Features

Utility companies shut down power for first time in years 

SAN DIEGO – Rockview Dairies Inc. had a sweet deal on electricity. But it started to spoil in the heat of summer as the first wave of power shortages began to hit California. 

Rockview, a milk bottler in the Los Angeles suburb of Downey, was one of about 1,000 companies that agreed to cut or reduce power use when state supplies fell below a certain limit in exchange for discounted rates from Southern California Edison. 

For seven years, the bottler saved $50,000 annually as Edison rarely asked for cutbacks. Last year, however, the company lost thousands of dollars in productivity as the utility, struggling to meet demand, told them to shut down for four hours more than a dozen times. 

“It’s become a real burden to me,” said Amos DeGroot, president of the family owned business that includes the Trader Joe’s food store chain among its customers. 

Hundreds of other businesses around the state are feeling the same burden and are now watching closely as the Public Utilities Commission tries to reshape the so-called interruptible service program, which granted discounts up to 20 percent in exchange for potential service cuts. 

A wave of businesses petitioned the PUC to get out of their contracts last year after being hit time and again with requests to curtail power use. The commission, fearing more stress on the statewide power grid if it couldn’t ask them for cutbacks, suspended the ability of customers to leave the program until March 31. 

In February, the PUC is expected to release new guidelines for the program, possibly providing new incentives for participants. Given California’s ongoing power-supply crunch, there’s no guarantee regulators will allow those large commercial users to return immediately to normal service, commission spokeswoman Kyle DeVine said. 

“We need these customers to remain in that interruptible program so we can keep the lights on for other people,” DeVine said. 

That could set up a conflict between businesses and the PUC because no amount of new incentives will satisfy some customers in the program, said Jim Conlan, vice president of governmental affairs for the California Small Business Association. 

“If you’re a manufacturer running 24 hours a day, seven days a week, you can’t afford even a blip in your power,” Conlan said. 

Meanwhile, companies are struggling with the shutdowns. An Oxnard bakery with 130 employees reported it loses $5,000 in wages and lost production for the first hour without power and another $3,000 for each additional one. 

A business that can’t cut its power use faces a steep fee. Edison increases the rate to $7 to $9 per kilowatt hour, up from 5 cents to 8 cents per kilowatt hour for businesses in the program. 

“Clearly, this level of interruption is very difficult for customers,” said Linda Ziegler, director of business and regulator planning for Southern California Edison, which supports allowing customers to exit the program or alter their agreements. 

In addition to the roughly 1,000 businesses in the Edison program, San Diego Gas and Electric offers it to about 120 customers, and Pacific Gas and Electric has 168. Until the PUC’s decision last fall, participants could opt out each November. 

Despite the problems, companies have reaped major benefits from the program. The PUC estimates the discounts have totaled at least $2 billion statewide since 1986. 

Given that history, some companies are likely to remain as interruptible customers. Rockview Dairies, which paid $170,000 to buy an emergency generator last month, probably will stay now that it has an independent source of power, DeGroot said. 

Even with the money for the generator and lost productivity, the company’s owner still feels he’s probably coming out ahead. 

“I’m not complaining because this did save me a lot of money,” he said. “It was my risk, and I took it.”