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Scheduled blackout plan gaining favor

LIMITING PRICES: 3-state buyers' cartel with Northwest could create leverage

Lynda Gledhill, Chronicle Sacramento Bureau

Thursday, May 17, 2001, 2001 San Francisco Chronicle


More blackouts but no ransom payments for energy gougers -- that's a deal looking increasingly attractive to California lawmakers and consumer advocates. The idea, which has attracted the support of some key lawmakers and the cautious interest of Gov. Gray Davis, is for the state to set a firm ceiling on what it will pay power producers for electricity this summer -- and not one dime more.

The trade-off would be certain blackouts, possibly more than if the state continues to pay any price electricity sellers demand. Some advocates of the idea think that California could minimize the number of blackout hours and gain a measure of control over the energy crisis by scheduling service interruptions.

"We need to stop this game of electricity chicken," said Michael Shames, director of the Utility Consumers' Action Network, which first proposed the idea. "We are likely to see blackouts this summer; we should use them to our advantage rather than be victimized by them."

The plan calls for creating a "buyers' cartel" of California, Oregon and Washington. Essentially, the states would decide at what price they were willing to buy power and refuse to purchase once it tops that level.

The state has spent $6 billion on energy purchases since January, and at one point during last week's power shortage was spending $1,900 per megawatt hour -- more than 10 times what Davis has planned on for this summer. That kind of spending cannot go on, Democratic Assemblyman Fred Keeley of Boulder Creek said yesterday.

"The question is, can we sustain the level of spending we have and have the state maintain economic stability? I believe the answer is no," said Keeley, the lower house's main figure on energy policy and author of the bill that put the state in the power-buying business.

"To get this problem solved, we have to think in bold terms," said Keeley, who introduced a resolution along with fellow Democratic Assemblyman Paul Koretz of West Hollywood that urged Davis to form a cartel.


Davis said last week that "my bias would be to keep the lights on at any price." But yesterday, the governor said a temporary price limit is "certainly a matter we've talked about and considered at some length. The next step will be to see how the governors of Oregon and Washington respond to it."

A spokesman for Gov. Gary Locke of Washington said the matter is being considered. Calls to the office of Oregon Gov. John Kitzhaber were not returned.

The idea has appeal among some consumers who believe, as many state officials do, that California is being gouged for electricity. "I can see if our bills were $20 or $30 more, but this is ridiculous," said Kimberly Chambers, an 18-year-old fashion design student from Oakland. "Whatever it takes, I don't think we should have to pay for more."

But Yunah Kim, 36, who moved to the Bay Area from New York a month ago, said blackouts should not even be considered. "The infrastructure of government is coming apart, and it's the basic service government is able to provide," she said. "Businesses are not going to put up with that. It's very shortsighted. We just have to pay until there's a solution."

Severin Borenstein, director of the University of California Energy Institute in Berkeley, said blackouts might be worse than supporters of price limits believe. "I think they (power companies) would call our bluff," and sell their electricity elsewhere, Borenstein said. "I don't think the state has the ability to credibly commit to paying no more than 'X.' That would be a very controversial decision."

Legislation is already in the works to give Davis the ability to enter into a West Coast buyers cartel. A bill sponsored by state Sen. Dede Alpert, D- Coronado, would allow the Independent System Operator to refuse to buy power if it is too expensive.

The maximum the state would pay would be set by a formula, based on such things as the cost of natural gas. A reasonable profit for power producers would be built in, supporters said.


Alpert said everyone wants to avoid blackouts, but that seems unlikely. "Everybody I talked to -- once you establish that there will be blackouts -- both businesses and residents say, let's have control," Alpert said.

The California Manufacturers and Technology Association, which commissioned a recent report that said unplanned blackouts could cost the state economy $21. 8 billion and 135,000 jobs, is considering whether scheduled interruptions would be less harmful. "The problem if we do (scheduled blackouts) is that we may have an inordinate amount of blackouts," said Gino DeCaro, a spokesman for the group.


The ISO, which runs the state's power grid, is scheduled to issue a report tomorrow on how scheduled blackouts might work. Sen. Debra Bowen, D-Marina del Ray, said that planning blackouts is not as easy as it sounds. "The difficulty is a pragmatic one -- the circuits are not wired to deal with choices like we are having to make," said Bowen, who has been holding hearings on how the state might better manage blackouts.

"Maybe we should be paying people to turn off their fuse box," Bowen said.

Chronicle staff writer Marsha Ginsburg contributed to this report. / E-mail Lynda Gledhill at

2001 San Francisco Chronicle Page A - 1

-- Swissrose (, May 17, 2001


Planned blackouts? This is the dumbest idea I've heard of yet.

-- Chance (, May 17, 2001.

California is going to continue having blackouts until more power plants are built. Some of those should come on line in 2002 and others in 2003. Until then, we have about 5,000 mw shortage of power either generated in this state or imported. Spot market price recently reached $2,000 mw - who can afford that? Not the utilities, and there is no more surplus left in the state to allow Gov Davis to keep buying power. So, lights out.

I'd rather know in advance if my house is going to be blacked out, so I can make plans. The "whoops" system we now have is dangerous and costly.

-- Margaret J (, May 18, 2001.

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