Blackouts could have been avoided, power regulators say

By Jessica Brice
Wednesday September 18, 2002

SACRAMENTO — Nearly all the blackouts that swept California during the state’s 2000-2001 energy crisis could have been avoided, according to a report released Tuesday by state power regulators. 

The analysis by the California Public Utilities Commission and Portland-based McCullough Research found that all Southern California blackouts and 65 percent of Northern California blackouts occurred because generators ramped down production at their power plants. 

On all but two of the 32 statewide blackout or service interruption days between November 2000 and May 2001, the state’s five largest non-utility electricity generators were not operating at maximum capacity, according to commission President Loretta Lynch. 

The report was presented Tuesday to the Senate Select Committee to Investigate Price Manipulation of the Wholesale Energy Market. It’s based on information obtained through the committee, which has collected more than 1 million documents and subpoenaed more than two dozen energy companies. 

“The only reason that is imaginable as to why generators would not generate power ... is because they thought that withholding (energy) from the market would drive the price up,” said the PUC’s general counsel Gary Cohen. 

The state claims it was overcharged nearly $20 billion during the power crisis by the five largest generators: Duke, Dynegy, Mirant, Reliant and AES/Williams. 

Cohen said the findings discredit the energy companies’ claims the crisis was caused solely by a lack of energy. 

“It wasn’t a question of California not having enough generatable capacity,” Cohen said. “That’s the story we heard over and over again from the generators when all this stuff was happening. This report shows that those excuses were simply untrue.” 

But Jan Smutny-Jones, executive director of the Independent Energy Producers, challenged the findings, arguing that California’s generators actually increased output by 88 percent during the energy crisis. 

“California’s merchant generators ran at historically high levels to power our state throughout the crisis,” Smutny-Jones said in a statement. “Our collective failure to address the state’s dysfunctional electricity market is what cultivated the energy crisis.” 

Gov. Gray Davis blasted the energy companies, calling their actions “inexusable.” 

“Their price gouging hampered California’s economic recovery, and that was bad enough,” Davis said. “But purposely putting the lives of Californians in jeopardy in the name of greed is inexcusable. This report is more fuel for the U.S. Department of Justice to take appropriate action.”