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JON FRANKEL, co-host:

The electricity crisis in California, as we mentioned, went to the brink overnight, but the state never went dark. Officials had planned a series of controlled blackouts that would have affected millions, but an 11th-hour loan kept the lights burning. Hattie Kauffman is in Los Angeles with more. Hattie, good morning.


Good morning, Jon. I’m standing in front of one of the power generating plants here in Southern California. The simplest explanation for this whole energy crisis is that there are not enough plants like this, not enough power being generated. So any extra strain, like this week’s storm, the first of the winter season, almost put out the lights.

For only the second time in the state’s history, California went to a Stage Three alert as electricity reserves dropped below 1 1/2 percent.

How serious is that?

Mr. GORDON BROWN (Operations Manager, California Ind. System Operator): For people like myself who have worked in the industry for 30 years, this is–this is about as bad as it would ever get.

KAUFFMAN: Shortly after 4 PM, cities like Long Beach were notified their power could soon be cut.

Mr. RICK PILLSBURY (Long Beach Fire Department): We were notified that it w–the rolling blackouts would start at 5–appear from 5 to 6. They were going to go from 6 to 7 and then 7 to 8. Each time there were going to be 10,000 residential occupants in the city of Long Beach affected.

KAUFFMAN: Even the chic shops in Beverly Hills were threatened with the blackout, all because the year’s first storm pushed the state’s shaky power grid to its limit. Seaweed in the high surf shut down the Diablo nuclear plant in Northern California, causing a shortage this power starved state just couldn’t afford.

Mr. BROWN: Because we do have these storms–storms at sea, we have some very large major generating plants that are–are reduced as much as 80 percent, and that’s–that really is one of the crippling factors.

KAUFFMAN: But critics complain the problem is not the storm, it’s politics.

Mr. HARVEY ROSENFELD (Foundation For Taxpayer And Consumer Rights): The reason why we’re facing a Stage Three alert today and the threat of rolling blackouts is because of deregulation, pure and simple.

KAUFFMAN: Deregulation has become a dirty word in California. It’s being blamed for rate hikes, the threatened bankruptcy of utility companies and potential blackouts like the one just averted last night.

Mr. BROWN: Our people are diligently trying to find every last megawatt that–that isn’t already nailed down.

KAUFFMAN: Power brokers made a computer search for any electricity on the market. And in the nick of time, power plants along the Columbia River in Oregon came through.

Mr. BROWN: When you have to get to the point where you–you’re actually interrupting firm load, it just kind of grates very rough on your stomach. It–it does not sit well at all.

KAUFFMAN: They dodged a bullet this time, but, remember, this is just the beginning of the winter storm season. Today, the governor of California will meet with other Western governors to discuss the power situation here. And Energy Secretary Bill Richardson has ordered other states to continue selling power to California, at least for the next few days. Jon.

FRANKEL: OK, Hattie, thanks very much. We know that bailed them out already. Hattie Kauffman in Los Angeles. Now here’s Jane.

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