California orders utilities 'to serve all customers'

The north tower of the Golden Gate Bridge, which is normally illuminated, remains darkened in Sausalito, California, on Thursday

In this story: 'Running out of supply' Stage 3 alert 'I'm worried about lights and heat' Official urges conservation Financial troubles RELATED STORIES, SITES

SAN FRANCISCO, California (CNN) -- The California Public Utilities Commission (CPUC) issued a temporary restraining order Friday requiring Southern California Edison and Pacific Gas & Electric to "meet their legal obligation to serve all customers."

The order came despite claims by both utilities they are dangerously close to bankruptcy and have had an increasingly difficult time securing power from providers.

The CPUC acted after the companies notified the agency they would begin reviewing their responsibilities Saturday. An emergency meeting of the PUC began in San Francisco at 11 a.m. (2 p.m. ET) to discuss the order.

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For a third straight day Friday, California was under a Stage Three power alert, according to the California Independent System Operator, the state's power manager. Rotating blackouts were not ordered but could not be ruled out.

Stage Three declarations, required by the state's Electrical Emergency Plan when reserves fall to 1.5 per cent, enable the California ISO to receive additional emergency assistance from federal and state agencies.

On Friday afternoon, Gov. Gray Davis also signed a $400 million emergency power purchase plan designed to keep power flowing. The plan, approved Thursday by the state assembly, allows the state to purchase electricity on the open market and provide it to cash-strapped utilities at little cost.

The ISO expects the Stage 3 alert to remain in effect until at least 9 p.m. Friday (midnight EST), and while more rolling blackouts are not expected, officials warned they're still a possibility. A Stage 3 alert is declared when the amount of reserve power falls to 1.5 percent of statewide electricity output.

Too few power plants and recent deregulation of the state's electricity industry are being blamed for the shortage.

"The thumbnail explanation in California is the fact that they were the first state to deregulate and so from a practical standpoint they had no one to go to school on," said Bill Brier, of the Edison Electric Institute, a utility lobbying group.

Thursday's first round of rolling blackouts affected regions from central California north to the Oregon border, and darkened many "blocks" adjacent to those affected Wednesday.

Nathaniel Goodwin, a 73-year-old man in Compton, California, could be in jeopardy if rolling blackouts in Southern California cut power to his electric oxygen concentrator

"I have a brand new baby. I'm worried about lights and heat," said Roland Plukas, 33, of Santa Monica. "I bought a flashlight yesterday, and I'm buying a bigger one today."

The 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. 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. Computer screens went dark, heaters and bank machines were silent and lights went out in classrooms.

In some darkened offices in several parts of San Francisco, employees tried to work by candlelight. In the Mission District, some people had to be rescued from stuck elevators when the power went out.

"Conservation can really make a huge difference," Cal ISO CEO Kellan Fluckiger said Thursday.

Fluckiger explained that two generators in the state had returned to service Thursday, adding about 600 megawatts of power to the state's reserve.

Each block -- clusters of electronic circuits that may or may not be geographically linked -- is darkened from an hour to an hour-and-a-half. Power to the next block is then turned off before the power is restored to the first block, a process that could take up to an additional 30 minutes.

Traffic comes to a halt at an intersection near Golden Gate Park, in San Francisco, on Thursday, as a rolling blackout cut power to traffic signals in the area

Fluckiger said the situation looks a little better for Friday, with the projected shortfall less than Thursday's predicted shortfall.

However Fluckiger said Davis' legislation falls short because the crisis involves more than funding.

"We have a financial crisis going on as well as a power crisis. ... Even if infinity dollars became available that doesn't get rid of the supply problem," he said. "But it will help."

As power companies are forced to pay high prices for electricity that is in very short supply, some firms are nearing bankruptcy. One businessman criticized Davis' bill, saying he fears the situation will worsen.

Pacific Gas & Electric Co. and Southern California Edison estimate they have lost more than $11 billion. They have both defaulted on millions in 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.

The power industry says California's plight is unique and a similar crisis could not occur elsewhere. But some independent observers disagree.

"Here in the Northeast there the potential it could replicate what's happening in California, particularly in New York City," said Ed Smeloff, of the Pace Law School Energy Project.

CNN Correspondent Natalie Pawelski and The Associated Press contributed to this report.

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  • 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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