By Leonard Anderson
SAN FRANCISCO
(Reuters) - California's electricity emergency worsened dramatically
on Wednesday when power suppliers threatened to halt sales to
California for fear they might not be paid by the state's biggest
utilities, now strapped by billions of dollars of power costs.
With the California
grid operator threatening to order unprecedented rolling blackouts
Wednesday afternoon because of tight supplies, U.S. Energy Secretary
Bill Richardson took the rare action of ordering power diverted
to California from federal hydroelectric dams in neighboring states.
Officials
at the California Independent System Operator (ISO), which manages
most of the state's power grid, said they received about 5,000
megawatts of hydropower from out of state shortly after the ISO
warned the grid was about to crash.
The strain
was further eased when service was cut to several big California
industrial customers, shedding about 1,200 megawatts of electric
load for the peak evening demand hours, which typically last from
5 p.m. to 7 p.m.
Kellan Fluckinger,
the ISO's chief operating officer, credited the federal action
with easing the crisis, but told reporters California will continue
to face problems until new generators are built and energy conservation
becomes widespread.
"All
we are doing now is putting Band-Aids on the problem,'' he said.
Daily Struggle
"Our
objective is to keep the lights on in California,'' Richardson
said at a news briefing after meeting with California Sen. Dianne
Feinstein. Richardson also met with California Gov. Gray Davis
and Federal Energy Regulatory Commission chief James Hoecker to
discuss California's chronic power crisis.
The state's
10-day power emergency took another twist when power marketers
in the Western U.S. and Canada said they can no longer accept
the high risks linked to selling power to utilities through the
real-time California market, citing recent spot power prices briefly
topping $3,000 per megawatt hour, nearly 100 times what they were
fetching a year ago.
Davis's office
listed the marketers as Dynegy Power Marketing, Trans Alta, Eugene
Water and Electric, Southern Energy Trading, British Columbia
Hydro's PowerEx unit, Public Service Colorado, Enron Power Marketing,
Portland General, Avista, Idaho Power Co., PPL Montana, Seattle
City Light and Puget Sound Energy.
The ISO's
Fluckinger said the agency is spending $50 million-$100 million
a day to buy power for sale in turn to the state's electric utilities.
He said the
marketers "have indicated no further willingness to sell
megawatts to the ISO and utilities'' because of credit concerns.
Fears Of
Bankruptcies
Pacific Gas
and Electric Co. (PG&E), the state's largest utility, said
it is piling up billions of dollars in uncollected power purchase
costs because its retail rates are frozen under a complex 1996
state law to deregulate the power market.
U.S. Senator
Diane Feinstein, a Democrat, said the unprecedented emergencies
and soaring power prices "may very well bankrupt'' two of
California's major utilities -- PG&E and Southern California
Edison.
The two are
the utility subsidiaries of San Francisco-based PG&E Corp.
and Edison International, headquartered near Los Angeles in Rosemead,
Calif.
"We are
united in asking that the Federal Energy Regulatory Commission
establish an immediate region-wide wholesale price cap to stop
the bleeding of electricity from California until stability can
be returned to the market,'' Feinstein said.
A spokesman
for PG&E said the utility is charging customers 5.4 cents
for a kilowatt hour of service when the power actually costs PG&E
up to 80 cents. "That's a situation that can't last forever.
All the costs at the ISO get passed on to us,'' he said.
"Two
things have got to happen. Retail prices need to go up...and we
need a rate stabilization plan to avoid a San Diego situation,''
he said, referring to the doubling and in some cases tripling
of electricity bills in San Diego since prices there were "unfrozen''
to reflect underlying market conditions.
PG&E had
by the end of November run up an unforeseen bill for power purchases
of $4.6 billion, or roughly 56 percent of the company's capitalized
value.
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