California's brokerages, exchanges brace for blackouts : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Tuesday April 3, 2:29 pm Eastern Time

US POWER-Brokerages, exchanges brace for blackouts

By Haitham Haddadin

NEW YORK, April 3 (Reuters) - A truck-sized generator, out-of-state data centers and back-up batteries are some of the measures brokerages and stock exchanges have ready if rolling blackouts slam California's financial districts this summer.

At Thomas Weisel Partners, an investment bank and brokerage in downtown San Francisco, a 25-foot electric generator is part of the bank's arsenal against the power crisis gripping the Golden State.

``It's the size of a truck,'' said Michael Huaco, director of corporate real estate at Thomas Weisel. ``It backs up our computer center and trading floor,'' he told Reuters.

Few companies are taking a chance a bad situation won't get worse when demand for power peaks this summer. Contingency plans include securing fueling contracts for generators, enacting energy conservation measures, readying evacuation plans and schemes to move work to other branches if needed.

California has been thrown into crisis by skyrocketing energy costs and the failure of a 1996 deregulation law, which has nearly bankrupted the state's two biggest utilities, Pacific Gas and Electric, a unit of PG&E Corp. (NYSE:PCG - news), and Edison International's (NYSE:EIX - news) Southern California Edison.

``It's bad and it is likely to get worse this summer and not improve for some time,'' said Dale Carlson, a spokesman for the Pacific Exchange, which operates equities and options trading floors in San Francisco and Los Angeles.

Like many banks and brokerages, the Pacific Exchange has its own generators and its data center and trading floors can be kept running as long as it gets the fuel.

``Our administrative offices are in a different building not linked to the generator, so if there is a blackout that affects the financial district, and I'm not sure there's going to be one, it could have an impact,'' Carlson said by telephone. ``But it will have no impact on our trading operations.''


Many companies are now in the midst of testing their contingency plans. Thomas Weisel is testing at least once a week its power generating system, which includes a battery that immediately supplies uninterrupted power if electricity is cut without notice, guarding vital data on computer screens until the generator takes over.

``It's being tested for our trading and other critical functions and it proved that it can support them,'' Huaco said.

The generator can run for up to 30 hours without refueling, which ``can take us through one trading day or two,'' Huaco said. ``Beyond that, we've made provisions with fueling companies to refuel the system as a priority fueling contract.''

He said his company can deal with an extended outage. The company's emergency plan, whether in an earthquake or outage, calls for evacuating people, leaving only the most critical operations working and transferring some brokering or banking business to its New York office.

J.P. Morgan Chase (NYSE:JPM - news), whose J.P. Morgan Securities Inc. is senior manager of California's $10 billion power purchase bonds, has a battery-backed Uninterrupted Power System (UPS) and generators. The company also has conservation measures, said Alan Markow, vice president of marketing and communications.

``You just can't plan for every possibility,'' said Markow. ``But if it is strictly an electrical outage, then we are in pretty good shape.''

Wells Fargo & Co. (NYSE:WFC - news), the San Francisco-based financial services company, said it has a similar back-up power system at its 13-story headquarters in the business district. It has also taken steps to cut power usage, like lowering wattage on bulbs, turning off unneeded lights and installing florescent lights.

``Right now we are not affected, but who knows what is going to happen,'' said Ravi Poorsina, a spokeswoman.

Automatic bank-teller machines would not work if power was to go out in the business district, Poorsina said, but information on customer transactions could be safely stored and protected.

``Our (Bay Area) data center has back-up generators and they have proven to be very effective'' during previous outages, she said.

Should call centers at Wells Fargo's California banks be affected by the loss of power, calls will be automatically shifted to 14 other centers around the nation, she said. A 23-state network provides resources to help out, she said.

``The stores that customers walk into are prepared to handle transactions offline; it would be paper based,'' she said. ``It probably would not be as fast or convenient, but functional.''


Meanwhile, financial services firm Charles Schwab, which has a substantial brokerage business in California, sees little impact from state power outages as its data center is located in Phoenix. All mainframe computers there have back up capabilities, said spokesman Glenn Mathison.

``We have contingency plans for power outages that have been in place separate from this (California) power crisis,'' he said. ``Because we live in a seismic zone, we have plans that anticipate power loss in San Francisco'' that involve moving work to other locations.

Some exchanges or investment houses declined to discuss their plans in detail but said that previous preparation to combat the Year 2000 computer bug, known as Y2K, has left them well prepared for such emergencies as power outages.

Among those, Merrill Lynch (NYSE:MER - news), the nation's biggest brokerage, said its Y2K-related computer upgrades and testing showed that its systems can work in an emergency.

``We have a contingency plan in place, tested for all our businesses nationwide,'' said Joe Cohen, vice president of law and compliance. ``We are confident that we will be able to continue to do business with our clients.''

-- (, April 05, 2001

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