Tech Firms Say Outages Costing Them Millions

Major Silicon Valley technology companies said Thursday that they have lost tens of millions of dollars in the last two days of rolling blackouts and have begun to intensify their lobbying efforts for increased energy production and incentives for reduced consumption.

Acknowledging that some consumers and small businesses blame them for the soaring demand for electricity, the companies pledged to reduce their own usage by 10% in the next two years. Santa Clara County’s peak power consumption has climbed by a third since 1994.

“The time for pointing fingers is over, and the time for joining hands must begin,” said Carl Guardino, president of the 190-member Silicon Valley Manufacturing Group. “This is the most critical issue Silicon Valley and the state of California have faced in the past few decades.”

Scores of manufacturing group employers met with state lawmakers Thursday to press for speedier approval of power generation, both at major plants and inside technology companies that are trying to take matters into their own hands.

Ellen Hancock, chief executive of meeting host Exodus Communications Inc., said that her company is planning to produce more of its own power but that the regulatory process could take a year, as opposed to as little as a month in other states. Exodus houses other firms’ Web sites in banks of computer servers around the state.

“Our intent is to cogenerate power on one of our campuses,” Hancock said. If others in the industry follow suit, “we can be viewed as part of the solution instead of part of the problem.”

Guardino said that of the 75 members of the trade group that responded to an e-mail survey Wednesday and Thursday, three in four had been hit this week by power outages lasting 90 minutes or longer.

With thousands of workers idled, the cost “is already in the tens of millions of dollars,” he said.

Advanced Micro Devices Inc., the biggest maker of computer processing chips after Intel Corp., lost power at a development facility and most of its other buildings in Sunnyvale for an hour and a half Thursday morning. Backup power kicked in at the development lab, AMD spokesman John Greenagel said.

“We had very little notice,” he said. Security officers walked through offices telling employees to save their electronic work and turn off their computers.

IDT Inc., which makes silicon chips for the communications industry, shut down a 572-employee plant in Salinas for four hours Wednesday after it was warned that it could lose power.

Then the plant’s power crashed Thursday for real, probably ruining work in progress, Vice President Dave Tote said. The lost chips could have been sold for more than $100,000, he said.

Although IDT can make up the lost revenue, “we’re generally frustrated by the whole process,” Tote said. “We’re a factory, and we want to run at peak performance.”

Other major Silicon Valley companies hit in blackouts include Apple Computer Inc. in Cupertino, Excite@Home in Redwood City and the Palo Alto headquarters of Varian Inc., a maker of scientific instruments and electronics.

Hewlett-Packard Co. lost power at two buildings in Mountain View and one in Cupertino Wednesday, affecting about 400 employees, spokesman Dave Berman said. On Thursday, the power went out at several more of its Bay Area buildings.

The city of Santa Clara, which is in the heart of Silicon Valley, was able to use its program of voluntary load reduction both days to avoid blackouts, the municipal utility said.

For some who were blacked out, the power loss wasn’t as much a serious problem as it was a troubling sign of what the future may hold.

“The concern everybody has is that if the high costs persist and the uncertainty persists, it’s going to make it more difficult for manufacturing in California,” Varian Vice President Laurie Alire said. And if power bills go up, that may become an issue for recruiting and retaining employees--already a challenge in the Bay Area.

“The cost of living around here is high enough without thinking about the size of the bills we are going to be getting,” Alire said.

At a Santa Clara news conference, Guardino and Hancock said both increased power production and reduced consumption were needed.

“Employers are willing to do more than their share,” Guardino said. But he said rewards for companies and residences will help. “The more we can incentivize sound behavior, the better off we can be.”