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California Energy Shortages Could Last Years

Aired December 15, 2000 - 2:05 p.m. ET


NATALIE ALLEN, CNN ANCHOR: Millions of Californians have been facing the possibility of hours without power to run their homes and businesses. California is getting help from the federal government as the state scrambles to find enough electricity to avoid rolling blackouts. Less than an hour from now the Federal Energy Regulatory Committee is to meet in Washington on the California energy crisis.

With a look at the power situation as it stands now, let's go to CNN affiliate station KGO and reporter Don Sanchez.

Don is in San Francisco; and Don, how is this affecting people there in San Francisco?

DON SANCHEZ, KGO REPORTER: Well, people have been worried for a long time, Natalie. Concerned that maybe something -- the lights are going to go out.

There is some encouraging news; and maybe we're sort of out of the woods today because the ISO, that is the Independent System Operator that controls the power grid says we're fine for today. We have enough power so there won't be any kind of a stage two or stage three emergency, where there would be outages. And they say that power plants are going back on-line throughout the weekend, so we should be OK.

But, you know, we've had 12 days of these threats of rolling blackouts that could last anywhere from an hour to an hour and a half. So we're not done yet with it, but hopefully through this weekend, Natalie, we can sort of breathe a collective sigh of relief.

ALLEN: We're going to talk with someone from the ISO in a moment.

But you say, you know, you find out day-to-day if you're going to have enough power -- that must not be a really fun way for people to work and carry out their lives there.

SANCHEZ: It's not day-by-day, it's really but hour-by-hour because, you know, they're buying power wherever they can. A big problem is that the wholesale price has gone up so much. They're paying, for instance, $1,000 for a megawatt now compared to $45 just a year ago.

And the utilities like PG&E and Southern California Edison -- their rates are fixed by the state, so they can't charge more. So they're having financial problems and the power operators say they don't want to sell to these folks unless they get cash up front or some kind of guarantee. So, as you suggest, the feds have been stepping in and some people are calling for government financing, more government control.

But you walk around the city, people say, what's going on? This doesn't make any sense. Obviously we're a state -- a big state, keep growing -- but the big problem is that we are growing and we haven't kept pace. They haven't been building power plants; the last one was built, I think, about 10 years ago.

So, yes, it's kind of unnerving, especially at this holiday season. So a lot of folks have been turning off the Christmas lights and that sort of thing. There's the Embarcadero Center here, a big high rise, four buildings. The buildings are outlined with Christmas lights, and they've been turning them off sometimes at night simply to conserve power.

ALLEN: Boy, that's got to be really strange. You don't expect it in California; you just think California has got it all together out there.

SANCHEZ: Well, yes, we do have our moments; so, hopefully -- the lights have stayed on here the entire time I've talked to you, so...

ALLEN: And we hope the heat stays on, too.

SANCHEZ: That, as well.

They say this problem really won't be alleviated, though, until maybe the year -- summer of 2002.

ALLEN: Oh my word; well, hang in there. We thank you so much Don Sanchez of KGO.

SANCHEZ: All right, Natalie, thank you.

ALLEN: For another perspective let's talk -- he mentioned the ISO. We have with us on the phone Kellan Fluckiger, he's the chief operating officer for California Operator Independent Systems -- operator called ISO. It's the organization that controls the California power grids. He's with us now by phone from Folsom, California.

Thank you for being with us. We know these are busy times for you; and we just heard from Mr. Sanchez that this isn't something that's just happened overnight. How did California get into this mess and is much of it based on the fact that California grows so rapidly?

KELLAN FLUCKIGER, CHIEF OPERATING OFFICER, CALIFORNIA ISO: Well, there's a couple of really important reasons. I heard it mentioned just a minute ago about the lack of addition of resources, not only in California, but also in the Western United States. There's been a lack of infrastructure investment over the last 10 years, partly fueled by all of the discussions about deregulation and everyone not knowing exactly how things were going to come out.

What's happened, also, is, with the robust economy for the last several years, load growth has been significant and we've simply reached a point where demand outstrips supply on a pretty regular basis.

ALLEN: And so now the state is faced with what? I mean, how long could people go -- we just heard Mr. Sanchez say that sometimes they find out hour by hour if they're going to have power the next hour. How long are people going to have to live like that?

FLUCKIGER: Well, there's a couple of things to think about. One, we need to get the political will manifest to really streamline and speed up the infrastructure generation citing process and get some power plants built. I heard him mention the summer of 2002; it's actually the summer of 2003 before I think we'll be out of this crunch.

In the meantime, there are things that, clearly, can be done to improve and make this better in addition to speeding up power plant citing and that sort of thing -- and that is, learn to operate with less demand. The kinds of things that people do really make a difference. We see, when we go out with public appeals, we see a significant difference of up to 1,000 or 1,300 megawatts as people voluntarily shift to off-peak times -- you know, dishwashing, clothes washing, other kinds of things and make those kinds of lifestyle choices that are helpful.

ALLEN: So the people are going to have to get used to this and make some real changes, then?

FLUCKIGER: It certainly would be helpful. We also have to decide as a society if we're going to -- if electricity is so important that we are going to build simply enough power plants to cover every peak, or are we going to decide we're not going to spend that much money and we're going to make some changes in our lifestyle and processes.

The worry that I have is that electricity is so integral to e- business and the developing economy and all that kind of thing that we really need to have the kind of supplies that will supply us -- our peaks -- overall in order to keep a healthy economy.

ALLEN: Well, you've got quite a situation on your hands. We thank you for joining us and telling the rest of us what's going on there; thank Kellan Fluckiger.



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