After Summer of Power Woes, California Is Hurting Again

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The New York Times

It was not supposed to be like this.

Families asked to turn off their Christmas lights. Businesses required to shut down for hours for days on end. Utility executives demanding relief from the governor, warning that the state’s electrical system is on the verge of collapse.

After California’s summer electricity troubles passed with the hot weather, most executives and state officials thought they had bought a year’s time to find a solution to the energy problems. But despite a mild winter here so far, the state is again in the midst of a crisis so severe it was forced to take unprecedented measures on Thursday to avoid running out of power. And if this week’s electricity shortage continues, Californians soon could be asked to darken their homes if rolling hourlong blackouts are instituted across the state as a last resort.

For most energy experts it is an unheard of situation given that air conditioners, a culprit last summer, are largely idle in the winter.

“People are in a heap of trouble,” said S. David Freeman, general manager of the Los Angeles Department of Water and Power, which owns its own power generation operations and is not likely to be affected like other large cities. “This shouldn’t happen this time of year.”

But an unusually large number of the state’s power generators were shut down for maintenance or to comply with air quality standards. On some days, as much as one-third of the electricity the state needed during the peak wintertime hours of 4 p.m. to 7 p.m. was not available, energy officials said. As such, the California Independent System Operator, which manages the electricity system for 75 percent of the state, had to pay as much as four times more to import it than what it might have paid a California producer.

To make matters worse, wholesale natural gas prices are up as much as 10-fold over this time last year. With a cold front expected across the West this weekend, that means consumers not only run the risk of seeing their lights dimmed, but also sticker shock when they see their gas bills.

“I fear what will happen when these bills start to arrive,” said Stephen L. Baum, chairman of energy services company Sempra Energy.

Mr. Baum said customers, including those served by Sempra‘s subsidiary, San Diego Gas and Electric, are likely to see rates double.

Of course, no one foresaw such a predicament four years ago, when California, the world’s seventh-largest economy, decided to deregulate its electric industry. Then electricity reserves in the state were running as high as 30 percent, industry executives estimate. Most people believed that competition would lower prices for consumers and businesses alike. But now reserves are running dangerously low — as little as 1.5 percent daily — causing concern for utilities and politicians alike.

State officials, for their part, are trying to get to the bottom of why so many power plants are idled now. Air quality regulators today eased up on restrictions for some power plants to help provide much-needed electricity. But late Tuesday evening, representatives from the Public Utilities Commission showed up unannounced at several shut-down power plants, spanning the state from Oxnard, near Santa Barbara, to Shasta County in the north. There, said Loretta Lynch, president of the commission, they interviewed executives, examined machinery and reviewed maintenance logs to verify that indeed the plants were shut down for the reasons they gave.

Not everyone has welcomed the commission. Some power generators refused to let them in, Ms. Lynch said, although now they have all complied with the commission’s requests. A report on the commission’s finding could come next week, she added. But consumer advocates wonder if the commission visits will really yield any useful information.

“What are they looking for?” asked Douglas Heller, of the Foundation for Taxpayer and Consumer Rights in Santa Monica. “Seeing if they have an oil can out?”

The electricity mess in California has become a public relations nightmare for Gov. Gray Davis. On Tuesday, for instance, hours before he was set to flip the switch on the lights for the state’s Christmas tree, industry executives said the Independent System Operator was scrambling to find more than 1,000 megawatts of electricity it was short that day. One megawatt is enough to serve about 1,000 homes. The system operator squeaked by at the last minute, the energy executives said, paying more than $1,000 per megawatt for electricity imported from the Pacific Northwest. By contrast, the price cap for electricity bought in California is usually $250 per megawatt. As such, Mr. Davis gave a brief speech, flipped the switch, then turned the lights off after 25 minutes.

Ms. Lynch insisted in an interview on Thursday that there was no emergency. She was seated in a dark San Francisco office then, she said, the only light glowing from a computer screen, because the state had required employees to turn off their lights to conserve energy.

“We have the power,” Ms. Lynch said, noting that the state’s power generators can generate 44,000 megawatts of electricity. But she agreed that something must be done to understand why one-quarter of that amount — about 11,000 megawatts — is unable to be tapped because the generators are not up and running. “From my perspective, people want a magic pill and they aren’t going to get it,” she added.

The federal Energy Regulatory Commission is expected to announce on Wednesday what steps it is willing to take to help California.

Despite Ms. Lynch’s assurances, nerves are frayed. “I’m getting tired of people saying we have plenty of energy when we don’t have it,” said Terry Winter, chief executive of the independent operator.

Take Thursday night, when the operator was forced to announce a final-stage emergency that gave the state the authority to call for statewide rolling blackouts, the first time in California’s history. At 3 p.m. a power generator went off-line for difficulties resulting in the loss of 500 megawatts of electricity.

That caused the emergency, Mr. Winter said. “That is how close we are to the margin.”

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