California's emergency power fund going fast : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Jan. 24, 2001, 2:40PM

California's emergency power fund going fast Associated Press

SACRAMENTO, Calif. -- California is "burning through" money about as fast as it is consuming electricity, putting added pressure on the state to quickly find a solution to its energy crisis.

At the same time, the state's two largest and struggling utilities went to court today to try to block California's electricity marketplace from seizing assets over missed payments.

Although President Bush extended emergency orders keeping power flowing to California, state officials noted Tuesday that in just five days they have spent more than a quarter of a $400 million emergency fund. The money was set aside to buy power from wholesalers on behalf of the state's two largest and struggling utilities.

That leaves lawmakers with no choice but to find a long-term solution to the crisis within the next few days, said Gov. Gray Davis' spokesman, Steve Maviglio.

"Everyone knows the clock is ticking," Maviglio said.

The California Independent System Operator, keeper of the state's power grid, predicted another tight day Wednesday. It extended a Stage 3 power alert for all of California until midnight tonight.

The alert, which means the state's power reserves have fallen to about 1.5 percent and rolling blackouts are a strong possibility, has been issued every day for more than a week.

California narrowly avoided rolling blackouts Tuesday when power officials bought 1,000 megawatts of electricity -- enough to illuminate 1 million homes -- from suppliers in the Pacific Northwest and Canada.

That staved off morning rush-hour blackouts in the northern half of the state.

Those suppliers later canceled a promise to keep the power flowing, however, when hydroelectric capacity in their own regions began to wane, and demand there increased.

"They don't have it to give," said Patrick Dorinson, spokesman for the California ISO.

Today, Southern California Edison was asking a Los Angeles judge to prevent the Power Exchange marketplace from selling its forward market contracts, a consequence of the utility's missing a $215 million payment, said Beth Pendexter, an exchange spokeswoman.

Forward market contracts are long-term contracts for power available up to five years in advance between the utility and generators and used as collateral on the exchange.

The exchange can sell the contracts to other utilities to recover what the utilities owe.

PG&E is asking a San Francisco Superior Court judge for the same protection. PG&E notified the exchange the utility wouldn't be making a $12 million payment due today, Pendexter said.

PG&E has a $500 million payment due on Feb. 1, but hasn't said it won't be paying that, Pendexter said.

Exchange officials declined to say how much the contracts were worth.

Both utilities have been blocked from the exchange unless they post new collateral for their purchases. Both say they cannot, and must buy power elsewhere. Outside suppliers are unwilling to extend them credit, however, putting more pressure on the state to find a solution.

Rolling blackouts hit the northern and central parts of the state last Wednesday and Thursday, darkening hundreds of thousands of homes and businesses for as long as two hours. Elevators, bank machines and traffic lights were shut down in San Francisco, Sacramento, San Jose and other cities.

Bush's decision Tuesday extended for two more weeks emergency orders directing suppliers to keep selling electricity and natural gas to California. It came as California officials acknowledged they would soon run through the $400 million they set aside to pay for that energy.

Although spending started slowly, "now we're burning through it, and it's increasing on a daily basis," Assemblyman Fred Keeley said. The state had spent more than $113 million by Tuesday.

Davis was pinning much of his hopes on an Internet-based auction for long-term electricity contracts that the state unveiled Tuesday. Sealed bids on contracts ranging from six months to 10 years were to be taken until noon today.

"I expect these bids on long-term energy contracts should stabilize the market and drive the price of electricity down," Davis said. "This is a key step in our efforts to keep the lights on in California at a reasonable price."

Lawmakers, meanwhile, continued to pursue other solutions, including one in which the state would take over the hydroelectric plants or transmission systems of its two largest utilities, Southern California Edison and Pacific Gas and Electric.

The utilities say they are $10 billion in debt and on the verge of bankruptcy as the result of a botched 1996 energy deregulation law.

The law required California's investor-owned utilities to sell their power plants and buy wholesale power, but capped the rates they could charge customers. As a result, when energy prices began to spiral upward last year, Edison and PG&E were unable to raise their rates.

With no end to the energy shortage in sight, power managers have called on Californians to do everything they can to conserve -- even suggesting people planning to watch the Super Bowl do so in groups.

TV use is likely to surge during the Baltimore Ravens-New York Giants football game Sunday. Group viewing could ease the burden.

Last year's game between the St. Louis Rams and Tennessee Titans was watched by an estimated 8 million viewers in Los Angeles, San Diego, San Francisco and Sacramento.

"A lot of people around one set is a lot better than having a lot of sets on," said Patrick Dorinson, an ISO spokesman.

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-- Martin Thompson (, January 24, 2001

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