Duke executive sees California power supply crunch

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Monday March 19, 5:09 pm Eastern Time


Duke executive sees California power supply crunch

WASHINGTON, March 19 (Reuters) - A top electric utility executive on Monday said California will not have enough power supply to meet demand this summer, echoing statements made by Energy Secretary Spencer Abraham earlier in the day on the problems continuing to plague the state.

James Donnell, president and chief executive officer of Duke Energy North America (NYSE:DUK - news), told a conference at the U.S. Chamber of Commerce that Californians would be forced to conserve power soon, either voluntarily or by curtailments.

``There will not be enough supply to meet demand,'' Donnell said of the summer situation. Abraham told the same energy conference the state would need around 61,000 megawatts to meet summer demand, against only 56,000 megawatts of generation.

The statements about California came on a day the state's power grid operators announced a severe shortage, and ordered statewide rolling blackouts until 8 p.m. Pacific Standard Time (PST) to cut demand.

Donnell also said there needs to be an end to investigations into charges of price gouging by generators selling power to California utilities, saying the efforts were a ``lot of wasted time and energy and money.''

He said the problems in California were so deep that spending time on the price charges clouded efforts to bring about more generation.

Duke was one of six generators ordered by the Federal Energy Regulatory Commission (FERC) to refund $55 million to utilities for over-priced wholesale power sold in the state in February. FERC said the companies must pay the refunds unless they can justify their high prices.

California's biggest utilities -- PG&E Corp (NYSE:PCG - news) and Edison International (NYSE:EIX - news) -- have bought large amounts of wholesale power from generators to meet demand. Both have been pushed to the brink of bankruptcy because state law bars them from passing on higher wholesale costs to consumers.

Of the six suppliers named in FERC's order, the two hit hardest with the biggest potential refunds were Dynegy Power Marketing Inc (NYSE:DYN - news) for $23.4 million and Williams Energy Services Corp. (NYSE:WMB - news) for $21.6 million.

Other suppliers named in the order were Reliant Energy Services Inc. (NYSE:REI - news) for $7.4 million; Duke Energy for $2.1 million; Mirant Corp (NYSE:MIR - news) for $826,111 and Enron (NYSE:ENE - news) unit Portland General Electric Co. for $73,600.

These six plus several other companies were ordered to pay potential refunds totaling $69 million for sales made to California utilities in January.

-- Swissrose (cellier3@mindspring.com), March 19, 2001

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