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State Gives Aid Against Soaring Electricity Bills

August 02, 2000|NANCY VOGEL and NANCY RIVERA BROOKS | TIMES STAFF WRITERS

SACRAMENTO — On an afternoon when last-minute electricity purchases from the Pacific Northwest were necessary to rescue California from blackouts, state authorities voted Tuesday to lower the price it will pay for such buys.

And power officials braced for even shorter electricity supplies, warning that electricity reserves in California are so low that the state risks blackouts again today.

In a testy meeting marked by accusations of profiteering on the part of power sellers and poor planning on the part of utilities, the board that oversees the state's electricity grid decided to give some relief to the 1.2 million customers of San Diego Gas & Electric.

They are the first utility consumers in the state's deregulated industry to face soaring summer electricity costs with no price protection from the state. San Diego homeowners' electricity bills have doubled, to an average of $105.10, in the past few months.

The lower price takes effect Monday.

The California Independent System Operator, or Cal-ISO, the Folsom-based nonprofit entity that makes sure there is enough electricity to serve the needs of about 75% of the state, narrowly avoided declaring a serious, "Stage 3" power emergency Tuesday, which would have meant ordering the state's big investor-owned utilities to institute rolling blackouts across their vast territories. The grid operator's power reserves fell below 3% Tuesday.

But Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric were ordered to cut power to hundreds of businesses and thousands of commercial and residential users of air-conditioner--customers who have agreed to have their power interrupted as many as 25 times a year in exchange for lower electricity rates.

"I don't think we've ever gotten this low on [electricity] reserves in my experience," said Ron Nunnally, director of federal regulation and contracts at Southern California Edison.

Southern Californians apparently got the message.

At the Valley Generating Station in Sun Valley, where temperatures hovered near 100, all 38 workers were making sure the plant's units were working at capacity.

"Entire countries can live with this energy," said Nazih S. Batarseh of the Los Angeles Department of Water and Power. "This is just one of four plants in the city."

At the Anaheim Hotel and Towers, lights and air conditioners in empty guest rooms were turned off. In Cheesecake Factory restaurants, managers adhered to a memo sent Tuesday by e-mail, asking them to conserve energy by dimming lights in dining rooms. Even many storage rooms and walk-in refrigerators were kept dark.

"We are making sure that lights and switches that don't need to be on are turned off," said Howard Gordon, a senior vice president at the restaurant chain in Los Angeles.

About 1,000 Orange County government employees were sent home at 12:30 p.m. Tuesday after being notified that power to buildings in the Civic Center would be turned off. It was the third brownout this summer for county buildings; in 1995, the Board of Supervisors agreed to voluntary outages in exchange for lower electricity payments.

Officials at SDG&E reported no outages Tuesday as a result of the statewide power squeeze. But they said they are prepared to shut off power in some neighborhoods, should the shortage worsen.

The Tuesday vote marked the third time this summer that the Cal-ISO has weighed the price cut option. Twice before, it narrowly refused to lower the cap from $500 to $250 per megawatt hour. In each case the board debated for hours, hearing consumer advocates and politicians plead for relief while energy producers and sellers asserted that state meddling would drive away the power plant builders California desperately needs.

California's thriving, computer-based economy runs on energy consumption that outstrips what experts predicted even a few years ago. That has made the state's four-year journey into deregulation especially troubling lately.

Energy prices naturally rise in the summer, when air conditioners can account for a third of the electricity consumed on a hot day. But the state has not added a major new power plant in a decade, in part because of uncertainty over deregulation. And other sprawling Western cities are sucking up the surplus power generation that California once tapped on the interstate grid.

The result is soaring prices for wholesale electricity. Customers of Pacific Gas & Electric and Southern California Edison are sheltered until at least March 2002 by a price freeze that lawmakers included in the 1996 deregulation law. But SDG&E unlocked its rates ahead of schedule by paying down its debt on uncompetitive investments, such as a nuclear power plant.

SDG&E officials argued Tuesday that, had the Cal-ISO imposed a $250-per-megawatt-hour price cap in June and July, consumers would have been spared an estimated $80 million in charges. A megawatt hour is enough electricity to supply 1,000 homes for an hour.

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