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This Summer, Power-Hungry U.S. May Feel West's Pain


CHICAGO — California's electricity meltdown has been so spectacular that, until recently, much of the rest of the country was sitting back, feet up, watching the rolling-blackout show on television.

No longer. As summer approaches, utility operators across the nation are scrambling to shore up their own systems, many of which are themselves in the murky middle of deregulation and in varying states of neglect and disrepair.

In Chicago, the recently overwhelmed power provider actually advises competitors on where to build power plants. In New York City, officials say the difference between light and dark this summer may be 11 mini-generators. And in states from Arkansas to North Carolina, legislators are watching California's deregulation fiasco and slamming the brakes on their own plans.

The West is bound to suffer the most this summer, experts agree, but it's going to feel long and hot across much of the rest of the country, whether it really is or not. And with the economy already sputtering, the largest power shortage since the Arab oil embargo of 1973 could be nudging the country toward recession.

"Pray for continuous clouds," advised San Francisco-based energy consultant Edward Kahn.

A good word for cheaper gasoline in the Midwest, strong backs for coal miners in the South and lower natural gas prices from coast to coast might be in order as well.

In the U.S., electricity flows a bit like water in that the two largest grids separate roughly along the Continental Divide. Power generated in the West stays there, for the most part, and likewise the juice in the East. (Texas has its own grid.)

With California, the world's sixth-largest economy, continuing to founder after its steady diet of deregulation mistakes, the other 10 mostly rural states in the Western grid are likely to suffer as well. As Rep. Jay Inslee (D-Wash.) put it: "You can, today, see blackouts coming, big as life, and an energy crisis going into the fall."

The Eastern Interconnect, however, is larger than its Western sibling, more diverse in its sources and more complex in its physical structure, and thereby protected from some Western-style utility woes. But, from a serious transmission-line bottleneck near Eau Claire, Wis., to a 28-year-old Florida law that some say is stifling much-needed growth, the Eastern grid has its own kinks, soft spots and weaknesses.

If things start getting out of hand on this side of the Rockies, the first fissure is likely to appear in the last place a fissure is needed: New York.

When rates for many California customers shot up by as much as 46% last week, New Yorkers could commiserate. They have seen their rates rise 40% since 1999. A sweltering July or August could send prices up an additional 50%, some analysts predict. As in California, New York has deregulated its power industry, so the market, not the state, sets the price. And as in California, New York is heavily dependent on natural gas to fire its generators--a commodity whose price has skyrocketed recently.

New York, again like California, also fell behind in the construction of new plants--the last one going up in 1995--even as demand was growing dramatically.

Now the city's power provider, Consolidated Edison, figures it has a thin insulation of extra kilowatts to get it through the summer--unless it's a bad one. Just in case, Con Ed wants to sprinkle the 11 mini-generators throughout the city. Environmentalists, concerned about the air pollutants the generators will kick out, have already filed suit to stop the plan.

Upstate New York has electricity surpluses ready to sell to the Big Apple. So does the nearby PJM (Pennsylvania, New Jersey, Maryland) Interconnection, which serves more than 22 million customers along the Eastern Seaboard and has deregulated cautiously and effectively.

But "New York City--even assuming those generators come on line--is going to be nip-and-tuck," said Bill Brier, vice president of Edison Electric Institute, which represents private utilities.

The reason: Transmission bottlenecks make it all but impossible for the city to import power on especially bad days. The Eastern grid is a much more intricate web than that in the West, a mesh of more and smaller lines ferrying electricity to a more evenly distributed population. But deregulation has fundamentally changed how the grid is used without preparing it for its new free-market role.

Constructed as a heavily regulated series of channels for efficiently floating power from one utility with extra power to another in need, the grid is now open to private electricity merchants who sell to the highest bidder. In 1996, 25,000 transactions took place on the grid, according to the Edison institute. By 1999, that figure had rocketed to 2 million.

"That," said Brier, "is why you're having more and more bottlenecks in the system."

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