Posted at 1:02 a.m. PST Saturday, Dec. 9, 2000

Warm trend helps state avert power blackouts Plan to boost prices gets chilly reception by governor BY STEVE JOHNSON, JOHN WOOLFOLK AND MICHAEL CRONK Mercury News

California backed away from the brink of blackouts on Friday after the weather turned warmer than expected and a major Southern California plant that had been out of service because of pollution problems was allowed to switch on.

RELATED STORIES PG&E plan to raise rates rejected Agency's construction plans criticized Public balks at dimming holiday lights State authorities, who were forced to issue their fifth straight stage-two emergency, remained deeply concerned about the prospects for blackouts in the next few days. But a plan adopted late Friday that would allow energy companies to sell power at a higher price was angrily denounced by Gov. Gray Davis.

Beginning today, the Independent System Operator, which oversees most of California's power grid, will soften its wholesale power price cap to give suppliers more incentive to sell in California.

``I am calling on Congress to immediately investigate this action, which I believe is disastrous for California ratepayers and businesses and should never have been taken in secret,'' Davis said. Like a number of other state officials, Davis has expressed outrage about the extraordinarily high prices that power suppliers already are receiving.

Another way the Independent System Operator plans to obtain more power is to begin imposing stiff fines on those that refuse to turn on their plants without good reason.

``We've tried to put some carrots in front of people to do the right things,'' said the agency's president, Terry Winter, in reference to the fines. ``Now, we're going to have to go to the stick.''

The plan was approved by the Federal Energy Regulatory Commission late Friday.

Although Winter declined to identify any companies that might be subject to the penalties, he said they could apply to a number of firms that have refused to switch on their generators during emergencies because of the soaring cost of natural gas. The companies that own the plants, which use natural gas as fuel, claim the gas prices have made it too hard for them to make a profit.

Fines could exceed $1,000 for each megawatt hour that the companies refuse to provide during critical power shortages. One megawatt is sufficient for about 1,000 homes. Winter said the amount of power those companies have refused to make available amounts to ``hundreds of megawatts.''

Aside from those plants, about 11,000 megawatts at a number of other plants was unavailable to the state because those generators were undergoing maintenance. The unusually large number of plants under repair prompted surprise inspections this week from state officials, who feared the plants were shut down to artificially reduce state power supplies and boost prices. But so far, Winter said, the evidence suggests the plants did have mechanical problems.

Tom Williams of Duke Energy, one of California's biggest energy producers, said the fines wouldn't affect it, because ``we're running everything we've got.'' But he was enthusiastic about the price-cap change, noting that ``it creates a more healthy market in the long run.''

Although a blast of extremely cold Canadian air was expected to push into Northern California on Friday, it failed to materialize when the weather front shifted east.

California also got a break when air quality officials agreed to allow a 1,285 megawatt plant in Long Beach to come back on line Thursday night. It had shut down when it exceeded the state's limit for how much pollution it could emit in a year.

State officials said several California plants that were down for repairs this week will probably be up and running next week, pumping a much-needed 1,000 to 1,500 megawatts back into the system. But they cautioned that California wasn't out of trouble yet. ``We're on guard here,'' said Stephanie McCorkle, of the Independent System Operator.

While not as cold as forecast, temperatures in Northern California are likely to be colder than normal today and Sunday. The National Weather Service predicted highs in the 50s to nighttime lows in the 40s. Even colder weather is expected next week, perhaps dipping into the 20s in some inland areas by Wednesday.

Meanwhile, the weather was forecast to be 15 to 20 degrees below normal in Oregon and Washington, which is likely to make it harder to convince officials there to sell power to California.

-------------------------------------------------------------------------------- Mercury News writer Mark Gladstone contributed to this report.

-------------------------------------------------------------------------------- Contact Steve Johnson at sjohnson@sjmercury.com or (408) 920-5043.

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-- Martin Thompson (mthom1927@aol.com), December 09, 2000