Electricity Outages Getting Some Users All Steamed Up

California’s power emergency has been a rude awakening for about 1,200 manufacturers, hotels, schools, retailers, hospitals and other outfits that have endured major outages over the last several weeks.

The fallout ranged from minor aggravations to major financial losses: There were science experiments that went bad. Satellite components that didn’t get built. Amusement park rides that slipped into eerie darkness. Mood lighting at the local grocery store.

These big electricity users have been getting cheaper electric rates for years as a reward for putting themselves in exactly this position: agreeing to slash power consumption when the state’s supplies run dangerously short.

This summer, for the first time, they’re repeatedly being called upon to live up to their agreements. In doing so, they are among the last sentinels on the edge of an unknown territory created by California’s electricity crisis.

Without these customers’ energy crash diets, neighborhoods around the state could be plunged into the first deliberate blackouts since World War II.

But many of them are getting tired of this summer’s severe disruptions, which are collectively costing them millions of dollars in lost productivity if they interrupt power--and millions of dollars in fines if they don’t.

The supply of sympathy for such customers may be as short as the supply of power. One consumer activist calls them “freeloaders” who last year saved $180 million on their electric bills virtually pain-free.

But if there is a widespread exodus from the program--some participants are threatening to quit in November--it could be a serious shock to the state’s electricity grid, where supplies are projected to be even tighter next summer.

And there’s a more immediate threat: Annual limits on how often these customers can be interrupted--a limit that varies under a maze of customized programs--could even be reached this year in the event of a serious end-of-summer heat wave.

“I worry that we have yet to be confronted with our most serious challenges this summer,” Terry Winter, chief executive of the California Independent System Operator, recently testified before a state Assembly committee.

“It is not unusual for California to experience its highest days of peak demand in August or even in September,” said Winter, whose agency is charged with making sure that California has enough electricity each day.

If all of the state’s “interruptible” customers comply with the call to reduce usage on a hot day when supplies are short, they theoretically could decrease power demand by nearly 3,000 megawatts, equal to the production of six mid-size power plants. Actual relief has never exceeded about 1,900 megawatts, but that can make a critical difference when demand is peaking above 42,000 megawatts and the power grid is using more than 95% of available electricity.

When businesses sign up for the interruptible programs, which got their start in 1979, they designate how much electricity they will turn off when asked. Each business decides how it will comply.

For example, Knott’s Berry Farm first kills lights and air conditioners in its backstage and administrative areas, but several times has needed to close some popular rides, such as Big Foot Rapids, for a few hours.

Children’s Hospital of Orange County switches to a backup generator so patient care is not affected. Hyatt Regency Long Beach shifts laundry operations to the evening, cuts power to parts of the hotel that aren’t being used and switches off lights in the lobby, relying instead on sunlight streaming in through walls of plate glass.

Because the program is voluntary, not every customer curbs power use when asked, although the price of noncompliance is a heavy fine that quickly begins to offset the 15% to 20% saved on electric rates. And there is evidence that compliance is slipping, particularly in the 50,000-square-mile territory served by Southern California Edison.

These businesses “were expecting once in a while to be called, but now they are being called again and again,” said Charles R. Toca, founder of Utility Savings & Refund Services, a consulting firm in San Juan Capistrano. “We’re seeing the penalty bills come in now.”

Already this year, Cal-ISO has called for power interruptions 12 times for a total of about 13,450 megawatt hours. (A megawatt hour is enough power to serve about 1,000 homes for an hour.) Last year Cal-ISO called for a single power interruption of about 1,155 megawatt hours.

“This is clearly a different level of activity than we have seen in the past,” said Lynda Ziegler, SCE director of business and regulatory planning. “We are appreciative, and I think all of California is very appreciative of how they’re helping the entire state.”

While these interruptible users say they are proud of the finger-in-the-dike role they play in assisting the electricity grid, many are complaining.

Not too many satellite parts made it off the Northrop Grumman Corp. assembly line in Palmdale the first few days of August. The plant there, along with Northrop office operations in El Segundo and Hawthorne, shut down in midafternoon on three consecutive days to got aOKhelp keep California’s power grid from fizzling. About 4,000 engineers, office and production workers went home early.

A week of chemistry experiments was ruined by power interruptions at the Claremont Colleges, and accountants ended up working into the night in early August to get payroll out on time.

One small manufacturer that did not reduce power when asked in July and August got zapped with a penalty of $86,295 on top of electricity charges of nearly $29,000 for the monthlong billing period ended Aug. 10, said Gary Fabrizi of Premier Utility Consultants. That more than wiped out the customer’s electricity savings from the program that month, Fabrizi said.

Critics contend that SCE sold its program too aggressively, using it as a perk for large customers or as an economic development tool to persuade businesses not to leave California. For whatever reason, SCE officials say only 50% to 60% of its nearly 1,000 interruptible customers representing about 2,200 megawatts of potential demand cut usage when asked.

In contrast is Pacific Gas & Electric Co.’s 500-megawatt program, with about 210 companies. When the call to drop load goes out, nearly every customer responds, with some cutting even more than required. PG&E; almost always hits its 500-megawatt target, said Roland Risser, PG&E; manager of tariffs and compliance.

But on its best day, PG&E;’s program delivers less than half the megawatts of the SCE program on its worst day. That causes some Southern Californians to grouse that they are bailing out their neighbors to the north, including electron-guzzling Silicon Valley.

“I can understand their frustration at being interrupted so many times,” said Robert Finkelstein, an attorney with the Utility Reform Network, a San Francisco-based consumer advocacy group. “But everyone else in Edison territory should be annoyed that they have been paying for this program all these years.”

They also get little sympathy from John Bryson, chief executive of Edison International, the Rosemead-based parent of SCE.

“Now they’re earning that interruptible tariff,” Bryson recently said, chuckling. “A lot of people have been receiving the benefit of lower rates for years believing they would never be interrupted.”

Two Orange County supervisors have said they will vote against renewing the county’s interruptible contract in November. Northrop Grumman will take a hard look at its participation too, spokesman Jim Hart said.

Consultant Fabrizi said many of his clients “share the common conviction that come November they will be off the [interruptible] rate, and, if allowed, they would be off the rate today.”

This would be worrisome, said Don Fuller, who oversees two pilot interruptible programs for the Independent System Operator that are intended to supplement the utilities’ programs.

“If there were a significant change in the population of those loads, that would be a significant concern,” Fuller said.

Already, Cal-ISO has exhausted its interruptible program for August. In addition, SCE said its air-conditioner interruption program, limited to 25 outages a year, is nearing its limits.

Interruptible customers say the November opt-out decision will require weighing business costs against rate savings while factoring in good corporate citizenship.

At the Claremont Colleges, there have been hardships: canceled classes, altered work schedules, cold food in some dining halls and lighting levels more suitable for a fern bar than a university.

But the program has also saved more than $1 million annually on electricity costs that would have to be replaced with more fund-raising, higher tuition or broad cost-cutting, said Brenda Barham Hill, chief executive of Claremont University Consortium, which supplies support services for the schools.

“We are private institutions and that is a savings that has made a measurable difference at the colleges,” Barham Hill said. “When people ask me if we can get off of this contract, I tell them the reality is that, until the larger problem is solved, the region is facing rolling blackouts and we would not be immune to that. . . . We are looking at it from a financial standpoint and the greater good of the area.”

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