Some Power Customers Could See Disruptions
Enron Corp. warned electricity customers Monday that it might be unable to serve them all because of the financial problems that led the Houston energy giant to file for the largest bankruptcy in U.S. history.
Such a pullout could cause short-term disruptions in California if done with little notice, especially on a cold day with many power plant outages and extra demand from holiday light displays, energy officials warned.
But the state’s relatively new power-buying operation would be up to the task of lining up any extra electricity that might be needed for Enron’s customers, officials said. They just want as much notification as possible to avoid the frightening shortfalls of last winter and spring, when power buyers frantically scoured the West by phone to scare up any available megawatt to prevent rolling blackouts.
“If the entire amount was dumped back on the grid without giving the grid time to absorb it, that would not be such a good thing,” said Pete Garris, acting deputy director in charge of the California Department of Water Resources’ power-buying division.
Enron is believed to supply as much as 1,400 megawatts of electricity demand by institutional and industrial customers in California, including the University of California and California State University systems. That is equivalent to the usage of slightly more than 1 million average homes, or nearly 4.5% of peak use on a typical winter’s day.
For nearly a year, DWR has been charged with buying about one-third of the power needed by the customers of Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric. A severe cash crunch and the collapse of the state’s primary power market left those utilities without the means to buy electricity.
Enron is best known as an energy trader--once the world’s largest--and pipeline owner, as well as a politically powerful proselytizer for the deregulation of electricity and other commodities. But the company also runs a fast-growing marketing business that delivers power to industrial customers as a kind of utility surrogate.
Enron continues to operate under protection from creditors under Chapter 11 of the U.S. Bankruptcy Code while it comes up with a plan to pay off its more than $31 billion in debts.
“So far, the Enron situation has not affected the reliability of the electrical system,” said Stephanie McCorkle, spokeswoman for the California Independent System Operator, which runs the grid of long-distance transmission lines that serves about 70% of the state.
However, some customers have received unsettling “Dear Customer” letters from Enron.
“They assured us that things would continue as before, but they also said that they are reviewing the situation,” said Chuck McFadden, spokesman for the UC system, which uses Enron power at seven of nine campuses.
The Cal State system, which relies on Enron to light 19 of 23 campuses, has received no direct communication from Enron, said spokeswoman Clara Potes-Fellow.
On its Web site, Enron sought to reassure electricity and natural gas customers that it would continue to provide service. But the company went on to say: “If ... for some reason, Enron does not provide gas or power, the utility will automatically serve these customers.”
That could be a problem in California, where utilities no longer buy additional power for their customers and regulators have ended the program that allows new customers to pick an electricity provider other than the traditional utility. If Enron were to drop customers, they would revert to their former utility, and any extra power would have to be supplied by the state, said Terrie Prosper, a spokeswoman for the California Public Utilities Commission.
“I don’t think it would be a problem,” she said. “It’s not like a whole city coming online all at once.”
In a signal that Enron is already pulling back, the company informed the Department of Water Resources on Monday that it would no longer fulfill a short-term contract with the agency to supply 800 megawatt-hours a day of electricity to state buyers.
PG&E; spokesman John Nelson noted that the utility would deliver power to any customer that needs it, but regulators and power buyers would have to work out where that power would come from.
Gov. Gray Davis said he doubts Enron’s bankruptcy filing will have an immediate effect on California, although he predicted it could result in rising wholesale electricity prices in coming days.
“It just shows you what a chancy business electricity deregulation is,” Davis said in Mexico City, where he was meeting with President Vicente Fox.
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Times staff writer Dan Morain in Mexico City contributed to this report.
