From preventing blackouts to simply coping with them

With the lights out again, California is focusing on minimizing cost of the crisis.

If states have body language, California's response to electricity outages has gone from head-wagging disbelief to shoulder-shrugging resignation.

Reactions to the outages hitting the state this week indicate a psychological shift from trying to prevent blackouts to simply learning to cope with them.

"We've done this so many times now, it's really gotten into a routine," says Lucien Canton, director of the Office of Emergency Services in San Francisco. "At this point, I think the public is getting fairly comfortable with how to deal with the whole mess."

Actually, this week's outages were the first since March. But every season now seems to present its own complications for the state's power grid, and this week was a grim reminder of the summer ahead.

Forecasters are saying California can expect outages on 30 to 35 days this summer. Their duration and magnitude will depend on weather, the availability of electricity imports, and how fast some planned new power generators come on line.

This week's outages, which affected around 300,000 customers on Monday and Tuesday across the state, were triggered by unseasonably high temperatures and the loss of power from some large power generators. Two nuclear facilities in California, one in Washington, and one in Arizona were all down for either repairs or refueling.

While California legislators, and particularly Gov. Gray Davis, would like to keep the lights on, efforts in the state capital are increasingly focused on the financial impact of the crisis.

The state has spent over $6 billion from its general fund - roughly the entire state budget surplus - on wholesale power purchases this year.

The Governor's plan is to have the state sell $13 billion in bonds - loans, really - that would repay the treasury the $6 billion and whatever else it takes to keep power flowing until the utilities are able to buy power again on their own. Those bonds would be repaid over many years by electricity consumers via a charge on their monthly bills.

The trouble is that it will take months before the bonds are ready for sale, and meanwhile, prices are expected to leap during the summer months, even as the state Legislature puts together next year's budget by July 1. Legislators are wondering how to craft next year's spending while the electricity crisis burns a growing hole in the state's pocket.

Now, the state is spending anywhere from $50 million to $90 million per day to keep the lights on. That has become necessary since the state's largest utilities have lost their credit worthiness. The largest, Pacific Gas & Electric Co., has filed for bankruptcy protection, and the second largest, Southern California Edison, has agreed to sell its transmission lines to the state. That sale will reap the utility $3 billion, an infusion that should put it back in business as a wholesale-power purchaser.

But all this will take time - probably months - and meanwhile, the state's fiscal integrity is at "great and continuing risk," according to California Treasurer Philip Angelides, a Democrat.

The state has pleaded with the federal government to temporarily cap wholesale power costs to help it navigate its way out of the current crisis. This week, leaders of the California Legislature said they will sue the Federal Energy Regulatory Commission for not ensuring that wholesale power prices are "just and reasonable."

FERC recently approved caps on prices under certain circumstances, but state officials labeled them inadequate.

So far, the Bush administration has rejected the state's push for more rate caps and continues to point to California as a kind of poster child for why the nation needs a new energy policy.

Vice President Dick Cheney told CNN Tuesday that California got into its mess by relying too much on conservation and not enough on new power supplies, a cornerstone of the administration's new energy policy. Governor Davis responded by saying the vice president was "grossly misinformed" about the state's plans to build more power plants.

Blackouts in the short term are now beyond the state's control, says Mark Bernstein, a Rand energy analyst and energy adviser to some legislators. The economic impact of the crisis, however, is still subject to some influence.

In a worst-case scenario, some economists say intermittent power outages could shave 1 percent off California's economic growth, an enormous hit, given that this is the sixth largest economy in the world, and all the more serious since the state's economy is slowing.

Power outages this week interrupted traffic, closed restaurants, and forced some schools to operate in the dark.

But a conversation heard in an elevator summed up many Californians' attitude. Man to woman: "I wonder if we should be taking an elevator in case they shut off the electricity?" Woman to man: "You're right. We should probably take the stairs, which would be better anyway for exercise."

"The impact of all this has really been psychological and economic," says Mr. Canton. "It's kind of like Y2K. No one really knew what it would be like, but we're finding that it really isn't putting a lot of people at risk. "

So far, anyway. Disability advocates and others warn that during the summer months, lack of air conditioning and even the reliability of medical devices could endanger some.

(c) Copyright 2001. The Christian Science Monitor

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