US Energy Sec. Richardson orders power sales

California averted blackouts Wednesday afternoon after US Energy Sec. Bill Richardson ordered power plant owners to sell electricity to the California Independent System Operator at a price to be determined by the Energy Department. But ISO officials said the state is not out of the woods yet and declared a Stage 2 emergency at 2 p.m. PST, signifying reserves have fallen below 5%. The ISO said it expects to ask the state's investor-owned utilities to activate voluntary load shedding programs.


Ann de Rouffignac
OGJ Online

California averted blackouts Wednesday afternoon after US Energy Sec. Bill Richardson ordered power plant owners to sell electricity to the California Independent System Operator at a price to be determined by the Energy Department.

But ISO officials said the state is not out of the woods yet and declared a Stage 2 emergency at 2 p.m. PST, signifying reserves have fallen below 5%. The ISO said it expects to ask the state's investor-owned utilities to activate voluntary load shedding programs at 4 p.m. PST. Demand is projected to peak at 33,767 Mw at about 6 p.m.

Earlier in the day, Kellan Fluckiger, chief operating officer of the ISO, warned blackouts appeared imminent because electricity producers were refusing to sell electricity on credit any longer. Out-of-state firms feared California utilities would not be able to pay their bills. The utilities have said they are at risk of insolvency because they are squeezed between the high cost of power and the rate caps imposed by the California legislature.

After a meeting with California Gov. Gray Davis, California Sen. Dianne Feinstein, and Federal Energy Regulatory Commission Chairman James Hoecker, Richardson invoked the Federal Power Act and ordered out-of-state generators to sell to California and to do so immediately, according to published reports.

Richardson also said the Energy Department will set rates for power sold to the ISO at a level ensuring a "fair return" to generators, but not at rates that will cripple utilities and consumers. He also ordered Bonneville Power Administration and the Western Power Administration�both federal entities�to ship as much power as possible to California.

Earlier, Richardson criticized Kaiser Aluminum Co. for taking advantage of high market prices for electricity in the Pacific Northwest. Kaiser has announced it will shut down operations in the region and remarket power purchased from the Bonneville Power Administration for prices well in excess of what it paid for the electricity.

�I believe that this act by the secretary had a significant impact on availability of power and will stabilize the supply for us,� Fluckiger said during a 3 p.m. telephone press conference. �This is a large contributing factor for us and it addresses the credit concerns that will get us through a few days.�

But, he added, avoiding blackouts will depend on if the extra 5,000 Mw that were suddenly made available will continue to be available for today�s peak. Fluckiger says that this will help get the state over the rough days ahead but the situation will remains difficult for weeks to come.

�If the water levels stay the same for the hydro, if the loads stay the same and the generation continues out of service, the picture will be the same,� says Fluckiger. � We are not out of the woods yet.�

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