Election Section

Businesses fear losses from rolling blackouts

The Associated Press
Sunday March 25, 2001

LOS ANGELES — So far, rolling blackouts have been more of an annoyance for California business owners than a serious economic problem. 

But if the blackouts continue through the summer, as many fear, the long-term impact on the state’s economy will be devastating. 

“I think it’s a disaster,” said Edward Leamer, director of the Anderson Forecast at the University of California, Los Angeles. “As long as we continue to have these blackouts or reports about them in the press, that’s a big negative as far as attractiveness to California is concerned. 

“This is a serious long-term problem for the state. It’s a public relations problem, kind of like the Tylenol scare. Unlike that, however, we’re not doing a lot to clean up this mess.” 

Leamer’s dire predictions come at a time when business owners across the state are frustrated by sudden power outages that have stopped movies mid-frame, left clothes soaking in washing machines at laundries and forced customers to navigate dark store aisles with flashlights. 

On Tuesday, in the city of Industry, Theresa Mejia said the computer screens at the exercise equipment wholesale firm where she works went blank about 10:45 a.m. 

“Everything just shut down,” she said. “We moved toward the door where there was some light and tried to do some paperwork, but there was only so much we could do.” 

At Ventura Foods in Industry, workers took an early lunch when the power was cut, then struggled with the phones after power was restored because the voice mail had to be reprogrammed. 

“This is mild weather for this time of year,” Frank Hynes, administrative manager of sales, said. “I don’t know what’s going to happen in the summer. They can’t just keep shutting people down.” 

At Moonlight Cleaners in Elk Grove, it took nearly an hour after power was restored to fire up the boilers and get back to businesses. 

“To me, this is nonsense,” Jennifer Ng, the store’s owner, said. “I don’t think they are saving energy at all. They are just giving us more problems.” 

In some cases, preparations made for the kind of natural disasters Californians expect came in handy during this week’s man-made emergency. 

“The store has a backup generator because the Santa Ana winds will knock energy out,” Stacy Watson, assistant manager at a Target store in Santa Ana, said. “We keep flashlights at the registers at all times and all the registers have their own battery packs.” 

When the lights went out Tuesday morning, Target workers accompanied about 50 shoppers with flashlights so they could continue shopping. The store finally closed when the cash register batteries died after about 45 minutes. 

Leamer, who will dedicate the next Anderson Forecast seminar in April to the impact of the state’s power crisis, said the state’s robust economy will not stall right away because of energy concerns. 

“There will be no smoking gun,” Leamer said. “There’s going to be a little lower investment in the summer, then a little lower in the fall. It will take some time.” 

Leamer, along with others, including many power wholesalers, said the state need to hike electric rates to force conservation and stimulate new supplies. 

“Eventually, we’re going to have prices that encourage conservation,” he said.  

“Let the market signal to all of us we have to conserve. Let the market communicate to the generators we need more capacity.” 

It’s not just the lost business due to actual blackouts that has businesses worried. 

“You bear costs even if they don’t happen because you have to make provisions for them,” Bradford Cornell, a finance professor at the Anderson School at UCLA, said. 


At the Port of Long Beach, officials are concerned that rolling blackouts could disable navigational aids, leave huge containers filled with hazardous chemicals dangling from cranes, and create other safety problems. 

Fortunately, none of those things happened this week when power was suddenly lost. But about 80 employees of the Metropolitan Stevedore Co. were idled Tuesday, costing the company about $6,000, according to Vice President Al Garnier. 

“At some point, one attempts to pass that on to customers, which makes the cost of doing business with the state higher,” he said. “There’s little we can do. Outside generation is out of the question. The horsepower need is just too high.” 

Port officials have asked the California Public Utilities Commission for an exemption from the power-saving measures. 

“We were fortunate,” port spokesman Art Wong said Wednesday. “If the situation were more widespread, potentially many more ships could have been interrupted. The more extensive, the more chance there could be an incident where people could be in danger.” 

At Bentley Mills in Industry, even 448 solar panels spread over 30,000 square feet couldn’t exempt them from a blackout. 

The panels, installed about two years ago, provide about 6 percent of the company’s energy needs. But when Southern California Edison cut power Tuesday morning, all the bright sun could do was shed some light into the dark factory. 

“Six percent is not enough to really run anything,” said Paul Paradiso, associate director of brand management at the carpet-making company. “I was on the phone and in the middle of e-mail when the whole place went black.”