Specific solutions for state’s woes also seem to be in short supply

USA TODAY

SAN FRANCISCO — Californians struggled through a second day of rolling blackouts Thursday as lawmakers and regulators sought
to bring short-term stability to a chaotic energy picture.

Electricity customers braced for more disruptions because of uncertainty over the state’s ability, despite the governor’s emergency declaration, to keep the lights on.

Despite forecasts for moderate to cool temperatures, officials said energy supplies could be less strained over the weekend while many of the state’s businesses are idle and consuming less power.

But Monday could mean a return to the daily supply-and-demand scramble that has roiled California energy markets for weeks.

The Independent System Operator (ISO), which runs the state’s electricity grid, expects an increase in supplies next week when power plants that have been down for maintenance come back on line. Regulators also counted on the Legislature quickly approving Gov. Gray Davis‘ energy emergency plan for freeing up millions of dollars to buy power.

“We need them to act quickly,” ISO spokesman Patrick Dorinson said. “As happened today, we ran out of rabbits to pull out of the hat.”

President-elect Bush offered little immediate help to California on Thursday, but he vowed to fight a “huge energy crisis” by analyzing federal lands for oil exploration and rejecting calls to breach hydroelectric dams.

Bush, in an interview with Reuters, expanded on his previous calls to reduce U.S. dependence on foreign oil. He said a natural gas pipeline would be needed to transport any gas tapped in Alaska’s Arctic National Wildlife Refuge. Bush said California was hampered by a “faulty” deregulation law.

Secretary of Energy-designate Spencer Abraham, during his confirmation hearing before the Senate Energy and Natural Resources Committee, said California’s crisis would be a top concern to the incoming administration. But Abraham said it would be “premature to speculate on actions we may or may not take. . . . We just haven’t looked at this at all.”

Thursday’s outages started about 10 a.m. in Northern California and were scattered from Bakersfield north to the Oregon border, affecting up to 1.8 million homes and businesses for at least an hour at a time. Under the utilities’ rotating system, when one group of customers got its electricity back, another had its
power shut off.

The blackouts ended just after noon, but outages in Southern California, the first there this winter, were likely later in the day unless more power was found, the ISO said. Outages hit Northern California first because a number of power plants were off-line there, and it’s difficult to pull power from the south through an aging link in the transmission system.

In San Francisco, Sacramento and other cities, lights went out, heaters grew cold and computers and automated teller machines shut down for the second day in a row. Several schools lost power, and many traffic lights darkened.

The ISO pulled the plug after losing thousands of megawatts from the Pacific Northwest, where hydroelectric production has been anemic because of a lack of rain and snow. Two modest storms expected to hit the Pacific Coast today could bring relief.

Pacific Gas & Electric and Southern California Edison, the state’s largest utilities serving 25 million residents, are on the verge of bankruptcy, having run out of money to pay suppliers. Their stock prices have tanked, and their credit-worthiness has plunged to junk-bond status. This month, Energy Secretary Bill Richardson ordered reluctant suppliers to keep selling to the cash-strapped companies.

Under California’s 1996 deregulation of its electricity market, utilities can’t pass soaring wholesale costs onto customers until next year. As a result, the utilities have sunk more than $ 10
billion in debt.

Davis’ proposed longer-term energy fix has passed the Assembly but won’t emerge from the Senate before next week.

Under the stopgap plan, the state would spend hundreds of millions of dollars buying massive amounts of electricity, then resell it to the utilities at cost. The state would buy at prices far lower than utilities have been paying, and long-term contracts would give the utilities a chance to recover.

So far, producers have worn the black hats in this crisis. Davis has asked for $ 4 million to investigate supplier price gouging, and this week, San Francisco announced a lawsuit accusing power generators of manipulating supplies to keep prices high.

Wholesalers deny those allegations and say they’ve given utilities more time to pay up. “We have bills to pay, too,” said Tom Williams of Duke Energy. “We’re part of the solution. We’re not driving anyone into bankruptcy.”

Consumer advocates oppose state power purchases, accusing suppliers of creating shortages that led to the blackouts after utilities suspended payments to them this week.

“They’ve brought California to its knees, and the solution is not to pay them off,” said Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights. “You can never negotiate with economic terrorists.”