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Date: Fri, 18 May 2001 08:40:43 -0500
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Subject: Scheduled blackout plan gaining favor
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FYI

Scheduled blackout plan gaining favor
LIMITING PRICES: 3-state buyers' cartel with Northwest could create leverage

Lynda Gledhill, Chronicle Sacramento Bureau
Thursday, May 17, 2001
,2001 San Francisco Chronicle

URL: 
http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2001/05/17/MN88959.DTL


More blackouts but no ransom payments for energy gougers -- that's a deal 
looking increasingly attractive to California lawmakers and consumer 
advocates.

The idea, which has attracted the support of some key lawmakers and the 
cautious interest of Gov. Gray Davis, is for the state to set a firm ceiling 
on what it will pay power producers for electricity this summer -- and not 
one dime more.

The trade-off would be certain blackouts, possibly more than if the state 
continues to pay any price electricity sellers demand.

Some advocates of the idea think that California could minimize the number of 
blackout hours and gain a measure of control over the energy crisis by 
scheduling service interruptions.

"We need to stop this game of electricity chicken," said Michael Shames, 
director of the Utility Consumers' Action Network, which first proposed the 
idea. "We are likely to see blackouts this summer; we should use them to our 
advantage rather than be victimized by them."

The plan calls for creating a "buyers' cartel" of California, Oregon and 
Washington. Essentially, the states would decide at what price they were 
willing to buy power and refuse to purchase once it tops that level.

The state has spent $6 billion on energy purchases since January, and at one 
point during last week's power shortage was spending $1,900 per megawatt hour 
-- more than 10 times what Davis has planned on for this summer. That kind of 
spending cannot go on, Democratic Assemblyman Fred Keeley of Boulder Creek 
said yesterday.

"The question is, can we sustain the level of spending we have and have the 
state maintain economic stability? I believe the answer is no," said Keeley, 
the lower house's main figure on energy policy and author of the bill that 
put the state in the power-buying business.

"To get this problem solved, we have to think in bold terms," said Keeley, 
who introduced a resolution along with fellow Democratic Assemblyman Paul 
Koretz of West Hollywood that urged Davis to form a cartel.


THREE STATES ARE BETTER THAN ONE
Davis said last week that "my bias would be to keep the lights on at any 
price." But yesterday, the governor said a temporary price limit is 
"certainly a matter we've talked about and considered at some length. The 
next step will be to see how the governors of Oregon and Washington respond 
to it."

A spokesman for Gov. Gary Locke of Washington said the matter is being 
considered. Calls to the office of Oregon Gov. John Kitzhaber were not 
returned.

The idea has appeal among some consumers who believe, as many state officials 
do, that California is being gouged for electricity.

"I can see if our bills were $20 or $30 more, but this is ridiculous," said 
Kimberly Chambers, an 18-year-old fashion design student from Oakland. 
"Whatever it takes, I don't think we should have to pay for more."

But Yunah Kim, 36, who moved to the Bay Area from New York a month ago, said 
blackouts should not even be considered.

"The infrastructure of government is coming apart, and it's the basic service 
government is able to provide," she said. "Businesses are not going to put up 
with that. It's very shortsighted. We just have to pay until there's a 
solution."

Severin Borenstein, director of the University of California Energy Institute 
in Berkeley, said blackouts might be worse than supporters of price limits 
believe.

"I think they (power companies) would call our bluff," and sell their 
electricity elsewhere, Borenstein said. "I don't think the state has the 
ability to credibly commit to paying no more than 'X.' That would be a very 
controversial decision."

Legislation is already in the works to give Davis the ability to enter into a 
West Coast buyers cartel. A bill sponsored by state Sen. Dede Alpert, D- 
Coronado, would allow the Independent System Operator to refuse to buy power 
if it is too expensive.

The maximum the state would pay would be set by a formula, based on such 
things as the cost of natural gas. A reasonable profit for power producers 
would be built in, supporters said.


LOOKING FOR SOME CONTROL
Alpert said everyone wants to avoid blackouts, but that seems unlikely.

"Everybody I talked to -- once you establish that there will be blackouts --

both businesses and residents say, let's have control," Alpert said.

The California Manufacturers and Technology Association, which commissioned a 
recent report that said unplanned blackouts could cost the state economy $21. 
8 billion and 135,000 jobs, is considering whether scheduled interruptions 
would be less harmful.

"The problem if we do (scheduled blackouts) is that we may have an inordinate 
amount of blackouts," said Gino DeCaro, a spokesman for the group.


NO EASY TASK
The ISO, which runs the state's power grid, is scheduled to issue a report 
tomorrow on how scheduled blackouts might work.

Sen. Debra Bowen, D-Marina del Ray, said that planning blackouts is not as 
easy as it sounds.

"The difficulty is a pragmatic one -- the circuits are not wired to deal with 
choices like we are having to make," said Bowen, who has been holding 
hearings on how the state might better manage blackouts.

"Maybe we should be paying people to turn off their fuse box," Bowen said.

Chronicle staff writer Marsha Ginsburg contributed to this report. / E-mail 
Lynda Gledhill at lgledhill@sfchronicle.com.

,2001 San Francisco Chronicle   Page A - 1
mmilner@coral-energy.com, rreilley@coral-energy.com, 