Azusa Business Blackouts Occur Right on Schedule
California Amforge Corp.’s operations were idle last Monday because of the energy crisis, even though the region wasn’t experiencing a power emergency.
The Azusa manufacturer of aerospace parts has worked out a deal with Azusa Light & Water, or AL&W;, to shut down every Monday, all summer long, to help the municipally owned utility meet an obligation to trim customer demand.
In hindsight, the company closed a whole day for nothing: The state’s power grid had plenty of electricity. But the ability to plan around a fixed schedule rather than shut down heavy equipment on the fly is worth it, according to William Taylor, president of California Amforge.
“When we’ve got [metal] in the furnaces, losing power can create a lot of problems,” Taylor said. “We could lose $50,000 worth of material just like that.”
Some business advocates have been lobbying for a system of planned, rotating business shutdowns as an alternative to rolling blackouts. Better to have companies take turns shedding load in a scheduled, orderly fashion, the thinking goes, than have them scrambling after eleventh-hour warnings or cursing the darkness of sudden outages.
It’s an aggressive form of conservation that’s largely been ignored by policymakers and has yet to be implemented by the big investor-owned utilities. But it’s working in Azusa, a community of 45,000 in the east San Gabriel Valley. The city’s municipally owned utility has managed to shed 5% of its electrical demand by enticing some big commercial customers to switch off assembly lines and equipment during peak periods all summer long.
Some dismiss planned shutdowns as too complicated and too costly to the state’s businesses. But others say the economic toll of repeated blackouts is so potentially devastating that tiny Azusa may have something to teach the rest of the state.
“It’s an excellent insurance policy against disaster,” said Peter Navarro, an associate professor of economics and public policy at UC Irvine. “This system of random rolling blackouts is stupid. They’ve got a better idea.”
A working-class community that counts a downtown drugstore among its major development coups, Azusa isn’t known as a trendsetter, particularly with regard to electricity. The town’s municipal utility doesn’t even own its own power plant, instead depending on purchases from outside generators. That can be a risky proposition, given the skyrocketing prices of electricity on the spot market over the last year. But AL&W; has locked in plenty of low-cost power on long-term contracts. That’s why city officials thought their customers were largely protected from the blackouts plaguing businesses and residents in nearby Southern California Edison territory.
Trouble is, AL&W; and other local municipal utilities are still connected to California’s power grid via transmission services provided by Southern California Edison. Agreements with Edison and the California Independent System Operator, or Cal-ISO, require them to share their electricity during emergencies. In the past, that meant giving up kilowatts during disruptions such as earthquakes or blown transmission lines. But on March 19, Azusa and other munis found out the hard way they were expected to curtail usage when the grid was suffering because big investor-owned utilities couldn’t secure enough power to service their own customers. For the first time since California’s energy crisis began last summer, Azusa was forced to throw the switch on its own ratepayers.
“That was a real wake-up call,” said Rick Cole, Azusa city manager. “It shocked a lot of folks who had thought we were immune.”
The city of Vernon last month filed a complaint with the Federal Energy Regulatory Commission, arguing it shouldn’t be penalized for the big guys’ supply problems. FERC has yet to rule on that complaint, which Azusa and four other cities joined in support. But AL&W; officials decided that simply filing some legal papers wouldn’t be much consolation to their customers if they were forced to pull the plug again. They decided to mount an aggressive curtailment campaign to be ready the next time Cal-ISO came calling.
“We support what Vernon is doing,” said Bob Tang, assistant director of resource management for AL&W.; “But as a practical matter, we had to do something more.”
What they did was come up with about $750,000 worth of incentives to persuade nearly two dozen big commercial customers to cut back. A handful agreed to shut down their operations on short notice in the event of a power emergency, similar to the “interruptible” programs offered by the large utilities.
In Azusa, most companies opted for scheduled shutdowns to help AL&W; trim its peak load on a daily basis.
The program has been tailored to fit companies’ needs. Whereas California Amforge chose to close one business day a week, the Azusa quarry owned by Mexican cement maker Cemex opted to run at night instead of during the day. Chocolate maker Morris National Inc. agreed to idle its hard-candy line during prime time and to shed nonessential equipment during a power emergency.
Flexibility and personal attention were key in gaining cooperation, said AL&W;’s Jesus Marez, who hammered out the load-shedding agreements. “We know these folks by their first names and have worked closely with them over the years,” said Marez, head of business development and public benefits for the utility. “Those personal relationships were key.”
They’re also the reason why Azusa’s example may be tough to replicate on a wider scale. Marez admits it took a lot of effort to craft individual plans for each business, which would be a challenge at a larger utility. Some communities probably would be unwilling to suspend noise ordinances for a rock quarry to run heavy machinery at night, as Azusa did for Cemex. Service businesses such as retailers would have difficulty changing their hours. And because electricity can’t be stored, some have questioned the necessity of shutting down their operations unless blackouts are imminent.
“The reality is that you might be off nine Mondays and it’s only on the 10th Monday that [the grid] needs the power,” said Dave Wright, deputy public utilities director for the city of Riverside. “Companies don’t want to give up that much productivity.”
But advocates of scheduled outages say that’s missing the point. The state Energy Commission said Californians used 11% less electricity last month compared with May 2000, largely because of conservation. Many businesses are already doing planned load shedding on an ad hoc basis by starting their work days earlier to minimize their risk of blackouts. An organized push, along with additional incentives, could encourage others to do the same, helping the state avoid emergency warnings and blackouts altogether.
“This isn’t rocket science,” said Joseph Hsu, director of utilities for AL&W.; “We did it. Others can do it.”
The Big Three utilities all have plans in the works to launch similar programs. Edison’s Scheduled Load Reduction Program, for example, would compensate certain business owners 10 cents per kilowatt-hour for the amount of load shed during peak periods, even when no power emergency exists, according to Lynda Ziegler, Edison’s director of business and regulatory planning. The California Public Utilities Commission has not yet signed off on the program.
In the meantime, Azusa is moving forward with even more conservation efforts. City offices are awash in electric fans to save on air conditioning, and 800 local school kids have been recruited as “Power Cadets” to take energy-saving tips home to their families. The city also sponsored a video contest to promote conservation, with one of the winning entries featuring a kilowatt-wise Little Red Riding Hood scolding Grandma: “My, what a big electric bill you have.”
City Manager Cole figures Azusa is in good shape to weather the summer. In addition to the 2.5 megawatts, or 5% of peak demand, reduced through scheduled load shedding, Azusa has the capability to shave 3.5 megawatts more through other means during power emergencies to ward off blackouts. But the whole point of the former is to avoid the latter, he said.
“Our strategy is to reduce peak usage before we’re in crisis,” Cole said. “If everyone did the same there would be no need for rolling blackouts in California.”
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