Governor orders discounts for businesses that cut power use

By Jennifer Coleman Associated Press Writer
Monday June 11, 2001

SACRAMENTO – Industrial power users could soon get paid by the state for cutting back on power use when California’s electricity reserves are low. 

Gov. Gray Davis signed an executive order Saturday creating a voluntary “interruptible” program that will use up to $100 million in state money to pay businesses for not using electricity. 

The money is “going to be spent one way or another,” said S. David Freeman, the governor’s senior energy adviser. “We’ll either be buying power or buying power reduction. It’s a matter of what’s the most economic.” 

Davis said that since nearly 70 percent of energy use in California is by commercial users, the program will “help mitigate and even avoid blackouts.” 

The Independent System Operator, manager of the state’s power grid, will operate the program, and the state Department of Water Resources will back it financially. 

Participants, mostly large commercial users, will submit bids for reducing their power. Grid operators will then compare that price with the going price for power and choose the cheapest option, Freeman said. 

“We’d rather pay people in California to cut back than pay out-of-state generators,” he said. Paying people to reduce their power has the added bonus of decreasing the chances of blackouts, he added. 

The new program is designed to streamline existing programs operated by the Public Utilities Commission, the Independent System Operator and utilities. 

Pacific Gas and Electric Co. and Southern California Edison have similar programs that offer cheaper electric rates if participants curtail energy use when electricity reserves drop below 5 percent. 

Those programs, which account for about 1,400 megawatts that grid operators can cut if necessary, will probably continue, but participants could eventually be moved into the state-funded program, said Kellan Fluckiger, Davis’ energy adviser. 

Fluckiger said the size of the new program would depend on how many participants the ISO can recruit. 

The ISO releases information on bids for energy after a period of time, and will probably treat bids for cutting power the same way, he said.