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Enron Chief Says Out-of-State Utilities Slowing Power Flow

September 07, 2000|From Bloomberg News

The president of Enron Corp. said Wednesday that utilities outside California are not allowing power to move freely into the state, aggravating a shortage that has sent electricity prices soaring in the Golden State this summer.

The Internet and computer-based growth in the U.S. economy are pushing power demand far beyond forecasts, Enron chief Jeffrey Skilling told reporters in Washington. Partly because of the lengthy time it takes state and local officials to grant approval for new power plants, California has insufficient generating capacity to meet the 12% increase in peak electrical demand it experienced from 1996 through 1999, he said.

(In Sacramento Wednesday, Gov. Gray Davis signed a bill to hasten construction of new plants.)

Utilities that own the transmission lines outside California are trying to preserve monopolies by hindering national electricity sellers such as Houston-based Enron, the world's largest energy trader, from moving power into the state, Skilling said.

The nation's transmission system is like an interstate highway system "with barriers every 20 miles," he said, and the utilities that own the transmission system "make it hard to access the highway."

Matt Morey, spokesman for an organization that represents investor-owned utilities that produce three-quarters of U.S. electricity, said California prices rose for a lot of reasons and that transmission constraints were not more important than other factors.

"There are occasionally some transmission constraints in the California market that might impede the flow of power," said Morey, of the Edison Electric Institute. "I can't say that's why prices rose to the levels they did."

Wholesale electricity prices have surged to as much as 10 times last year's average during hot weather in California this summer as a result of tight supplies and growing demand.

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