State moves out of power alert for first time in weeks

The Associated Press
Friday February 23, 2001

California called off all power alerts Thursday for the first time in nearly six weeks, thanks to the availability of more imported electricity and the return to service of power plants that had been down for repairs. 

The Independent System Operator canceled a Stage 1 alert that had been declared Wednesday. Until last weekend, the state spent 32 consecutive days in a Stage 3 alert — the most severe of the alerts, warning that reserves were dangerously low and that rolling blackouts were possible. 

Until Thursday, the last time California had been free of all alerts was Jan. 13. 

“The supply picture has improved and we are glad that we’re able to come out of the emergency. However, we are looking at a long-term limited supply of electricity within the whole region,” said ISO spokeswoman Lorie O’Donley. 

“We’re coming up on the summer, our high use period, and we appreciate the conservation efforts that people have made. We hope they incorporate that into their lifestyles.” 

Meanwhile, officials said fears that natural gas supplies in Northern California would be depleted by the end of February have eased because more suppliers have agreed to deliver gas to Pacific Gas and Electric Co. – and the utility said it will pay all its suppliers Friday for gas delivered in January. 

At the state Capitol, lawmakers worked on bills they hope will result in more power plants for California. The Assembly Natural Resources Committee approved two bills, sending them to the energy committee for further hearings next week. 

One bill would require local governments in areas where power demand exceeds production to identify potential sites for new power plants. The other would speed up state approval of the remodeling of old or retired power plants. 

Gov. Gray Davis’ administration met again with utility company executives to negotiate a rescue plan for the two utilities. The governor has proposed buying 26,000 miles of transmission lines to give the utilities an infusion of much-needed cash. He also has proposed allowing the utilities to issue revenue bonds to be paid back by ratepayers over many years. 

“We’re hopeful for an announcement tomorrow,” said Steve Maviglio, spokesman for the governor. 

A federal judge is expected to decide Friday whether wholesalers can be forced to sell to the state power grid, even without a creditworthy buyer. A temporary restraining order requiring three generators to keep selling power to the ISO expires Friday. 

U.S. District Judge Frank C. Damrell Jr. had extended the temporary restraining order by two days in order to give attorneys for the grid and the generators more time to try to reach an out-of-court-settlement, but no deal was completed by late Thursday afternoon. 

“We have not entered into any deal to make the TRO from Judge Damrell go away,” Richard Wheatley, a spokesman for Houston-based Reliant Energy, said Thursday afternoon. 

State power regulators decided unanimously Thursday that the Department of Water Resources is responsible for buying any power that two cash-strapped utilities are unable to generate or buy on their own – no matter what price wholesalers are charging. 

However, the PUC voted 3-2 against taking action to ensure that the DWR will receive a portion of ratepayer revenues from PG&E and Southern California Edison Co. to help cover the cost of buying electricity. 

The state, through the DWR, was authorized by a recent law to buy power for the two utilities, who have battled to stave off bankruptcy for weeks and have such low credit ratings that no power companies will sell to them. 

The DWR has spent about $2 billion on electricity for the customers of PG&E and SoCal Edison; the rest is provided by the utilities’ own plants or through existing long-term contracts. But the DWR has refused to buy power beyond a certain price. That means more last-minute power purchases on the expensive spot market. 

The utilities and the state disagree over how the DWR will be reimbursed — whether through state bonds or ratepayer dollars — and the extent of its power-buying role. 

In a letter filed with the PUC last week, the DWR asked state regulators to ensure that it will receive “at least a portion of its current revenue requirements from the sale of power to retail end consumers.” 

But PG&E spokesman John Nelson said Assembly Bill 1X is very clear that the DWR is buying that power to spare the utilities the extra cost to help them get out of their $12.7 billion debt. 

“We believe the draft decision undermines the clear intent of the law and what the Legislature said when it passed AB1X,” Nelson said. “If the CPUC fails to implement the law correctly it could propel the parties toward bankruptcy.” 

The author of the bill authorizing the long-term contracts said Wednesday the legislation’s intent was to fully cover the one-third of the power that utilities purchased on the spot market, either through extended contracts or through the state ISO. 

Assemblyman Fred Keeley, D-Boulder Creek, said his bill was supposed to cover the full “net-short” position — or all of the power the utilities were buying on the spot market. That would include the emergency power purchases grid officials bought to avoid rolling blackouts. That is typically the most expensive power. 

“By refusing to purchase all of the utilities’ net short needs, the DWR is ignoring the intent of Assemblyman Keely’s bill,” PUC Commissioner Richard Bilas said. “DWR’s attitude is exacerbating a problem AB1X was meant to alleviate.” 


On the Net: Read the bills, AB9x by Assemblyman Keith Richman, R-Northridge, and AB36x by Assemblyman Rod Wright, D-Los Angeles, at