Davis Signs California Power Bill
Legislation Allows State To Buy Power For Utilities
The plan was pushed through the state Legislature late Thursday after California residents were hit with a second straight day of rotating blackouts, affecting 675,000 homes and businesses.
The governor also signed legislation Thursday that replaces the governing board of the California Independent System Operator -- a 26-member panel overseeing the deregulated market -- with five appointees of the governor's choosing who must not be connected to electricity market participants.
The second bill repeals a law that would have permitted the state's three major utilities to sell off remaining generating facilities to the highest bidder and requires the power that they produce to be sold in California.
The bill, co-sponsored by Assemblyman John Dutra, also prohibits the sale of plants owned by public utilities in the coming six years and orders their operations to be dedicated to the benefit of state residents.
Through power brokering and statewide conservation efforts, California will likely avoid another round of rotating blackouts that have plagued the state since Wednesday.
The California Independent Systems Operators announced Friday that power reserves were at sufficient levels and no blackouts would be needed to maintain the stability of the power grid.
The ISO said Friday that the Stage 3 alert that the state has been under could end as early as Friday and that a Stage 2 would be in effect over the weekend.
Effects of the weeks blackouts began to ripple through the economy Thursday, as power problems shut down the state's main gasoline pipeline and forced farmers to dump milk because the dairy plants were operating on reduced hours.
The blackouts stretched from the Bakersfield area of central California to Oregon, 500 miles away, with outages lasted about two hours.
Power managers said that they expected to avoid blackouts at night and were hopeful that they would have enough power Friday, when demand was expected to lessen.
Meanwhile Thursday night, the Legislature passed the stopgap $400 million plan in which the state would buy power on the open market and provide it to strapped utilities at little cost.
The bill would be in effect for up to 10 days or until lawmakers pass a long-term plan. Davis was expected to sign the measure Friday.
"We're troubled by what goes on in our state, and we can only see it getting worse," Senate leader John Burton said.
Kinder Morgan Energy, one of the state's biggest pipeline companies, couldn't pipe gasoline from major California refineries to terminals around the state for 12 hours Thursday, spokesman Larry Pierce said. The company is one of hundreds that have agreements with the utilities that give them lower rates in return for allowing the power company to turn off the electricity during shortages.
The volatile situation soon could lead to long gas lines and higher prices at the pump, said Bill Greehey, CEO of Valero Energy, which operates a Benicia refinery that produces about 10 percent of the state's gasoline supply.
"California is getting to the point where they are going to have a crisis that is a helluva lot bigger than the one it already has on its hands," Greehey said.
The exact number of homes and businesses affected was difficult to determine.
The Independent System Operator said the amount of megawatts taken out were enough to serve 1.5 million homes and businesses. PG&E, which accounts for about 80 percent of the blacked-out customers, said it cut power to 675,000 residential and business customers.
Hospitals and airports were exempt from the outages. Utilities refused to disclose which areas were blacked out, but the effects were obvious: Traffic lights went out for a second day across the San Francisco Bay area, causing fender-benders in Palo Alto. Computer screens went dark, heaters and bank machines were silent and lights went out in classrooms.
The power outage in Sun City Lincoln Hills, a retirement community near Sacramento, prompted Jim Datzman, 62, and his wife, Sandy, 59, to take their two grandsons to a community playground. The 2-year-old twins, Corbin and Quinn, had been watching Barney on television when the power went out.
"We saw a lot of our neighbors lifting our garages up manually, which of course isn't too good for seniors," Datzman said.
The Independent System Operator, keeper of the state power grid, said the latest blackouts were caused by a loss of thousands of megawatts from the Northwest, where hydroelectric dams are low on water. One megawatt is enough to power 1,000 homes.
The first mandatory blackouts came Wednesday, also in northern and central California. Northern California faced the outages first because of a transmission-line bottleneck that makes it harder for the northern part of the state to bring in power.
On Wednesday, Davis declared a state of emergency and ordered the state Water Resources Department to temporarily buy up to $1 billion in power from wholesalers and provide it to the state's two largest utilities, Pacific Gas & Electric Co. and Southern California Edison. Both are short on power and in deep financial trouble.
Davis also signed a bill to roll back California's deregulation by dropping a requirement that utilities sell their power plants.
The crisis is blamed in part on the Northwest's limited supplies of hydroelectric power and California's deregulation of its electricity industry.
Under the plan, utilities were forced to sell their power plants and buy electricity on the open market, an approach that was supposed to lead to lower rates. But wholesale prices for electricity have soared and rate caps imposed under deregulation have prevented utilities from passing on those costs to customers.
PG&E and SoCal Edison estimate that they have lost more than $11 billion. They have both defaulted on millions of dollars in bills and lender payments and have warned that they are sliding toward bankruptcy.
There was more trouble Thursday: SoCal Edison was suspended from the state's Power Exchange, a clearinghouse for buyers and sellers of electricity, after failing to pay $215 million in bills.
The utility must post collateral before it can return to the market, an exchange spokesman said. A utility spokesman refused to comment, and it was unclear where SoCal Edison would go for its power.
