California warns of possibility of rolling blackouts 
STEVE LAWRENCE, Associated Press Writer
Wednesday,?December 13, 2000 
,2000 Associated Press 
(12-13) 14:50 PST SACRAMENTO, Calif. (AP) -- U.S. Energy Secretary Bill 
Richardson ordered Northwest generators to sell electricity to California 
utilities Wednesday after state regulators warned that low power supplies 
could force rolling blackouts. 
The warning came from the Independent System Operator, keeper of California's 
power grid. It said that electricity supplies were so perilously low that it 
might declare a Stage 3 power emergency for only the second time ever. At 
Stage 3, the grid can impose blackouts. 
Richardson said at a Washington, D.C., news conference he was using emergency 
powers to force wholesalers to sell power to California at a price he deemed 
fair. He said he would also request that two large Pacific Northwest power 
generating associations send more power to California. 
``Our objective is to keep the lights on in California through this emergency 
situation,'' he said. ``We're dealing with a potentially very serious 
situation here.'' 
California has been caught in a power crunch over the past several days, in 
part because of cold weather in the Northwest -- where California buys much 
of its power -- and the shutdown of some generating plants for maintenance. 
California's two largest utilities, Pacific Gas and Electric and Southern 
California Edison, are near bankruptcy due to skyrocketing wholesale power 
costs, Gov. Gray Davis and Sen. Dianne Feinstein, D-Calif., said at a 
Washington, D.C., news conference with Richardson. 
Davis and Feinstein asked federal regulators to set a regional price cap on 
wholesale electricity to prevent the high prices that have plagued 
California. On Friday, the Federal Energy Regulatory Commission lifted price 
caps in California. 
Record wholesale power prices followed, and PG&E warned it was in financial 
danger. 
The problem became especially acute when about a dozen suppliers began 
demanding cash before selling power to California, Kellan Fluckiger, the 
ISO's chief operating officer, said Wednesday. 
``The credit limits of utilities and what markets are willing to sell us have 
been reached and surpassed in many cases,'' Fluckiger said. ``There are 
questions about utility solvency. That has come to a head today.'' 
He said officials may have to interrupt power to as many as 4 million 
customers Wednesday afternoon and early evening, when people come home from 
work and power demand hits a peak. 
An unprecedented Stage 3 emergency was issued last Thursday, meaning reserves 
had fallen below 1.5 percent. But the state fended off rolling outages by 
turning off two power-sucking water pumps. 
This time, Fluckiger said any blackouts would probably last about an hour to 
90 minutes and occur mostly in Northern California. 
``It's a fairly bleak picture,'' he said. ``This thing will not change unless 
something is done to alleviate the credit situation.'' 
A Stage 1 alert was declared Wednesday morning, meaning power reserves were 
below 7 percent and all power users are asked to conserve. 
Stage 1 and Stage 2 emergencies, in which power reserves fall below 5 percent 
and large commercial customers can be forced to shut down, have become 
routine this month, but last Thursday's Stage 3 was the only time the threat 
of blackouts loomed. 
Contributing to the problem is a shortage of water to power hydroelectric 
generators in the Northwest and California, Fluckiger said. 
``We have reservoirs so low that we have people standing by them watching the 
situation to make sure it does not go below safe limits,'' he said. 
The power crunch over the past few months has been blamed in part on 
electricity deregulation. California approved a phased-in deregulation of the 
electricity market in 1996 to try to lower prices for consumers through 
competition, but so far it has led to higher energy prices. 
At the same time, wholesale power costs have been soaring, in large part 
because of skyrocketing prices for natural gas. Wall Street is worried about 
utilities' financial health, and on Tuesday, a consumer group urged the state 
to seize and run the strapped $20 billion electricity system. 
,2000 Associated Press ?