California Forced to Turn the Lights Off
Rolling Blackouts Ordered as State's Options Run Out

California Power Cut Off
An employee of Michael's Arts and Crafts in Sacramento leaves the store during a rolling blackout Wednesday. (Bob Galbraith - AP)

By Rene Sanchez and William Booth
Washington Post Staff Writers
Thursday, January 18, 2001; Page A01

LOS ANGELES, Jan. 17 -- Out of power and out of options, California ordered rolling blackouts across the state today, its most desperate move yet in an energy crisis that is spinning out of control.

The widespread blackouts affecting some half-million customers began at midday. With only minutes of warning, sections of San Francisco, Silicon Valley, the state capital of Sacramento and a few other small communities went dark.

Traffic lights and television broadcasts blinked off, assembly lines stopped and system operators who maintain the vast computer networks in the affected areas rushed to turn on backup generator power. Passengers were trapped in elevators, businesses closed early, and schoolchildren were dismissed for the day.

The scattered outages, which lasted as long as 90 minutes in some areas, spared hospitals and public safety agencies but left a trail of inconvenience and temporary hardship in their wake.

"It's like we're living in Bosnia," said Michael Mischer, 41, an Oakland baker, who expected his home to be dark for a while tonight. "If they're really concerned about the state's economy, how could this happen? This would be the first thing to kill it."

But in some settings, such as downtown San Francisco, many residents seemed unaware of the blackouts because so many office buildings have auxiliary generators.

The immediate cause of the blackouts was a large power plant suddenly going offline in Northern California this morning. More important is that some wholesale energy suppliers refused to sell power to California's financially struggling utility companies, which have had difficulties paying for power.

By midafternoon, power was returned to most of Northern California. But more blackouts were likely, and Southern California was bracing for the lights to go out this evening.

After a week of dire warnings and coast-to-coast negotiations on the state's predicament, managers of California's electrical system -- or power grid -- said they resorted to blackouts because demand overwhelmed dwindling supplies and a frantic effort to beg or borrow electricity from other states failed.

"This situation is not going to get any prettier unless we find some magical megawatts from somewhere," Patrick Dorinson, a spokesman for the California Independent System Operator, the agency that distributes power through most of the state, said this afternoon. "And right now that does not seem very likely at all."

The operators of the state's power grid said that some wholesale power providers declined to sell energy to California until the operators made phone calls to the suppliers today pleading for more power hour by hour and invoking Energy Secretary Bill Richardson's emergency order requiring the providers to come to California's aid. Richardson extended that order again today.

California's energy crisis is largely viewed as a failure of a partial deregulation plan, which allowed the prices of wholesale electricity to soar on the free market as it continued to place caps on the rates that the utility companies could charge customers. This has resulted in huge profits for the wholesale providers and huge debts for the utility companies, which are now broke.

One of the state's big three utilities, Southern California Edison, announced Monday that it was unable to repay nearly $600 million in bond and electricity payments, pushing the company to the brink of bankruptcy.

To save the state's utilities and keep the lights on, Gov. Gray Davis (D) and the Legislature are scrambling to produce a plan that would allow the state to serve as a major energy broker, using its financial clout to purchase electricity and then sell it at cost to the struggling utilities. The plan passed the Assembly on Tuesday and is being debated in the state Senate today.

For weeks, the operators of the state's main power grid have been calling for more conservation of power, ordering some customers who volunteer to do so in times of emergency to cut back, and hovering just at the edge of blackouts, which had been narrowly averted until today and had not been ordered in the state since World War II.

Early this morning, the grid operators announced another Stage 3 alert, meaning that power reserves had fallen to less than 1.5 percent of demand. The operators hoped that by buying just a few more megawatts of power, they could struggle through the day. But then a large power plant in Northern California suddenly went down.

Supplies were already extremely tight. Scant rain and snow over the last few months greatly reduced water levels in California and Pacific Northwest rivers and reservoirs, limiting the output of hydroelectric dams. Other plants were broken or undergoing maintenance.

And demand, because of below-normal temperatures along the West Coast, was up.

The large number of power outages comes as power-generating companies are warning the state that they cannot continue to sell power to California if the financial crisis gripping the state's two largest utilities is not immediately resolved.

"We need to know how the generating companies are going to be paid," said Richard Wheatley, a spokesman for Reliant Energy, a Houston-based company that has about 4,000 megawatts of power capacity in California and in Nevada on the California border.

This morning, the California Independent System Operator ordered Pacific Gas & Electric and several smaller municipal utility companies to reduce their load by 500 megawatts, which serves about 500,000 customers. By noon, the rolling blackouts began.

In San Francisco, power was cut in the downtown financial district, Chinatown and Fisherman's Wharf and around the Civic Center. Lights at dozens of intersections went dark. City Hall turned on its generators, and workers in buildings without auxiliary power flooded into the streets.

"So far, we haven't had any reports of major problems," said Steve Vinson, a spokesman for San Francisco Mayor Willie Brown, who was on duty at the city's emergency operations center. "We've had reports of people stuck in elevators, but the power is still on at essential services, like hospitals and public safety. We're just waiting it out right now."

Coordinating from the U.S. Conference of Mayors meeting in the District, Sacramento Mayor Heather Fargo said that city officials were working to help businesses but that residents were the city's top priority.

"Frankly, we're more concerned about the individual households and those in them that are trying to stay warm and pay their heating bills," she said. "It's really a stretch for a lot of people in Sacramento."

In Modesto, where unusually low temperatures dropped below freezing this morning, thousands lost power in rotating blackouts that cut electricity to traffic signals, homes and businesses.

Emergency crews scrambled to organize local law enforcement, while Maree Hawkins, a spokeswoman for the Modesto Irrigation District, a local utility provider, tried to calm distressed callers who had lost power.

"We're asking people not to panic," Hawkins said. "They won't die without heat for an hour. It's chilly here today, but I don't think we're talking life-threatening."

In nearby Turlock, Tony Walker, a spokesman for the Turlock Irrigation District, estimated that 10 percent of its 67,000 accounts had lost power as a result of the blackouts.

Particularly frustrating was that the utility had to cut power as a result of an agreement with PG&E despite having enough power to service its clients.

"It's difficult to sit here and tell a customer that we have sufficient energy resources," Walker said. "But because of a mess that wasn't our making, we're asking them to be patient with this so we can be good neighbors throughout the state."

The blackouts were imposed as California lawmakers continued to search for solutions to the state's energy problems. Late Tuesday night, in a rushed vote, Assembly members gave overwhelming support to emergency legislation allowing California to buy power directly from suppliers at low rates and then resell it to the state's two largest utilities.

Consumer groups are deriding the bill as a bailout that will lead to unnecessary rate increases, but Davis said the Legislature "had no choice."

"This measure will allow the state, a much more creditworthy purchaser, to acquire power at a vastly lower price than utilities are currently paying on the spot market," Davis said.

Energy suppliers are scoffing at the plan. They say the price caps that Davis and the Legislature want in order to avoid consumer rate increases are far too low and could make it even harder for the state to secure the power it badly needs, because some suppliers would not sell electricity to California under those terms.

"There is an air of incredulity among suppliers about what the Legislature is doing," said Gary Ackerman, a spokesman for the Western Power Trading Forum, which represents generators who supply power to the state. "And there is a growing concern that the state is just not taking its role in fixing this problem seriously right now."

With the change of administrations three days away, President-elect Bush's top advisers were reportedly focused on how to respond to California's electricity crisis. Some advisers were said to favor leaving it in California's hands, but others said it was far too serious a problem for the administration to sidestep. "You need a very big rug to sweep that mess under," one adviser said.

Paul H. O'Neill, testifying at his confirmation hearing to be treasury secretary, called California's electricity program "lunacy."

"The state of California assumed that they could defeat economics," he said. "I mean, you don't have to have an economics degree to understand that this is an unworkable situation unless -- unless -- there's a great surplus of goods." Trying to hold retail electric prices down when supply is short "makes no sense," he said.

Staff writers David Streitfeld in San Francisco and Peter Behr in Washington contributed to this report. Special correspondents Jeff Alder in Los Angeles and Liz Garone in Oakland also contributed.

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