Big Power Users See Dark Side of Reduced Rates

Rolling blackouts like those that struck Northern California on Wednesday would have been a breeze at places like Pomona College, where back-to-back outages have been interrupting campus life for the past two months.

While thousands of utility customers in the state were left in the dark for up to 90 minutes, the college was faced with a second straight day without power.

That’s because long before the power crisis became acute, Pomona College--like more than 1,200 other big users of electricity--signed up for a program entitling it to reduced rates in exchange for agreeing to drastically reduce power consumption whenever state supplies run short.

It’s a bargain that many companies and organizations now regret.

“Certainly, we have gotten more than we ever bargained for, especially in the last year,” said Cynthia Peters, the college’s associate director of public affairs.

As the energy crisis escalates, many of these customers are left with no choice but to abandon the agreements they have lived with for years and instead pay whopping fines.

The California Institute for the Arts in Valencia, for instance, estimates its daily penalty for keeping the school open during Stage 3 days reaches about $40,000.

“There’s no way we can afford this type of cost,” said Dean Houchin, vice president for administration. “But we can’t afford to shut the school down either.”

The Antelope Valley Union High School District expected its power bill to reach $250,000 for Tuesday and Wednesday, according to Supt. Bob Girolamo.

If the crisis continues much longer, the district will be faced with a lose-lose situation: squander its $5-million budget reserve on electric bills, or cut back more school hours and face possible fines by the Department of Education.

“If we go to a minimum day, we’ll be penalizing ourselves through the state,” Girolamo said. “And if I don’t do it, I’ll get the big hit through Edison.”

Schools aren’t the only so-called “interruptible” customers who are complaining. Hotels, hospitals, retailers, big manufacturers and other big outfits are worried about the economic ripple effects.

“One company told me that their penalty costs in January alone so far are approaching $1 million and penalties from October to December were just shy of $2 million,” said Julie Puentes, executive vice president of the Orange County Business Council. “And that is not the only company that has quoted me figures in that range.”

Under programs run by Southern California Edison, Pacific Gas & Electric and San Diego Gas & Electric, customers get rate discounts of about 15%.

They can be called upon to reduce power consumption for up to six hours at a time, for a total of about 100 hours during one calendar year. Fines for not complying can reach more than 100 times the normal costs. That means 7 cents a kilowatt hour suddenly becomes $7.

Theoretically, the state’s load can be reduced by more than 2,000 megawatts if all customers comply, providing critical relief in emergency situations. But given the voluntary nature of the program, actual relief is typically lower.

Since this past summer, when the never-ending declarations of emergencies began, customers have been complaining about being called on time and time again.

“If I could get out tomorrow, I’d get out of it,” Houchin said, referring to his school’s contract with Edison.

In fact, the Public Utilities Commission, fearing widespread flight from these programs, voted to temporarily suspend until March 31 the window during which companies can opt out or reduce the amount of power they are willing to give up.

PG&E;, which lost 30 of its 200 customers during its last opt-out period in the fall, said it sympathizes with members of its program.

“Certainly no one who signed up for the program expected what’s happened over the past two days,” said Andrew Bell, an analyst in the rates department.

As a comparison, PG&E; never asked for more than four interruptions a year, never needed more than 20 hours in any given year and never resorted to such measures in the middle of the winter, Bell said.

Customers “generally don’t mind carrying out the program if it proceeds as expected,” he said. “But these days they have multiple curtailments that are presenting multiple problems for them.”

To limit the effect of these interruptions, some Edison customers agree to partial shutdowns, finding ways to reduce consumption without having to close their doors or--in some cases--stop the presses. A difficult balancing act, in any case.

“We can’t completely power down, because the presses do have to run,” said Gene Janski, vice president of operations for Los Angeles Newspaper Group, which owns the Los Angeles Daily News.

“In order to keep the kilowatts down, we run the presses slower,” Janski said.

In Buena Park, the Big Foot Rapids Ride, the biggest energy user at Knott’s Berry Farm, was closed on Wednesday. And lights, computers, radios and small appliances were turned off in areas where theme park visitors were not affected.

“If we are required to and need to we would start shutting down rides,” said spokeswoman Susan Tierney.

Many of the so-called interruptibles, never expecting to be called on in the winter, have bought or rented generators to get them through their darkest hours.

Hanson Aggregates Pacific Southwest Inc., which bills itself as the largest rock and sand mining company in the world, shuts down most of its 23 locations when called on to reduce power use. It relies on a diesel-powered generator to keep its concrete-making plant in San Diego’s Carol Canyon up and running.

“What that means to us is lost production. We won’t be able to make it up,” said Marvin Howell, the company’s director of land use planning.

“At the end of the day it means someone isn’t going to get their driveway paved, a home isn’t going to get built, or a school isn’t going to be finished on time.”

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Times staff writer Richard Faussett contributed to this story.