Threat of Blackouts Has Chicago Set to Lose Cool

They say they are not nervous. They have seen this before. But this summer, on days when the temperature reading reaches the mid-90s on the big board in Commonwealth Edison Co.’s 33rd-floor trading office, the electricity brokers watch helplessly as the price of their precious commodity spirals upward.

In moments, a megawatt that normally costs $75 can rocket to $750. And over a black 15 minutes on June 25, a single megawatt soared to $7,500. In that tension-ridden quarter-hour, Com Ed officials spent $4 million for power that would normally go for $200,000. “Sometimes,” said Com Ed utility trading director Peter A. Frantz--who makes this Midwest powerhouse’s energy buys--”the megawatts don’t flow but the dollars do.”

As steep as Com Ed’s costs were that day, the looming social and political price of being unable to power this metropolitan region of 8.5 million was even steeper. On a day of blistering heat and storm-spawned outages hundreds of miles away, Com Ed teetered on the brink of ordering massive “rolling blackouts”--intermittent, targeted outages across Chicago and northern Illinois that are designed to prevent a massive regionwide shutdown. Only the utility’s last-minute electricity purchase on the power commodities market, coupled with Chicagoans’ hurried moves to cut their own usage, kept the juice flowing.

Hot Summer Has Tested Power Firms

Chicago’s weakened power system is not the only major utility in extremis. Power companies across the country have been tested by this summer’s early and extended heat wave, a series of crippling weather-related outages and the roller-coaster adjustments of a deregulated market--where monumental price spikes are becoming a seasonal hazard.

This week’s torrid temperatures have taxed the nation’s power grids to their limits, setting record electricity usage levels from Boston to Denver and forcing utilities to scrape for every last available megawatt--often at astronomical prices. When a storm shorted a main line last Friday, Colorado’s Public Service Co. could not find even costly electricity and resorted to a five-hour rolling blackout that shut off power intermittently to nearly 300,000 customers. The blackout unfolded without incident, officials said, mostly because it was so short.

This week, as much of the nation blanches under oppressive heat, Chicago’s power woes are at a quiet crisis stage. City officials, still scarred by the deaths of 733 elderly and infirm Chicagoans during a heat wave three years ago, worry that lingering episodes of rolling blackouts could produce a new spate of fatalities. And although consumers here appear willing to slash their usage in an emergency, their patience with Com Ed--a utility whose vast network of nuclear-powered plants has been hobbled by mismanagement and shuttered by federal edicts--is wearing thin.

“I don’t hold a grudge against them, but if they want me to cut down, they’re gonna pay,” said Jack Cerone, 26, a restaurant manager whose eatery has lost power six times over the last year. In Chicago, a town accustomed to exacting tribute for the tiniest political deals, even Com Ed is anteing up, agreeing for the first time to compensate customers for losses incurred if blackouts become a necessity.

“This is our state-of-the-art power industry,” fumed Henry L. Henderson, commissioner of Chicago’s Department of Environment. “They can tell us about all their big plans, but they can’t tell us where their cables go.”

Henderson and his boss, Chicago Mayor Richard M. Daley, went apoplectic when Com Ed officials informed them recently that they could not divulge which areas would be affected by rolling blackouts. After nearly a century of monopoly over Chicago’s power, the utility’s best minds could not translate the diagrams of their hydra-headed cable system into usable maps.

City Scrambles to Avert Problems

So this week, as lakefront temperatures again hovered in the 90s and city officials warned the elderly to seek relief in air-conditioned public “cooling centers,” a group of New England electronic consultants feverishly pored over a 2-inch-thick Com Ed ledger.

Hired by the city at a cost of $15,000, the team has been given a week to unravel hundreds of pages of cable diagrams and pinpoint hospitals, senior residences, shelters and other vital locations that might be knocked out by rolling blackouts.

City officials could have tackled the job themselves, “but it would have taken us weeks,” Henderson said. “We wanted to make sure we could decipher Com Ed’s maps before all hell broke loose.”

The utility, too, has rushed to forestall the threat of rolling blackouts by offering industrial users and even residential customers the lure of refunds. Com Ed has announced it will put $1 million into a public fund to be distributed to consumers for turning off their air conditioners and will erase customers’ service charges if rolling blackouts occur.

In Denver, Public Service Co. has similarly begged its consumers to conserve. “We don’t generate enough electricity to provide for all our customers’ needs, either,” spokesman Mark Salley said. Even in Texas, where torturous summers have long spurred utility firms to bulk up early with electricity and where rolling blackouts are hard to imagine, this year’s lethal heat wave has pushed demand for power to dizzying new heights.

“We’ve been shocked by the numbers,” said Letitia Lowe, spokeswoman for Houston Lighting & Power.

On Wednesday and Thursday, the relentless heat set record highs for electric usage at Virginia Power in Richmond and ISO New England in Massachusetts. PJM, the power network that oversees operation of the electricity grid that serves about 22 million people in the mid-Atlantic region, warned it would need to buy emergency power and curtail exports to other power firms to meet its own demand--strained by the heat and freak storms in the Washington area.

Deregulation Tangles Old Alliances

Power officials blame regional housing booms in cities like Denver, the nation’s humming economy, even the standardization of central air-conditioning for the growing regional urban demands. “We expected a 2% growth in demand from last summer,” Salley said. “We’re up 10%.”

As the nation’s power monopolies move toward deregulation, they are less able to depend on once-reliable power sources. In Denver, deregulation has been stalled by a reluctant Legislature; in Illinois, it is already state-sanctioned to take place in two years. But the old days when monopolies quietly funneled power to each other to stave off emergencies are done.

Instead, when Com Ed turned to other power suppliers for help in June, several firms that had previously agreed to deliver electricity begged off, citing demand surges in their own areas. Though Com Ed officials chalk their evaporating contracts up to the vagaries of the marketplace, Sen. Richard Durbin (D-Ill.) questioned whether some utilities might be guilty of price-gouging. The U.S. Energy Regulatory Commission has directed its staff to see if an investigation is warranted.

Federal energy officials say this summer’s spot shortages are a result of the power industry’s long-term failure to keep its capacity in tune with demand. An over-reliance on nuclear plants, they say, is part of the problem. Com Ed, for example, invested in reactors even as other utilities, such as Colorado’s Public Service Co., decommissioned theirs. Two of Com Ed’s plants have been shuttered for mismanagement by impatient officials at the federal Nuclear Regulatory Commission. But despite new plant construction in California and several other states, other areas like Illinois have not kept pace with surging power needs.

“Those huge price spikes tell us there are not enough plants up and running,” said a high-ranking Department of Energy official.

With energy rates skyrocketing, its nuclear plants dwindling and no new plants ready to meet power needs in Chicago this summer, Com Ed has thrown itself before a suspicious public. Regulatory officials criticize Com Ed’s offers of compensation as minuscule. Savings on service charges, they say, would amount to less than $10 a household.

“If I lose $5,000 for the night, are they going to pay me in full? Come on,” said Cerone, who has repeatedly lost customers and had to scurry to find dry ice to keep his meat and produce fresh during recent outages.

The problem, for Com Ed and many large utilities, is that years of rate hikes, spotty service and poor public accountability have disintegrated public confidence. “Com Ed has never won awards for communicating with the public,” said David Farrell, a spokesman for the Illinois Commerce Commission, which oversees utility performance and rates.

“I don’t believe them,” said Mary Acosta, a downtown office worker who sat in Daley Plaza, suffering through a 97-degree heat index with only a water bottle for succor. “They have plenty of power. They probably want to raise the rates. I would turn things off, but if it got real hot, I would turn them back on.”

Com Ed officials are well aware of the trust gap. “It’s been a rough month, and we have to undo years of arrogance,” one official said. Even Paul McCoy, a senior vice president who stunned city officials by suggesting that Com Ed long had kept its cable maps secret for fear that they might fall into the hands of terrorists, now talks about “communicating change to our customers.”

Rolling Blackouts Would Cost Goodwill

With deregulation approaching here, Com Ed will soon find itself with rivals racing to build their own power plants. If it has to resort to rolling blackouts before the summer is over--a prospect Henderson and other city officials insist might strain substations and cause chaos despite the most orderly plans laid by Com Ed--the utility could lose whatever traces of public goodwill remain.

It is that gloomy prospect that makes Com Ed officials so willing to pay astronomical prices for electricity. If all their sources are plumbed and the utility exhausts its last conservation measures, McCoy acknowledged, rolling blackouts “are our only choice left.”

Com Ed’s officials believe they can carry such an emergency operation off the way Denver did last week, with no loss of life and minimal inconvenience. But Chicago is a bigger, more complicated place, officials here warn, with older power stations, more antiquated lines and a larger populace living in uncooled, substandard housing that warms to oven-like conditions quickly--just as they did in the deadly summer of 1995.

“Let’s just hope,” said a worried Henderson, “we never get to that point.”

Times researchers John Beckham in Chicago and Lianne Hart in Houston contributed to this story.