Here's what those of us in San Francisco read Sunday morning, as the lead
story in the SF Chronicle:

> Soaring Electric Use More Fiction Than Fact
> Chronicle investigation finds power companies manipulate data to excuse
> their towering rates
> Christian Berthelsen, Scott Winokur, Chronicle Staff Writers
> <mailto:cberthelsen@sfchronicle.com>
> Sunday, March 11, 2001
> ,2001 San Francisco Chronicle </chronicle/info/copyright>
> URL:
> <http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/03
> /11/MN213155.DTL>
>
> Power companies say it so often, and with such certainty, that it has
> become a virtual mantra: "Skyrocketing" energy use by Californians is a
> root cause of the state's power crisis, and justification for surging
> electricity prices.
> But a computer analysis of electricity usage data by The Chronicle reveals
> that the mantra is a myth -- that overall growth in electricity demand
> hasn't been nearly as great as the industry portrays it.
> The industry has painted the summer of 2000 as the equivalent of a
> 100-year storm in meteorology -- an event so powerful and unexpected that
> the existing infrastructure was devastated by its force.
> The statistics show that 2000, taken in total, was nothing of the sort.
> Moreover, two independent state agencies' assessments of California's
> power plant capacity appear to show that the growth should have been
> easily accommodated.
> The companies have defended their practice of increasingly taking power-
> generation plants out of service by arguing that heavy demand and
> consequent plant usage necessitated major, time-consuming repairs.
> "The claims that demand growth is rampant and that it was totally
> unexpected and due to the Internet economy, to Silicon Valley, or server
> farms,
> or people recharging cell phones -- that's bogus," said Tom Kelly,
> assistant executive director of the California Energy Commission. "About
> as bogus as you can get."
> The Chronicle's findings are based on data collected by the California
> Independent System Operator, a manager of the state's electricity grid.
> They show:
> -- Total electricity consumption in California increased only 4.75 percent
> in 2000 from 1999, a sharp contrast to claims of industry representatives,
> who have repeatedly relied on isolated, loose or selective comparisons
> that make growth appear as high as 20 percent. In fact, the single
> greatest hour of electricity usage in 2000 was actually lower than any
> peak demand period in 1999 or 1998.
> -- Average peak demand -- the average of the highest hour of electricity
> usage for each day -- increased only 4.79 percent from 1999 to 2000. Even
> during the months of May to September in 2000, when the greatest spikes in
> electricity usage occur, demand growth was only 8.31 percent higher than
> the same period the year before.
> -- More than 30 days of critical power shortage warnings, so-called Stage
> 3 emergencies, and two days of blackouts this year occurred at times of
> moderate energy use -- levels often below those at which neither warnings
> nor blackouts have occurred in the past.
> The findings appear to buttress suspicions that the "skyrocketing demand"
> explanation for rising energy prices is a cover for what is really
> happening --
> that power companies have simply started charging more for an essential
> commodity, regardless of whether it is in short supply.
> Presented with The Chronicle's findings, Gary Ackerman, a representative
> for the Western Power Trading Forum, a trade group representing power
> companies, said the calculations support the industry position that
> electricity demand is growing strong.
> "That's pretty healthy growth for California as opposed to the long-term
> historical average, which is close to 2 percent," he said. "To me, that's
> really strong growth."
> Energy demand is certainly on the rise in California -- growth of more
> than 4 percent is still double what was projected -- and the state has
> obviously fallen behind in building power plants.
> Even though a recent study found California ranked 47th out of the 50
> states in per-capita energy consumption, the surging demand explanation
> has become so accepted that leading officials accept it as gospel. Gov.
> Gray Davis has made energy conservation -- 10 percent, at that -- a
> centerpiece of his efforts to solve the crisis.
> "Energy use is growing," said state Sen. John Burton, D-San Francisco,
> citing the growth of Silicon Valley and high-tech operations statewide.
> "There's been tremendous growth, whether manufacturing or high tech --
> cell phones, faxes, whatever. The stuff is growing."
> Yet the energy industry has been steadfast in its insistence that the
> consumer is largely to blame. In testimony and submissions to government
> bodies considering prescriptions for the crisis, energy demand growth has
> consistently been overstated.
> Joe Bob Perkins, the chief operating officer of Houston-based Reliant
> Energy Inc., told the U.S. Senate in January that California's growing
> economy and high summer temperatures caused electricity use to "surge
> dramatically" -- a demand growth of 13 percent.
> Richard Wheatley, a spokesman for Reliant, said Perkins' testimony was
> based on estimates by the federal Energy Information Administration of
> monthly retail electricity sales.
> "We do stand by that," Wheatley said. "Unfortunately, it does not track
> with ISO data."
> The industry-backed Edison Electric Institute said in a report that
> electricity demand grew by anywhere from 5 percent to 21 percent during
> the spring of 2000, compared with the same period a year earlier.
> Russell Tucker, an economist for the institute, said the group's figures
> were derived by identifying the single highest hour of electricity demand
> for each spring month of 1999 and 2000 and comparing them, finding the May
> peak rose 21 percent.
> Granted, the state Energy Commission uses the same model to determine
> whether California has enough plant capacity to meet demand. But the
> presentation makes it appear that overall demand, not just the absolute
> peak, is growing by 21 percent. When the peak of each day is averaged and
> compared from year to year, May's figure was much lower: 12.79 percent.
> Also, nowhere did Edison's report note that the peak hour of 2000, a load
> of 43,784 megawatts on Aug. 16, was actually lower than the peak hours of
> either of the previous two years -- 45,884 on July 12, 1999, or 44,406 on
> Sept.
> 1, 1998.
> The Chronicle analysis of average peak demand showed that no month last
> year grew more than June's 15.34 percent, though no blackouts occurred in
> that month. May and June were the only months when demand growth exceeded
> 10 percent, the analysis showed. Most months recorded 4 percent or 5
> percent, and some -- such as September -- were less than 3 percent.
> Two months, October and December, had demand levels lower than the year
> before -- 4.22 percent less for October, 1.46 percent lower for December.
> Mike Florio, a consumer lawyer and board member of the ISO, said that even
> growth of less than 5 percent from 1999 to 2000 would seem overstated,
> since 1999 was a relatively mild weather year and 2000 was a much hotter
> one. "You are quite right," Florio said. " 'Skyrocketing' demand is a
> myth."
> MARKET MANIPULATION?
> Consumer representatives and some politicians have long suspected that,
> rather than dire imbalances between supply and demand, market manipulation
> is behind the crisis.
> Generators and power marketers adamantly deny this, saying they have done
> everything they could to keep the lights on. They say they ran aging,
> decrepit plants at higher-than-normal levels last summer to accommodate
> what they described as unprecedented demand. They also say that, at great
> expense, they delayed much-needed maintenance in order to keep the power
> flowing.
> Their claims have received some support from the Federal Energy Regulatory
> Commission, which said in a report last month that it found no evidence
> power companies were using maintenance schedules to manipulate supply. The
> report, however, was heavily qualified by the FERC, which said it did not
> investigate other forms of manipulation. Moreover, the agency acknowledged
> that the bulk of its investigation was conducted by simply calling power
> plants and questioning them over the telephone.
> The supply side of the energy equation is harder to penetrate, in part
> because supply data are confidential. Thus, the question of how blackouts
> could have occurred at such low levels of demand in January is hard to
> answer. What is clear is that, at times, during the crisis this year, as
> much as 12, 000 megawatts of electricity supply have been unavailable for
> use, mostly because of unplanned plant outages -- about four times the
> level anticipated by the ISO.
> Power companies say the old plants they bought were not capable of
> producing to the levels sketched out by the ISO and the Energy Commission,
> and that everything from low water conditions, emissions limitations and
> high temperatures last year caused less energy to be available than was
> anticipated.
> But others suggest that what began as a shortage caused by a withholding
> of supply to drive up price has turned into one caused by withholdings out
> of fear of not being paid.
> What did go up, unquestionably, were wholesale electricity prices.
> While average electricity usage during the heaviest hours last year
> increased by less than 5 percent, prices charged by power companies to the
> utilities that deliver juice to consumers increased more than 289 percent.
>
> In June, the cost of a megawatt hour increased more than fivefold, going
> from the 1999 level of $30.53 to $170.60. In October, prices doubled over
> the same period a year earlier, going from $53.47 to $111.04. And in
> December -- despite a 1.46 percent decline in electricity usage from the
> previous December -- peak wholesale electricity prices hit $425.59. They'd
> been $31.88 one year before.
> Then the pace of price increases began to accelerate within the last six
> months of 2000. Overall, average peak usage during December was about
> 31,200 megawatts, about a fifth lower than it was in August. Average
> prices in December? They just about doubled, to $425 a megawatt hour.
> The companies' explanation for rising prices despite falling demand was
> that more and more plants had to be taken offline for repairs, decreasing
> supply. Even given the high number of inoperable plants, questions remain
> about why the existing supply could not cover demand.
> On the blackout days of Jan. 17 and 18 fewer plants were offline -- and
> more electricity was available -- than on days when the state managed to
> squeeze by without turning out the lights.
> Even today, with Stage 3 alerts having faded away, at least temporarily,
> demand levels remain more or less the same as when California was in a
> constant state of emergency. Moreover, the lists of offline plants are as
> long as ever.
> AMPLE POWER SHOULD EXIST
> The Energy Commission and the ISO have concluded that California's power
> plants are capable of generating more than 45,000 megawatts of
> electricity. That means that even with plant repair outages, low water
> levels decreasing hydraulic generation, air-pollution rules and other
> environmental constraints, the power companies should be able to
> accommodate all but the most extreme spikes in demand.
> According to industry data obtained by The Chronicle, the Western Systems
> Coordinating Council, a government-backed trade group in Salt Lake City,
> concluded California would have considerable surpluses throughout 2000,
> including margins as high as 39 percent in December, based on data
> provided to it by the ISO. Even under low water conditions, the ISO
> reported, the state would have total power resources of 47,532 megawatts
> in that month. Yet unplanned outages were far higher, and the system began
> to crash that month and into this year, at far lower levels of demand.
> "Clearly," Florio said, "we should not be having a shortage at 2 a.m. on
> Christmas Eve, when the only person awake is Santa Claus."
>
>
>
>
>
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