Vol. 22, No. 5,514 - The American Reporter - September 7, 2016

American Reporter Staff
Hollywood, Calif.
January 17, 2000
Reporting: California

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LOS ANGELES, January 17, 2001 (2:20 p.m. PST) -- In a dramatic demonstration that California's deregulation of electric utilities has been an abysmal failure, the state's independent power grid operator today ordered "rolling blackouts" of an hour each in Northern California cities including San Francisco and Oakland as a hard-edged cold wave increases demand and the prospect of bankruptcy looms for its major utilities. The blackouts were suspended after about two hours but may resume later in the day, authorities said.

The crisis was precipitated over the past several months as independent energy producers -- some of whom had bought plants from Pacific Gas & Electric (PG&E) and Southern California Edison (SCE), two of the state's largest power retailers, when deregulation permitted them to be sold - demanded payment of hundreds of millions of dollars and PG&E then defaulted on critical payments for power, including some purchased from the plants it sold several years ago.

The popular Pier 39 in San Francisco and the high-tech Silicon Valley cities of Sunnyvale, Burlingame and Santa Cruz have already been hit by blackouts. Some providers charge that so called "dot.com" companies have been responsible for the growing demand on the state's newly-limited power supplies.

In San Francisco, a group of students were trapped on an elevator at the Hastings School of Law on McAlester Street during the blackout. They have now been freed.

A group of Houston-based power generators are refusing to sell power to the utilities unless they are paid now for about $500 million in energy already provided to them.

The utilities say they have spent $12 billion on power that has not been recovered from ratepayers because of a state cap on electricity prices. But in recent days PG&E has spun off key assets into a new company to protect them from seizure.

The two firms have earned an estimated $22 billion since deregulation by selling power-generating assets they said were too expensive to operate and reaping higher payments from consumers in the early stages of deregulation.

PG&E was the first affected by the blackouts.

"The likelihood that they will spread south increases as the day goes by," a spokesman for PG&E in San Francisco said. However, the Los Angeles Dept. of Water and Power is not affected as it generates a surplus of energy for the nation's second-largest city.

"This is a managed or controlled emergency, not like an earthquake," the Edison spokesman said. The utility's plan calls for turning off a single circuit serving one community at a time that will "minimize the impact on any one community," he said.

As many as 75,000 to as many as several hundred thousand customers in will be affected during each blackout, the spokesman said in an interview carried live by KFWB in Los Angeles, an all-news radio station.

Joe Shea, a candidate for Mayor of Los Angeles, in a letter sent to the Los Angeles Times this afternoon, said the state needs to act quickly to end the crisis.

Shea advised the state to seize the two utilities before they are forced into bankruptcy, seize the plants located in California that were sold and assure their present owners of reimbursement, and immediately begin to "scour" California, the country and the world for new technology and alternative energy sources that can reduce the state's dependence on oil- and gas-fueled power generation.

"It may be too late tomorrow to exercise any of these options," Shea warned. Power generators that supply the two utilities have said they may take the utilities into court Thursday if they are not paid by then.

The alternative to seizure is a massive bailout and huge rate increases that may not be sufficient or may need to be repeated in a couple of years, he said.

Shea, who is now on leave as Editor-in-Chief of The American Reporter to seek the office, also said that as Mayor he would order the Dept. of Water and Power to provide as much energy as practical from the city utility's surplus at any time the prospect of substantial power failures is imminent.

The editor, who will be listed on the April 10 ballot as a "secession advisor," said that proposals by San Pedro, Hollywood and the San Fernando Valley to secede from Los Angeles will be difficult if communities cannot prove they can either buy power from the DWP or generate it themselves, as Los Angeles and nearby Burbank do.

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