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Will Blackouts Be Back? 

With many power plants scheduled to go down for repairs, a stretch of bad weather could spell trouble

Wednesday, Nov 14 2001
Remember when the scariest thing in the mail was the energy bill?

Thanks in part to much-lobbied-for federal price caps, electricity prices have settled down to almost pre-crisis levels, and Californians haven't experienced rolling blackouts since June. The summer that was supposed to make the state look like a Third World country went by without incident.

But has the energy crisis passed, or paused?

While federal price caps ensure that the worst is over for your energy bills, the same cannot necessarily be said for the reliability of California's electrical transmission. Industry insiders say that because an unusually high number of plants will be down in the next few months for maintenance -- which they were barred from receiving during the summer -- a dash of extreme weather early in the winter or during the spring could mean more blackouts for California. Potentially, that could mean higher electricity bills for consumers.

"Clearly, there was a lot of work deferred," says Pat Dorinson, a spokesman for Mirant Corp., which owns more Bay Area power plants than any other company. "I think [the amount of power offline] could go higher, and then you get the forced outage problem again."

According to the state grid operator's projections, California is scheduled to be without 4,000 to 8,000 megawatts of power daily from now through May 2002 as power plants go offline for maintenance. (One megawatt is enough power for about 1,000 homes.) About 2,500 additional megawatts are usually offline at any given time due to unplanned outages, such as mechanical breakdowns, which are common because 34 percent of California's electricity comes from plants built before 1970. And this winter the state figures to get less hydropower than usual because of the drought that plagued the West all summer.

Should a surge in demand coincide with a high-maintenance day, the grid's reliability could be imperiled. None of this necessarily means Californians need to dig up old electricity bills and rememorize their outage blocks, but experts say it bears watching, especially if the weather gets cold early.

"The word "potential' is the key here," says Gary Ackerman, president of the Western Power Trading Forum, which represents generators' interests. "There's a probability, with an early cold snap, that we could have a gas shortage and a price spike. ...

"What you can't anticipate is if all these plants are supposed to be unavailable, and then others suddenly aren't available [because of breakdowns]. It's normal to have plants go down," Ackerman continues. "And that's a scenario I'd really urge people to keep an eye on, because consumers get upset when they're not forewarned. And you hope nobody rushes to the federal government for tighter caps because ... price changes aren't a result of any market manipulation."

There are many, of course, who disagree. They argue that the energy fiasco -- which saw prices now capped at $92 a megawatt reach $3,000 last spring -- was primarily a result of so-called "gaming," in which generators purposely cut back their plants' output to raise prices. A small handful of whistle-blowing power plant workers have said as much, suggesting manipulative tendencies that may have been exacerbated by the state's bizarre deregulation structure. Indeed, SF Weekly and other news organizations have reported that, at times, the state's contracts with generators actually encouraged them to behave this way (see "Contract Killings," May 30).

To some consumer activists, it's just a matter of time before the price gouging starts again. "It's our view that a number of factors eased the pressure last summer," says Mindy Spatt, spokeswoman for the Utility Reform Network. "Part of it was that generators looked around the country, and they saw other states thinking twice about deregulating [because of California's mess], and reconsidered milking us for all we were worth."

But the only way prices will be impacted, generator representative Ackerman explains, is if the cold spell happens early enough in the winter to exhaust gas supplies, which are more substantial than they were last year. The biggest challenge for the electricity grid may come after the weather warms up. Greg Fishman, a spokesman for the Independent System Operator, says there should be enough power to get California through the winter as long as consumers continue to conserve energy at the unprecedented rate they've managed so far. What scares the grid operator most, Fishman says, is the spring.

"The real potential problem, to me, happens in May," he says. "There will still be a relatively high number of plants down for maintenance, and it's very conceivable that we could have a heat wave then."

As for the generators' concerns about the winter?

"I'd be real skeptical about anything these guys say," says Frank Wolak, the Stanford economist who runs the grid operator's Market Surveillance Committee. "Maybe this is how they spread the news to their brethren. ... I mean, I guess they're saying we were better off under regulation, when PG&E ran the entire system with absolutely no problem."

About The Author

Jeremy Mullman


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