State Facing Summer Blackouts, U.S. Warns
U.S. Energy Secretary Spencer Abraham told Congress on Thursday that he believes power blackouts are inevitable in California this summer, but he resisted suggestions that the federal government aggressively intervene to avert them.
Abraham, the Bush administration’s point man on the power issue, said the administration would not oppose California’s purchase of three major private utilities’ electrical transmission systems. That removes one potential obstacle to Gov. Gray Davis’ plan to rescue the two biggest utilities, Pacific Gas & Electric Co. and Southern California Edison.
State officials have acknowledged that blackouts are likely this summer, although their latest forecasts are that the state could avoid them through an aggressive combination of conservation, new power plants and long-term energy contracts.
“I think all these gloom-and-doomers are just doing it for political reasons,” Assemblywoman Jackie Goldberg (D-Los Angeles) said in response to Abraham’s remarks. Goldberg has been leading the Assembly’s investigation into what summer may bring.
“The fact is, we’ve crunched these numbers four times, we’ve done a lot of work on this, and I think we could squeak by--barring any unforeseen exigencies,” she said.
However, power generators, which have been warning for weeks that summer could bring an overwhelming surge in demand, called Abraham’s prediction right on target.
“He’s articulated what most Californians refuse to believe, which is we’re in the midst of a power crisis and a capacity shortage,” said Gary Ackerman, executive director of the Western Power Trading Forum, a group of energy generators and marketers.
Ackerman said “all these rosy forecasts” by the state assume that California will be buying substantial amounts of electricity from the Pacific Northwest, which usually has abundant hydroelectric power. But a drought could undermine that assumption, he said.
As if to underline his point, the state plunged into a Stage 2 energy emergency Thursday when imports from the Northwest suddenly plummeted because of water shortages in Oregon, Washington and western Canada. A Stage 2 emergency is declared when electricity reserves fall below 5% of the state’s total demand.
The Northwest “is well on the way to the worst water year ever,” said Mike Hansen, spokesman for the Bonneville Power Administration, which markets power from a network of federal dams. Washington Gov. Gary Locke officially declared a drought in that state Wednesday.
Against that gloomy backdrop, Abraham delivered his first lengthy public comments to Congress on the California electricity crisis. He labored to maintain the Bush administration’s tough political balancing act on the issue--trying to dispel the impression that, as he put it, the president “does not care about California,” while holding firm against federal measures demanded by state leaders.
Abraham said he has spent “a substantial amount of every single day working on the issues that confront us in California and the rest of the West.”
But he drew the line at the wholesale electricity price controls advocated by some Western governors and senators.
Davis, along with California Sens. Dianne Feinstein and Barbara Boxer, say temporary price controls would stabilize the dysfunctional electricity market that has brought PG&E; and Southern California Edison to the brink of bankruptcy and has cost California billions of dollars for power.
In a letter sent to Senate leaders Thursday, Davis said: “The federal government has an obligation and responsibility to take corrective action on one issue that falls squarely on the shoulders of Washington--excessively high wholesale energy prices.”
But Abraham contended that price controls would only make matters worse.
“Let me be clear,” he said. “Any action we take must either help increase supply or reduce demand.”
Price controls would accomplish neither goal, he said. Instead, he warned, such caps would potentially worsen the anticipated summer blackouts.
Citing projections that summer peak demand in California will fall about 5,000 megawatts short of supply, he said that price controls “will seriously aggravate the supply crisis, since they will discourage investment in new generation while eliminating incentives to reduce demand.”
Abraham’s expressions of sympathy for California failed to move Feinstein.
“I was really surprised by the ideological hardness of your statement” on price controls, she told him.
Sen. Jeff Bingaman (D-N.M.), the top Democrat on the Energy and Natural Resources Committee, demanded to know Abraham’s solution to the crisis.
Abraham responded that the Federal Energy Regulatory Commission has authority to address excessive prices. He cited the agency’s order last week for 13 energy companies to justify their prices or reimburse California $69 million.
A number of lawmakers have complained that FERC has not been aggressive enough in protecting consumers.
FERC Chairman Curt Hebert Jr., testifying before the committee, indicated that the agency will issue another order, possibly as early as today, dealing with wholesale rates charged to California utilities in February.
And Abraham said he had sent a letter to Davis advising him that the Bush administration would not oppose the state’s purchase of the utilities’ transmission systems.
“While the actions you propose might not be the course the administration would choose, we recognize and respect the state of California’s prerogative to determine how to restore the financial health of your utilities,” Abraham wrote.
FERC must approve the takeover, and Hebert had previously said state acquisition of the utilities’ high-tension power lines would amount to “nationalization” that might not be in the public interest.
In other energy-related developments Thursday:
* The Stage 2 emergency was declared after only 1,600 to 2,000 megawatts flowed into the state from the Northwest and Canada, compared to 2,700 megawatts Wednesday. Stephanie McCorkle, spokeswoman for the agency that operates the statewide grid, added that power plant outages took away an additional 10,147 megawatts of generating capacity. One megawatt is enough electricity to power about 1,000 homes.
* The state Assembly approved several bills aimed at easing the crisis. A measure by Assemblywoman Carole Migden (D-San Francisco) would protect power supplies by preventing too many power plants from shutting down at the same time.
Two other bills, by Assembly members Roderick Wright (D-Los Angeles) and Lynn Daucher (R-Brea), would expand the so-called interruptible programs under which large users agree to go without power in emergencies, but would allow power users to bail out if the cutoffs were more than they bargained for.
The bills now move to the Senate.
* State regulators ordered Edison and PG&E; to rescind hundreds of layoffs that, they said, have begun to harm electric service. They demanded that the utilities halt plans for future layoffs.
“The layoffs . . . have reduced the level of service below what customers expect as an adequate, efficient, just and reasonable level,” the Public Utilities Commission said in a 4-1 ruling.
Edison had proposed to lay off 1,600 workers in the coming months, in addition to 400 cut in December. PG&E; released 325 contract workers and hiring hall employees and planned to cut another 675 jobs if its financial situation did not improve.
Officials from both utilities expressed frustration with the order.
“It’s ironic that they drove us to the edge of bankruptcy [by not allowing the utility to raise rates], and when you try to cut costs . . . they say you can’t do that either,” said Edison Senior Vice President John Fielder. He said the utility will look for other spending that can be reduced. A PG&E; spokesman expressed similar annoyance.
* The PUC put off a vote on whether to investigate the financial relationships of PG&E;, Edison and San Diego Gas & Electric Co. and their parent companies.
* At a Senate hearing focusing on electricity consumption, Bill Julian, a PUC official, testified that the commission has been studying ways to raise rates on consumers who use large amounts of electricity. Julian said the idea is to penalize consumers who fail to conserve.
But he also said the 1996 legislation that deregulated the state’s electricity system appears to restrict the PUC’s ability to tinker with the rate structure in such a manner.
* A coalition of California religious leaders delivered an open letter to Davis asking him to push for a clean solution to the energy crisis that does not “sacrifice the health of Californians” or excessively punish the poor and minorities.
The California Council of Churches, a diverse organization of clergy serving more than 1.5 million churchgoers, teamed up with the American Lung Assn. to urge the governor to focus on conservation as the primary means of getting through the crisis and to promote clean-energy sources such as wind and power as long-term solutions.
“It is a sin not to protect people,” said the Rev. Dexter McNamara of the Sacramento Interfaith Service Bureau.
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Simon reported from Washington, Warren from Sacramento. Times staff writers Miguel Bustillo and Dan Morain in Sacramento, Nancy Rivera Brooks and Mitchell Landsberg in Los Angeles and Tim Reiterman in San Francisco contributed to this story.
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