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California power crisis continues

Sacramento, January 28

(CBS) Power-starved California lurched through Super Bowl weekend under a round-the-clock electricity alert as state officials, utility executives and consumer groups huddled privately in the Capitol on Saturday to keep the lights on.

The manager of California's electricity grid declared a Stage 3 emergency through the weekend, which means reserves dipped to 1 percent or less statewide.

The California Independent System Operator said it did not anticipate rolling blackouts during the weekend, but urged Californians to keep up conservation efforts that have had an effect on the state grid estimated at about 1,000 megawatts daily.

Bush adviser Lawrence Lindsey defended what could be called the administration's "tough love" attitude toward California over its power crisis on CBS News Face The Nation on Sunday. The Golden State's power woes have prompted Mr. Bush to extend Clinton administration directives that force outside power suppliers to keep shipping electricity to California's debt-ridden utilities.

That extension ends on February 7 - and the president has made it clear he will not issue any more. "They should expect no more help from the White House," said Lindsey. "It's not that we don't want to give them the help. If we could send thunderbolts into the electric grid to run electricity, we would do it. We can't." A major reason, Lindsey explained, is that extensions are beginning to hurt the rest of the West.

"We're running out of water in Arizona...People are not going to be growing crops in Arizona this summer," he said. "They have shut down paper mills in Oregon, they shut down aluminum smelters in the Pacific Northwest - all to accommodate this sending power to California."

Although blackouts were not expected, many businesses still faced the prospect of being ordered to cut power under agreements to do so in return for favorable rates. Some 1,200 businesses were cut Friday in Southern California, where rolling blackouts have been avoided so far.

Southern California Edison warned, however, that the situation could change in its territory because of a state Public Utilities Commission decision Friday to suspend financial penalties imposed on "interruptible customers" who refuse to shut down.

Those businesses need relief, "but our customers' cooperation is the main reason our system has avoided rolling blackouts to date," SoCal Edison said in a statement.

Spokesman Paul Klein said that if all the companies in SCE's area complied with a request to cut power at once, they would save the state about 2,400 megawatts of load in the summer and 1,200 megawatts in the winter.

The plight of the utilities is at the heart of the state's electricity crisis. The White House planned a strategy meeting Monday on the problem and is dispatching top energy officials - including Energy Secretary Spencer Abraham - to see Western state governors affected by the power crunch. But the Bush administration cautions that it does not have the silver bullet solution to the mess.

"It's not a problem you can solve with decrees from Washington. It's something that has to be done with tough decisions: more power plants, more transmission lines, more natural gas pipelines," Lindsey told Face.

In Sacramento, negotiators struggled to reach agreement on a rescue plan that would stave off bankruptcy for utilities and assure enough electricity to avoid blackouts. The scheme is likely to include rate increases, public ownership of the utilities and state-backed power purchases of electricity for the utilities at favorable rates.

In return for rescuing the utilities, California would be granted long-term options allowing the state to buy low-priced stock in the utilities. If the price goes up, the state could sell the stock and use the profits to help pay off the bonds.

Meanwhile, consumer advocates suggested an alternative to lawmakers on Saturday - that the state purchase the utility-owned power transmission grid. The grid is worth about $3.2 billion, according to Nettie Hoge, executive director of the Utility Reform Network, a group that is pushing the idea.

A state purchase would help the utilities pay down some of the debt they have incurred during the crisis, she said. Indeed, the state's two huge utilities, Pacific Gas and Electric Co. and SoCal Edison, say they have lost $12 billion since June because their rate structure in California's deregulated market blocks them from passing on to their customers the spiraling cost of wholesale electricity.

Stage 3 alerts - once unthinkable in California - have become commonplace as high demand, low imports, transmission problems and idled power plants stress California's grid. The state has been under a near-continuous Stage 3 alert for more than two weeks.

For the first time, the ISO began publicly identifying idled power plants in California. A law signed last week by Gov. Gray Davis requires the disclosure, which was opposed by power generators but urged by consumers who complained some plants may have been deliberately withheld from operation to tighten supplies and boost prices.

The ISO listed 48 power plants as idled Saturday, including 21 with unplanned outages and 27 in scheduled outages. The list did not say when plants would resume operation.

The unplanned outages included a major 750-megawatt plant in Moss Landing owned by North Carolina-based Duke Energy, and several units near Pittsburg, northeast of San Francisco.

The Moss Landing plant, in the midst of a planned $30 million retrofit, was expected to resume operation in mid-January, but has been delayed. Crews there are working seven-day, 24-hour shifts.

"At one time this (idled power plants) was pretty secretive stuff. At a minimum, it has a limited effect on the market because traders know what units are down," said Duke spokesman Tom Williams.

California's electrical grid has a total capacity of roughly 46,000 to 48,000 megawatts, although on any given day the amount available is usually 8,000 to 15,000 megawatts less than that because of idled plants. One megawatt is sufficient to power 1,000 homes.

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-- Swissrose (, January 29, 2001

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