State Power Players’ Feud Draws Notice of Regulators

A feud between two of the most powerful players in the state’s electricity market is attracting attention from regulators and lawmakers worried that the spat could leave California and other Western states vulnerable to blackouts.

The combatants are formidable. In one corner is the Los Angeles Department of Water and Power, which generates and delivers electricity for 3.8 million Angelenos. In the other is the California Independent System Operator, the obscure agency known as Cal-ISO that is responsible for running 75% of the state’s electricity transmission lines.

The dispute itself, however, seems a bit petty. Cal-ISO officials complain that they got the cold shoulder when they sought information from DWP during two late summer blackouts in Southern California.

Cal-ISO officials said feelings were further bruised when a DWP worker demanded payment of a $186-million debt when the grid operator asked about buying emergency power as high temperatures and wildfires threatened a major electricity transmission line last month.

But the dust-up between the two California power players is sending sparks through the tightknit fraternity of regulators, utility executives, grid operators and power consultants charged with keeping electrons flowing from Idaho to Tijuana.

“People are talking about this issue throughout the West,” said Pedro Pizarro, senior vice president for power procurement at Southern California Edison Co., which provides electricity for 13 million people in Los Angeles, Orange and inland counties -- but not in the city of Los Angeles. “We are all part of an interconnected network.”

And across the sprawling, multistate grid, where power providers depend on each other for electricity during emergencies, officials fear the feud could contribute to the sort of cascading blackout that plunged much of the Northeast and Midwest into darkness in August 2003.

“You need your neighbors from time to time to help you get through a situation,” said Gary Ackerman, executive director of the Western Power Trading Forum, a trade group that encourages power market competition. “Having good relations with your neighbor is just being smart.”

That isn’t lost on the folks who run the two agencies involved in the dispute. Mary Nichols, a veteran environmentalist named to the Board of Water and Power Commissioners by L.A. Mayor Antonio Villaraigosa and recently elected its president, plans to meet next week with Yakout Mansour, Cal-ISO’s president and chief executive, in an effort to smooth things over.

“Our guys on both sides look stupid for carrying on this childish battle with each other,” Nichols said. “It’s macho, and one thing I can say is that I’m not macho.”

The strained relationship has touched off a flurry of inquiries. The Federal Energy Regulatory Commission, recently authorized by Congress to oversee the reliability of the nation’s power grid, “is informally looking into the circumstances surrounding this,” commission spokesman Bryan Lee said.

The Salt Lake City-based Western Electricity Coordinating Council, which monitors the electricity grid in 11 Western states and parts of Canada and Mexico, is looking into the blackouts that hit DWP customers Aug. 25 and Sept. 12 and what effect they may have had on Cal-ISO and other grid operators.

State Assemblyman Lloyd Levine (D-Van Nuys) will convene his Utilities and Commerce Committee in Los Angeles next month to hear from utilities and grid operators about the blackouts. Levine wants to find out what role, if any, miscommunication between the DWP and Cal-ISO played in the emergencies.

“The job of [Cal-ISO] and DWP is to cooperate and keep the lights on, not to engage in territorial fighting,” Levine said.

The need for cooperation lies in the complex system of generating stations and transmission lines that links the various agencies and utilities that supply power to Southern Californians and throughout the West.

“Every plug in every house and business in the [region] is tied together,” said coordinating council spokesman Kwin Peterson, recalling how sagging transmission lines in Oregon caused outages across several Western states in 1996.

All of the connections aren’t necessarily formal. The Los Angeles utility, for instance, isn’t part of the Cal-ISO grid and isn’t legally required to sell power to the state agency or anyone else who asks for it.

But nearby utilities, such as Edison and San Diego Gas & Electric Co., get much of their electricity over transmission lines controlled by Cal-ISO. Those lines can be affected by disruptions in the DWP’s grid, which has its own system of transmission lines reaching as far as Oregon.

Cal-ISO and the private utilities also will sometimes seek to buy power from the DWP if they are running short of electricity because of an unexpected surge in demand or drop in supply.

According to Cal-ISO’s Mansour, the DWP was anything but cooperative during the recent emergencies on the Southern California grid.

When a major DWP transmission line from Oregon failed Aug. 25, Mansour complained, L.A. officials “did not respond” to repeated requests for information he said was needed to maintain the reliability of Cal-ISO’s system. The failure caused outages for some customers of Edison and San Diego Gas & Electric.

Next, Mansour said, the DWP failed to provide timely information Sept. 12 about a human error that darkened half of the city of Los Angeles.

“We learned of the details from TV stations rather than your operators,” Mansour said in a Sept. 29 letter to DWP General Manager Ronald Deaton.

“The last straw,” Mansour said, came Sept. 28, when Cal-ISO called the L.A. utility to ask about buying reserve power as wildfires threatened the same line from Oregon that failed a month earlier.

A DWP employee told the state agency that the “first megawatt will cost you $186 million ... because that’s what you owe us for the last time I sold you power years ago.”

The DWP employee, Ken Larson, was referring to money owed to Los Angeles for electricity sold to the state during the 2000-01 energy crisis. The city is awaiting payment as part of a pending settlement engineered by federal regulators.

On Friday, Larson denied that he was rude to the Cal-ISO representative. He contended that the Cal-ISO employee didn’t say that the agency was facing an emergency and didn’t follow the proper procedures for requesting power.

Deaton noted that the DWP had a policy of not selling electricity to Cal-ISO because of the unpaid bill. The DWP does sell power to Edison and other local utilities, he said.

Deaton dismissed Mansour’s charges of poor communications Aug. 25 and Sept. 12 as “simply not accurate.” He said his agency followed established procedures by notifying the Western Electricity Coordinating Council’s representative at Cal-ISO headquarters about problems affecting the grid.

Although Deaton pledged to improve relations with Cal-ISO, the message might not have reached all of his workers. Last week, people identifying themselves as DWP employees offered T-shirts and coffee mugs emblazoned with the now-infamous Larson quote for sale on the CafePress.com website.

The items -- which Mansour denounced as being in “poor taste” -- were gone from the website by Monday. The incident, if it was the work of DWP employees, was not endorsed by management, said Nichols, the DWP’s new leader.

“These are guys who have got too much boring time on their hands, sitting around the control room,” she said.