Blackouts eat profits Idled factories hit tech firms in pocketbook

Joseph Menn Los Angeles Times Jan. 20, 2001

For educational purposes only!

SAN FRANCISCO - Major Silicon Valley technology companies said that they have lost tensof millions of dollars because of the rolling blackouts this week in California, and they have begun to intensify their lobbying efforts for increased energy production and incentives for reduced consumption.

Acknowledging that some consumers and small businesses blame them for the soaring demand for electricity, the companies pledged to reduce their own usage by 10 percent in the next two years. Santa Clara County's peak power consumption has climbed by a third since 1994.

"The time for pointing fingers is over, and the time for joining hands must begin," said Carl Guardino, president of the 190-member Silicon Valley Manufacturing Group. "This is the most critical issue Silicon Valley and the state of California have faced in the past few decades."

Random blackouts of about two hours swept across Northern California on Wednesday and Thursday - the culmination of a crisis that has left the state's two biggest utilities on the verge of bankruptcy.

Southern California has been spared so far, partly because of the layout of the power grid. Los Angeles has a municipal utility with its own power sources, and a few other areas are similarly protected.

Ellen Hancock, chief executive of Exodus Communications Inc., said her company is planning to produce more of its own power but added that the regulatory process could take a year, as opposed to as little as a month in other states. Exodus houses other firms' Web sites in banks of computer servers around the state.

"Our intent is to co-generate power on one of our campuses," Hancock said. If others in the industry follow suit, she added, "we can be viewed as part of the solution instead of part of the problem. "Effects of the escalating crisis spread elsewhere through the state's economy, threatening to push up prices for commodities from gasoline to milk and forcing layoffs at factories shut down for lack of electricity.

Miller Brewing Co. halted production Friday at its brewery in Irwindale, and California Steel Industries Inc. in Fontana closed its plant and idled most of its 1,000 workers. Textron Aerospace Fasteners in Santa Ana sent 400 employees home with half-pay.

The state's main gasoline pipeline is running only part of the day, threatening supplies to airports and service stations and prompting warnings that prices will start to climb.

In Silicon Valley, Advanced Micro Devices Inc., the No. 2 maker of computer processing chips, lost power at a development facility and most of its other buildings in Sunnyvale for an hour and a half Thursday morning. Backup power kicked in at the development lab, AMD spokesman John Greenagel said.

IDT Inc., which makes silicon chips for the communications industry, shut down a 572-employee plant in Salinas for four hours Wednesday after it was warned that it could lose power.

Then the plant's power crashed Thursday, probably ruining work in progress, Vice President Dave Tote said. The lost chips could have been sold for more than $100,000, he said.

Santa Clara, which is in the heart of Silicon Valley, was able to use its program of voluntary load reduction both days to avoid blackouts, the municipal utility said.

For some who were blacked out, the power loss wasn't as much a serious problem as it was a troubling sign of what the future may hold. At a Santa Clara news conference, Guardino and Hancock said that both increased power production and reduced consumption were needed.

"Employers are willing to do more than their share," Guardino said.

The Associated Press contributed to this article.

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