California Firms Ready to Cut Back on Power

At California Steel Industries Inc., a burgeoning power crisis threatens to meddle with the metal.

The Fontana maker of flat steel and pipe is among hundreds of California companies that have agreed to temporarily slash their power use if the state’s electricity reserves get dangerously low -- a scenario that’s becoming more likely with each passing day.

“We don’t like to have to do it,” said Brett Guge, California Steel’s vice president of administration. “But we understand that’s one of the ways we keep the state and the grid viable, and we all share in the pain.”

Three years after California’s energy crisis spawned rolling blackouts, the state is consuming a record amount of electricity and again is perilously close to running short of power.

The state set new highs for electricity use on three straight days last week, when temperatures soared in Southern California and power-hungry air conditioners shifted into overdrive. Although another record-breaking consumption binge didn’t materialize as predicted on Monday, the latest record soon could be eclipsed and state officials are urging conservation.

California’s growing economy and population -- illustrated by sprawling tracts of new homes and industrial parks -- is the main piston driving up electricity usage, officials said. Much of that growth is centered in hot regions such as the Inland Empire east of Los Angeles, where air conditioning is nearly a survival tool.

The state’s investor-owned utilities are struggling to meet the soaring demand. Although California has added power supplies since the crisis of 2000-01, constraints on electricity’s availability and transmission still exist, state officials and industry executives said. (The Los Angeles Department of Water and Power isn’t affected because it operates on a separate system from the rest of the state and has more than enough electricity to serve its customers.)

No one is expecting a fresh wave of rolling blackouts like those that swept California early in 2001. But the state isn’t immune from smaller disruptions, causing outages for homeowners, businesses and farms that have agreed to cut back when supplies get low.

“How long does it take for the situation to change? The blink of an eye,” said Gary Ackerman, executive director of the Western Power Trading Forum, which represents electricity buyers and sellers.

The slim margin for error was evident a week ago, when a brush fire in northern Los Angeles County knocked out several high-voltage power lines. The state’s power-grid operator declared a transmission emergency and asked Southern California Edison, the region’s major provider, to cut electricity to nearly 114,000 of its 4.6 million customer accounts.

The affected customers were households and agricultural concerns that had volunteered to shut down air conditioners and irrigation pumps if supplies fell too low. In exchange, they get a discount on their electric rates.

Major customers in the plan -- corporations like California Steel and universities -- were spared. But observers said another fire, or problems at a generating plant or along high-voltage wires, could mean new outages for all customers on the voluntary “interruptible” roster. Statewide, those customers account for slightly more than 1,400 megawatts of demand, or enough to serve about 1 million homes.

“You’re going to see it invoked pretty often this summer,” predicted Charles Toca, senior consultant at Utility Savings & Refund, a Newport Beach firm that helps companies buy power.

Businesses, schools and government agencies on the roster are bracing for the next call to switch off the juice.

Guge of California Steel said the company was ready to comply despite the problems it would cause. “It would put a significant crimp in our operations because we would have to cut back immediately with very little preparation,” he said.

The Claremont Colleges, having endured “the horrible experience” of rolling blackouts three years ago, have since bought five backup generators that will be turned on if Edison calls, said Brenda Barham Hill, chief executive of the Claremont University Consortium, which supplies support services to the schools.

Otherwise, “we would have no power at all,” she said.

Irvine Ranch in Orange County is set to close two of the master-planned community’s 18 wells and pumping systems under the voluntary plan. But the shortfall wouldn’t be noticed by the 416,000 people who live and work within the ranch, which includes Irvine and portions of Lake Forest, Tustin, Newport Beach and other cities, said Marilyn Smith, a spokeswoman for the Irvine Ranch Water District.

That’s because the district fills its remaining 16 wells at night, when electricity demand is lowest, to compensate for the two closed wells.

“You can store water, but you can’t store electricity,” Smith said.

State and utility officials maintain that there should be sufficient power over the next several weeks if there isn’t an unexpected disruption. The electricity that has been added since the crisis “is enough to get us through the summer,” said Stephanie McCorkle, a spokeswoman for the California Independent System Operator, which operates the power grid for about 75% of the state.

That should prevent a repeat of the rolling blackouts. During the crisis, power supplies fell short as wholesale prices soared, cash-strapped utilities couldn’t afford enough power, transmission constraints cut deliveries, generation plants went down and suppliers in the Pacific Northwest pared deliveries from their drought-stricken hydroelectric plants.

Many of those problems have since ebbed. Yet California now is using 90% to 95% of its available electricity on hot days, and “if there’s unexpected outages with generating facilities, certainly there’s a chance there could be problems,” said Steve Conroy, a spokesman for Southern California Edison, a unit of Edison International in Rosemead.

The state’s record for electricity use before last week was set July 12, 1999 -- before the energy crisis gripped California, according to Cal-ISO’s figures.

As the region sizzled last week, that record was surpassed three straight days, with use topping out at 44,360 megawatts Wednesday. One megawatt can power about 750 homes at any given moment. Edison, which serves a 50,000-square-mile area in Southern California, also set internal records for power distribution.

Supply isn’t the only headache: Transmission bottlenecks are a major problem, Cal-ISO says. It has estimated that 770 to 1,650 megawatts of power capacity might be stranded at Southern California power plants this summer “because we are not able to move it out to consumers, due to a lack of transmission lines,” McCorkle said.

The congestion also disrupts California’s ability to import electricity from nearby states, power that’s often cheaper than electricity generated in California, she said.

“A lot of people don’t realize that California imports one-quarter of all its power needs in the summertime,” she said. “We are dependent on our neighboring states.”

That’s why businesses and others on the voluntary power-reduction plan expect they’ll have to pull the plug at least once more this summer, said Terry Rich, executive vice president of Ancillary Services Coalition, which helps companies manage their power-interruption plans.

“But everybody is sitting out there with their fingers crossed,” he said, “hoping they don’t get called.”