DOE extends emergency order to sell power to California

Ann de Rouffignac
OGJ Online

This week California has been getting by with fewer power shortage emergencies thanks to more megawatts in service, better weather in the Northwest, and Energy Secretary Bill Richardson�s emergency order.

Late Wednesday, Sec. Richardson extended his emergency order for California until January 5. The order was issued under the auspices of the Federal Power Act that requires generators and marketers to make power available to the California Independent System Operator to keep the lights on in that state.

�The order is helping us out,� says Patrick Dorinson, spokesman for the California ISO. �And we only have about 6,000 Mw out of service.�

In November, the state found itself crippled with power plant outages for scheduled and unscheduled repairs and maintenance. Some days California had as much as 11,000 Mw out of service.

When the Northwest experienced an early winter cold snap, the state had to scramble for power day after day. The ISO issued continuous Stage 2 emergency alerts calling for interruptible load and conservation. California imports as much as 8,000 Mw of its load from out of state generators especially from those located in the Northwest.

Complicating the crisis, was a liquidity crunch by two of the state�s largest utilities that were strapped for cash because of mounting wholesale power bills. The $8 billion debt accumulated by the utilities that were not able to recover the costs of purchased power in rates threatened their credit ratings. Sellers were then reluctant to sell power to the ISO fearing they would not get paid. Department of Energy was asked to intervene with the emergency order by the ISO because it could not buy power needed to keep the lights on.

For the next wee, the state is focused on whether to raise rates for the two utilities to ward off credit downgrades and possible bankruptcies.

If the rates are increased by the California Public Utility Commission, that might stabilize the utilities and keep the system reliable. But it will do nothing to solve the underlying problem of short generation supply.

How much the utilities raise rates and whether the ratings agencies find that acceptable, will not be known until the California Public Utility Commission meets on Jan. 4, 2001.

�Once the PUC votes, we will see where we are,� says Dorinson.

Dorinson fears a rate increase, unless substantial enough to provoke conservation, will not solve the crisis though. Demand continues to grow and few new resources are available.

�I think the �perfect storm� for consumers will be rates are increased, bills swell, and there is still no power next summer,� says Dorinson.

California Power Exchange�s spokesman Jesus Arrendondo agrees.

�What we need is more electrons,� he says. �You still have a wreck and irreparable damage may have been done.�

Arrendondo worries that with the uncertainty and volatile political climate, few generators will be willing to step forward and invest in new power plants in California now.

Dorinson says that officials should layout the severity of the problem.

�What we need to do is to tell Californians how severe the problem is. Fixing it will take time and their cooperation is essential.�

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