Energy Shortage Taking A Toll On Silicon Valley By Leonard Anderson, Reuters , InternetWeek Dec 11, 2000 (10:01 AM) URL: http://www.internetwk.com/story/INW20001211S0004

SAN FRANCISCO -- A widening energy crisis in the western United States is disrupting industry in California's Silicon Valley. "An energy crisis of electricity shortages and high power and natural gas prices now is becoming an economic emergency," said Tapan Munroe, a California economist and head of an energy and economic research company in Moraga, Calif.

The region is confronting the fact that almost no new power plants have been built for 10 years meet the rising needs of its rapidly growing population and strong economy. Adding to the problem is a natural gas supply crunch caused by two years of low demand, low prices, and idled drilling rigs.

Gas flowing into Southern California soared last week, to $35 per million British thermal units, 16 times its price a year ago, and no price relief is likely until the spring.

Tom Lieser, who compiles a widely watched survey of California's economy for the Anderson School at the University of California at Los Angeles, said chronic energy shortages would keep California consumer prices above the national average.

"[Energy] might be ... a factor for businesses considering whether to relocate to California," Lieser said.

The Golden State was battered last week by power emergencies that cut electricity to several large industrial companies who pay discounted rates for being turned off when supplies run low.

California faces a second week of power cuts, and Oregon and Washington are gearing for trouble as a frigid Alaskan cold front bears down on the region, prompting the governors of Oregon and Washington to jointly urge residents to conserve electricity and natural gas for the next week.

California's computer industry and its growing appetite for electricity is a big reason for tighter supplies.

While power demand is rising at about 2 percent a year in California, it is surging at 5 percent in Silicon Valley.

"Power blackouts could cost Silicon Valley-based companies an estimated $100 million a day," said Michelle Montague-Bruno, a spokeswoman for the Silicon Valley Manufacturing Group, a trade organization representing 190 technology companies.

The bill for lost production in Silicon Valley blackouts during a heat wave last June cost some companies as much as $1 million a minute, she said.

Intel Corp., the world's No. 1 semiconductor maker, said its chip making operation in Santa Clara would be seriously damaged by a major failure of the power grid, but has spread its risk by building new plants in other states and overseas.

In the Pacific Northwest, sharply higher power prices have already hurt aluminum producers, many of whom moved to the region decades ago due to its abundant supply of cheap hydropower.

Mike Zenker, an analyst at Cambridge Energy Research Associates, Oakland, Calif., said aluminum cutbacks could be especially harmful because U.S. production, which accounts for 16 percent of worldwide output, is concentrated in the Northwest.

http://www.internetwk.com/shared/printableArticle?doc_id=INW20001211S0004

-- Martin Thompson (mthom1927@aol.com), December 11, 2000

Answers

Captain, we don’t have the power By iTnews staff Tuesday, 12 December 2000

A power crisis on the US west coast is sapping Silicon Valley of its energy.

"An energy crisis of electricity shortages and high power and natural gas prices now is becoming an economic emergency," Tapan Munroe, a California economist and head of an energy and economic research company in Moraga, California told Reuters.

The Valley’s insatiable appetite for electricity combined with a blossoming west coast population and a lack of new power plants is bleeding the region’s energy supply dry. Ballooning gas prices are also putting the squeeze on the technology hub.

"Power blackouts could cost Silicon Valley-based companies an estimated US$100 million a day," said Michelle Montague-Bruno, a spokeswoman for the Silicon Valley Manufacturing Group.

Tom Lieser, who compiles a widely watched survey of California's economy for the Anderson School at the University of California at Los Angeles, told Reuters that chronic energy shortages would jack California consumer prices well above those experienced in the rest of the US.

"[Energy] might be ... a factor for businesses considering whether to relocate to California," Lieser said.

Last week California was hit by a bevy of power emergencies that saw several large industrial companies have their power switched off. The state is now bracing for a second week of power outages, with Washington and Oregon set to follow.

http://www.itnews.com.au/story.cfm?ID=5049

-- Martin Thompson (mthom1927@aol.com), December 11, 2000.