 7 p.m. was especially irritating to many who had spent weeks planning displays.

Directors of San Jose's Christmas in the Park, which is open daily during December from 9 a.m. to midnight, decided Wednesday to curtail only daytime lighting during power shortages, according to its coordinator, Bautista. He said the exhibit -- which includes a variety of animated attractions -- will be fully lighted from 5 p.m. until closing, even during shortages.

In stage-one shortages, during which the public is asked to begin conserving, about a fourth of the exhibit would be turned off during the day, resulting in a 30 percent energy savings, Bautista said. In stage-two emergencies, which are declared when 95 percent of available power is in use, half of the display would be off during the day for a 60 percent reduction, he said.

``This is a once-in-a-year thing,'' said Rose Hansen of San Jose, ``and if we can't have something like this to enjoy, we might as well throw in the towel. So what if we don't have power in our homes for a couple of hours. This is for the children.''

http://www0.mercurycenter.com/local/center/lights1207.htm

-- Martin Thompson (mthom1927@aol.com), December 07, 2000

Answers

Thursday, December 7, 2000 State Inspectors Visit Idled Power Plants

Energy: They want to know why the facilities are not generating electricity. But deregulation leaves the value of such questioning in doubt.

By NANCY VOGEL, Times Staff Writer

SACRAMENTO--State inspectors fanned out across California on Wednesday after being dispatched to learn why idled power plants are not generating electricity--a move that angered the plants' owners and reflects how undependable the state's electricity has become. It is a move of dubious value, many experts said, given that the state lost control of power plants under deregulation.

Even the governor's office--which approved the inspections--and the state agencies involved agree that whether they are entitled to make such visits or order changes to plant operations is a legal gray area. "They don't regulate us," said Tom Williams, spokesman for Duke Energy North America, which owns four large power plants, including one in Chula Vista that was visited by a state inspector Wednesday. "But we worked with him." Inspectors were sent out Tuesday, when power plants that could generate enough electricity to meet a third of the state's demand were not running, according to the agency charged with balancing electricity supply and demand. Supplies got so tight Tuesday evening that Gov. Gray Davis turned off the state's official Christmas tree almost as soon as it was lit. On Wednesday, Sea World in San Diego announced that it would not turn on 2,000 lights strung from its landmark tower. Power plant owners offered explanations for why their units were not running: overdue maintenance, air pollution rules, installation of pollution control equipment. But state regulators apparently were skeptical, suspecting that some plant owners might be withholding electricity from the market to boost prices.

The California Public Utilities Commission and the California Independent System Operator, the agency that oversees the power grid, sent a dozen inspectors throughout the state to ask questions and get copies of maintenance logs. The information will be given to the PUC, which will decide whether to make it public, said PUC energy division director Paul Clanon. One PUC worker showed up at 9:30 p.m. Tuesday, unannounced, at the gate of Reliant Energy's power plant in Oxnard. He asked for proof that the company was making the mechanical repairs it reported, said Richard Wheatley, spokesman for the Houston-based company. Wheatley said the inspector told plant workers that Gov. Davis is investigating whether power plant owners are holding back production to manipulate the market.

"This is an extraordinary situation," said Steve Maviglio, the governor's spokesman, "and we want to see if they're holding back, and if they're holding back maybe it's something we want to address." Some industry experts scoffed at the notion of using such inspections to get cooperation from the private, profit-driven companies that bought power plants from state-regulated utilities when California launched deregulation in 1998. The designers of the new market figured competition would drive down electricity prices. But the opposite has happened, and California consumers and utilities have paid billions of additional dollars for electricity this year.

Experts said the fundamental problem is that California hasn't built any major new power plants in the last 10 years, while demand for power has grown steadily. They said that shortage, plus flaws in the structure of the market, allow power plant owners to manipulate prices. "We asked for it," said S. David Freeman, general manager of the Los Angeles Department of Water and Power, which is publicly owned, exempt from deregulation and enjoying abundant electricity supplies. "These people are not in the generating business--they're in the moneymaking business. "They're generating green stuff. It's time to ask the question, 'Who is responsible for power supply in California today?' " Freeman said, "and the answer is: 'Nobody.' " Freeman argues that California must reverse deregulation through public purchase of its transmission grid or by ordering utilities to build and run new power plants. Consumer activists have said they will take a ballot measure to voters in 2002 to undo deregulation if solutions to the state's electricity crisis are not found quickly. Power plant owners, while justifying shutdowns on the grounds of maintenance and air pollution control, point out that there is little economic incentive to sell electricity in California this week. Earnings here are capped at $250 per megawatt-hour, while electricity is selling in the Pacific Northwest, where it has been unusually cold this week, for three times that.

What's more, they say, the most inefficient plants aren't worth running now that the price of natural gas--the main fuel burned to make electricity--has rocketed to levels nearly 16 times those of last year. Charlotte-based Duke Energy owns power plants with a combined capacity to serve more than 3 million homes. On Wednesday, less than a third of that capacity was shut down for installation of pollution control equipment, Williams said.

Reliant Energy, which owns slightly more capacity than Duke, had shut down somewhat less than half of that capacity for repairs that had been put off all summer, said Wheatley.

http://www.latimes.com/cgi-bin/print.cgi

-- Martin Thompson (mthom1927@aol.com), December 08, 2000.