Silicon Valley Braces For More Energy Shortages By Meg Walker, TechWeb News Dec 27, 2000 (6:16 PM)

URL: http://www.techweb.com/wire/story/TWB20001227S0019

Silicon Valley companies are facing the reality that a widening energy crisis in the western United States could disrupt or shut down plants and offices. Michelle Montague-Bruno, communications director for Silicon Valley Manufacturing Group, a trade organization that represents 190 technology companies, said a power shortage would trigger huge energy bills and equally high costs due to lost staff time and disabled manufacturing plants and computer centers.

"If you lose power for an hour, it doesn't mean you are just shut down for an hour," she said. "You send employees home; you have to recalibrate networking equipment; a transformer could blow and you could be out for days. There are domino effects."

Silicon Valley companies got a taste of shortages on June 14 when there were rolling blackouts in the area due to a heat wave, she said.

Companies belonging to the trade association lost anywhere from $1 million a minute to $1 million an hour, she said.

The region is confronting the fact that almost no new power plants have been built for 10 years to meet the rising needs of a rapidly growing population and economy.

Adding to the problem is a natural gas supply crunch caused by two years of low demand, low prices, and idled drilling rigs.

California was battered earlier this month by power emergencies that cut electricity to several large industrial companies that pay discounted rates for being turned off when supplies run low.

Trying to head off an economic catastrophe for California's utility companies, Gov. Gray Davis flew to Washington, D.C., to meet on Wednesday with Federal Reserve Board chairman Alan Greenspan and Treasury Secretary Lawrence Summers.

California's utility companies say they are faced with billions in losses because of rising electricity costs. The officials did not comment after the meeting.

Typically, Silicon Valley companies are accustomed to the threat of power outages in summer, when peak demand for power is during the day, said Montague-Bruno.

She said some might not have expected such difficulty in the winter when peak demand is usually after working hours.

Some companies, such as 3Com Corp. (stock: COMS), prepared for energy problems in 1999 during concerns over Y2K.

The company's main data and networking center can draw power from two different grids, according to 3Com spokesman Brian Johnson. The Santa Clara, Calif., company also can rely on alternate generators.

"Behind the building there are two pieces of machinery the size of a tractor trailer, and they are diesel generators," he said.

Worldwide, 3Com offices also have special sensors that shut off power systems once employees have left, he said.

The back-ups give the company enough room "to make sure we have a soft landing," Johnson said.

Semiconductor maker Intel Corp. (stock: INTC) said its chip operation in Santa Clara would be seriously damaged by a major failure of the power grid, but the company has spread its risk by building new plants in other states and overseas.

Reuters contributed to this report.

-- Martin Thompson (mthom1927@aol.com), December 28, 2000