'It's Going To Get Ugly' January 11, 2001 9:15 pm EST

Storms Threaten California's Tenuous Electricity Supply

SACRAMENTO, CALIF., JAN. 11, 2001 (CBS News) - California faced the threat of rolling blackouts Thursday after an ocean storm and high winds crippled nuclear plants while other electric generating stations were shut down for maintenance.

The California Independent System Operator (ISO), which manages the grid that serves 75 percent of the state's 34 million residents, told a news conference the outages would likely hit Northern California communities the hardest starting around 5 p.m. Pacific Time and lasting until 8. p.m.

About 1.5 million customers will be affected.

"It's going to get ugly," said Pat Dorinson, a spokesman for the California Independent System Operator (CISO), keeper of much of the state's power grid. He said the state was "losing megawatts by the hour."

California's power production fell more than 15,000 megawatts as a storm carrying high winds and heavy rain battered the state. One megawatt is enough to power 1,000 homes for an hour.

As CBS News Correspondent Sandra Hughes reports, California power officials have put the out the call pleading for more power from neighboring states.

"We're working with our neighboring utility areas and our neighboring states and we're literally asking for every kilowatt we can get," said Kellen Fluckiger, an official with CISO.

The state declared a Stage Three power alert early Thursday as electricity reserves dropped below 1.5 percent, but stopped short of ordering scattered blackouts.

Natural Gas Burns California, dependent on natural gas to run its power plants, is being burned by soaring prices.

Click here to read about the runup in the natural gas market. Power plants hit by the storm included the Diablo Canyon nuclear power plant in San Luis Obispo along the Pacific north of Los Angeles, which was hampered by high surf that blew sea kelp into the plant's intake valves.

Some of the plants were down for scheduled maintenance, Dorinson said. Another plant that produced 1,600 megawatts of power went off-line suddenly Wednesday night, he said.

"We haven't taken off any customers yet, but that could change in the next half hour," he said.

The California Independent System Operator asked PG&E to cut off power to customers who had volunteered to let their power be cut in exchange for lower rates, Dorinson said.

Since last June, electricity shortages linked to California's botched deregulation of the power industry have produced soaring prices and sporadic threats of blackouts in the state.

Thursday's power emergency couldn't have come at a worse time for the utilities, who are threatening bankruptcy as skyrocketing wholesale power prices push them to the brink.

The chief executive of Pacific Gas & Electric Corp. said his company could likely file for bankruptcy protection Feb. 1 if it doesn't receive money needed to pay for more electricity.

CEO Robert Glynn told CNBC Thursday the company must make a $583 million power payment by Feb. 1 or face the risk of filing for Chapter 11 bankruptcy protection. He said the money could come from the state or power suppliers could extend the deadline.

"I believe that the state fully recognizes that it's in consumers' interest to keep electricity flowing and natural gas flowing," Glynn said. "That means that the state's going to want to intervene and not have those supplies drop off."

Glynn said state funding could come in the form of short-term financing.

Because of the company's cash shortage, PG&E also suspended its fourth-quarter 30-cent dividend on Wednesday.

Both PG&E and Edison International have delayed releasing fourth quarter earnings announcements because of the power crisis.

Another problem: power generators supplying the energy to California largely run on natural gas, which is experiencing its own price surge. The frenzy for new sources of power led to the highest bidding war ever for natural gas drilling rights in Washington state today.

"Given our current energy situation it is both surprising and amazing but not unexpected," said Jack Hulsey of the Washington State Department of Natural Resources.

http://www.iwon.com/home/news/news_article/0,11746,221065|national|01-11-2001::21:15|cbs,00.html

-- Martin Thompson (mthom1927@aol.com), January 11, 2001

Answers

Re "One megawatt is enough to power 1,000 homes for an hour."

It annoys me that journalists often seem to miss the distinction between instantaneous power (e.g. megawatts) and accumulated energy (e.g. megawatt-hours). The quoted sentence should be either "One megawatt is enough to power 1,000 homes" or "One megawatt-hour is enough to power 1,000 homes for an hour."

-- Barb Knox (barbara-knox@iname.com), January 12, 2001.