Assembly approves power fine proposal

The Associated Press
Friday March 16, 2001

SACRAMENTO — Reacting to suspicion that some power suppliers have shut down California plants to raise prices, the Assembly approved a proposal Thursday that would let state regulators fine generators that cannot justify their outages. 

The Legislature’s focus on the state’s electricity supply came as the managers of California’s power grid Thursday declared their first electricity alert since March 5. 

The Independent System Operator called the Stage 2 alert as power reserves fell below 5 percent. The falling supply was due in part to the loss of at least 1,600 megawatts from the Pacific Northwest. That’s enough power for roughly 1.6 million households. 

“This demonstrates how we’re still operating on the edge here, and how critical these imports from the Northwest are,” ISO spokeswoman Stephanie McCorkle said. 

Much of the lost power came from the federal Bonneville Power Administration. It had been supplying much of the Northwest power because it needed to run water over its dams to help salmon eggs hatch, BPA spokesman Mike Hansen said. 

However, the fish have hatched and Bonneville is cutting releases to build summer reserves, Hansen said. 

The unanticipated cut in imports came as California was already down about 10,000 megawatts due to power plant maintenance, ISO spokesman Patrick Dorinson said. That’s enough electricity for about 10 million households. 

Despite the tight reserves, the ISO did not immediately require “interruptible” customers — who get lower rates for turning off power when needed — to shut down. 

Also Thursday, the Assembly took several steps to cope with California’s energy crisis, passing bills that would regulate power plant outages and expand the utilities’ interruptible-service programs. 

A measure by Assemblywoman Carole Migden would give the ISO authority to coordinate plant outages to prevent too many from going off-line for maintenance at any one time. 

If a power plant seemed to have too many outages or was shut down for a suspicious length of time, the ISO could investigate. If the outages were found to be unwarranted, the state Electricity Oversight Board could order fines. The fines would be based on the cost of power the ISO had to buy as a result of a plant’s shutdown. 

“We have suspected that in some instances these generators have shut down and this has not been in the public interest,” said Migden, D-San Francisco, adding that she was not accusing anyone of wrongdoing. “What we’re trying to do is create an audit and accountability system.” 

The bill largely puts into state law an executive order issued last month by Gov. Gray Davis and goes further by giving the Electricity Oversight Board the power to issue fines. 

Senate leader John Burton on Wednesday announced a Senate committee will investigate whether electricity wholesalers illegally withheld power to drive up prices. 

He cited plant outages for scheduled and unscheduled maintenance that have contributed to the state’s strapped power supply and forced the ISO to scramble for power at premium prices to fill gaps on the grid. 

Duke, Dynegy, Mirant and Reliant will be among major providers included in the inquiry. The wholesalers deny any wrongdoing. 

The Assembly approved Migden’s plant outage bill 57-5 and sent it to the Senate, which is considering a rival bill to give the authority over generators to the California Public Utilities Commission. 

That bill by Sen. Jackie Speier, D-Daly City, was approved Wednesday by the Senate Appropriations Committee and sent to the full Senate. 

The Independent Energy Producers Association supports Migden’s bill, but opposes Speier’s. The PUC does not have the expertise to handle the task, IEPA executive director Jan Smutny-Jones said. 

The Assembly also passed two proposals to modify the utilities’ interruptible programs. Both measures were approved 67-0 and sent to the Senate. 

One would expand the program with an eye to the critical summer months; the other would let customers hit hard by frequent outages this year, such as schools, get out of the program now. 

The programs give participating factories and other large users a discount of about 15 percent for cutting their power during shortages. In the past, those interruptions have occurred in summer, leading many school districts to sign up. 

However, because of this winter’s problems, many customers have already hit their yearly limits for power interruptions. That could cause problems this summer when the flexibility will be most needed. 

A bill by Assemblyman Rod Wright, D-Los Angeles, would extend the programs through 2002 and create several new options, offering different credits for different conservation commitments. 

The new options could save 2,700 megawatts this summer, said Assemblyman Joe Canciamilla, D-Pittsburg. That’s enough power for 2.7 million households. 

A proposal by Assemblywoman Lynn Daucher, R-Brea, would give some relief to interruptible customers such as school districts that have been unable to cut power during this winter’s shortages and have faced huge penalties. 

The PUC last November prohibited customers from getting out of the program, then suspended the penalties for doing so Jan. 26. 

The bill would allow customers in the program at least a year to get out and would waive any penalties against them between November and Jan. 26. 

Also Thursday, the PUC voted to bar Pacific Gas and Electric Co. and Southern California Edison from cutting thousands of workers. The commission said the proposed layoffs could slow response time to power outages and harm service. 

PG&E and Edison representatives say the layoffs would help them conserve cash — as much as $100 million for PG&E if they were able to complete all layoffs, spokesman Jon Tremayne said.