Lights stay on in California

No weekend blackouts planned despite low supplies

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From staff and wire reports

SACRAMENTO, California -- Despite an official warning that California's electric power reserves were again running low, lights were expected to stay on across the state over the weekend.

The agency that oversees California's power grid, the California Independent System Operator (ISO), issued on Saturday another of its Stage 3 alerts, warning that power reserves are approaching 1.5 percent. The alerts allow the agency to impose rolling blackouts, but spokeswoman Lorie O'Donley said none were planned.

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"I have just confirmed that there are independent stations that have run out of fuel. It's not a very good situation," said Jim McCaslin, president of the California Independent Oil Marketers Association, on Friday night.

Although the agency said blackouts were unlikely over the weekend, it called on people to conserve energy whenever possible. The ISO shut off power to hundreds of thousands of homes and businesses on Wednesday and Thursday.

Problems from the power crisis rippled across the state Friday, with independent gas stations along the coast running out of fuel because power shortages kept California's main gasoline pipeline in operation only part of the day.

Emergency legislation

In a stopgap effort to keep electricity flowing, Gov. Gray Davis has signed emergency legislation allocating $400 million in state funds to buy power and provide it to cash-strapped utilities.

However, lawmakers acknowledged it that was only a "Band-Aid" solution expected to provide the state with adequate supplies for a week or two, at current wholesale prices, while they try to work out a long-term solution. They planned weekend telephone conferences to discuss a rescue plan.

Depending on the outcome of a state-sponsored power auction next week, California could spend as much as $5.4 billion in the next 90 days to avert rolling blackouts, officials told the Los Angeles Times.

In hopes of avoiding that high price, the governor and others are relying on an electricity auction Wednesday, at which buyers and sellers will enter blind bids for long-term energy contracts.

Davis said he believes California will get many offers in the range of $55 per megawatt-hour, but some market players and lawmakers said few companies would sell that low.

California's power crisis has driven the state's two largest utilities, Southern California Edison and the Pacific Gas & Electric Co., to the verge of bankruptcy. But the state Public Utilities Commission, ruling insolvency is no excuse, barred both from cutting off power to their 25 million customers, at least until a Jan. 29 hearing.

Businesses disrupted

Many businesses across the state had to shut down for hours at a time Friday because they had signed contracts agreeing to turn off power voluntarily in exchange for much lower utility rates.

That forced the gas pipeline to run part-time and caused dairy farmers to dump fresh milk because industrial creameries could not process it.

"They've having trouble at the plant," complained dairy farmer Tony Nunez, who told CNN his mile was "being dumped down the drain."

Silicon Valley companies complained that the week's rolling blackouts had cost them millions of dollars in lost production.

In Southern California, Miller Brewing Co. halted production at its brewery in Irwindale on Friday and California Steel Industries Inc. in Fontana closed its plant and idled most of its 1,000 workers for the day. Textron Aerospace Fasteners in Santa Ana sent 400 employees home for the day with half-pay.

"What am I supposed to do? How am I going to take care of my husband if I don't work and I lose my health insurance," asked Lucia Fraijo as she stood outside the Miller brewery, tears in her eyes. The 52-year-old bottler said her husband has cancer.

On Friday, Standard & Poor's put the state's bonds on credit watch, reflecting a lack of investor confidence in California's ability to dig its way out of the mess.

The crisis, months in the making, peaked when soaring natural gas prices and a shortage of hydroelectric power drove up the wholesale price of energy. PG&E; and SoCal Edison couldn't increase prices to cover those rising costs because of a flawed deregulation effort. The companies are an estimated $11 billion in debt and unable to buy any more power on credit.

Southern California, with most of the state's population, was spared blackouts because of the layout of the state's power grid and because Los Angeles, with its own power sources, had an adequate supply to serve its nearly 4 million residents.

CNN Correspondent Rusty Dornin and The Associated Press contributed to this report.

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Dynegy
PG&E; Corporation
SoCal Edison
  • Deregulation - What this means to you - Electricity Market Issues
California Power Exchange
System Conditions - The California ISO
California Public Utilities Commission
California Utilities Emergency Association

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