With a winter season peak demand of less than 30,000 MW,California nonetheless Monday instituted rolling blackouts of 1,000MW across nearly the entire state shortly after Noon PST. TheCal-ISO said the system was down 14,000 MW of capacity due toplanned maintenance, a generator accident, lower imports and somepower loss from qualifying facility (QF) cogeneration plants.

“A number of the gas-fired QFs decided there is no point incontinuing to run if there is no progress toward a settlement withthe utilities that will allow them to get paid,” said an officialwith the Independent Energy Producers, a Sacramento-based tradegroup for major merchant generators and many of the QFs. Besidesthe lack of progress with the governor’s utility negotiations, thestate legislature seems to be unable to move legislation that wouldat least help get the QFs paid prospectively (SB 47X), but thatbill is stalled presumably waiting for the governor’s negotiationto reap a major overall settlement with the utilities.

The IEP spokesperson said many of the gas-fired cogenerationplants that have shut down are small to medium-size operation inthe 50 MW or less category. For the most part, larger refineriesand oil field operators with cogeneration operations are continuingto run as are many of the geothermal projects.

There are 688 separate QF units that compose 6,000 to 9,000 MWof power, depending on how much wind and other renewables areavailable at any given time. Natural gas-fired QFs are at thecenter of the controversy.

The Cal-ISO ordered a Stage Three alert, meaning reserves areexpected to dip below 1.5% in peak-demand periods. It was the firsttime the outages had cut such a wide swath, from San Francisco toSan Diego, and touching on some suburbs of Los Angeles that are notserved by the municipal agency there. Homes, businesses and trafficlights on the systems of Pacific Gas & Electric, SouthernCalifornia Edison and San Diego Gas & Electric were affected.SDG&E, which saw a service cut of just 74 MW or 3% of its load,ordered one hour rolling blackouts. SoCal Ed expected about 20,000of its customers would be interrupted, and PG&E said 105,000 ofits customers were affected.

About 7,000 MW of the outage, was unplanned, Cal-ISO officialssaid. State officials indicated they were assessing the situationon an hour-by-hour basis. “A number of different factors added upto an overall supply shortage throughout the Western U.S.,particularly in California,” said Jim Detmers, Cal-ISO’s operatingvice president, noting that imports overall — particularly fromthe Southwest — were down. “Conservation means everything to thegrid system at this point to reduce the impact of continuingoutages.”

Imports from the Pacific Northwest were actually higher thanthey had been in recent days and weeks, but still well belowtypical levels, according to Detmers. “Our actual load shape (forMonday) looks more like the typical summer pattern of peaking inmid-afternoon.”

Fires at two very large generators in Southern Californiaknocked out about 1,400 MW at mid-morning, making a difficultsituation a full-blown emergency, Detmers said, noting that theCalifornia grid experienced an “enormous strain.” He and Cal-ISO’sspokesperson Patrick Dorinson said the rolling blackouts point outthe state’s need for continuing conservation.

“As I have said all along, conservation is no longer an optionin this state; it is a way of life,” Dorinson said. In themeantime, reports out of Sacramento indicated little progress wasbeing made in negotiations with Gov. Gray Davis’ team to separatelyresolve the QF contract stalemate in which utilities have beenunable to pay for power or to secure an over-arching settlementthat saves the utilities from bankruptcy.

A number of QF plants shut down because they cannot pay for, orget credit, to allow them to continue getting the natural gassupplies they need to operate their cogeneration plants. Detmerssaid “about half” of the QF volumes usually available to the grid(not all of the generation is) had been shut down Monday.

“The (proposed state) QF bill (SB 27X) doesn’t put any moneyinto the pocket of the QF generators,” said Evan Goldberg, an aideto State Sen. Debra Bowen, noting that only an agreement from theongoing negotiations can do that, as many QF generators struggle tostay in business in the wake of not being paid by the two majorutilities. “It won’t help those facilities that are truly in a cashcrunch and are going down. They don’t have any money or any creditto get money to pay gas suppliers and others.”

The California Public Utilities Commission could order theutilities to pay the QFs and there has been a proposed decision atthe commission, but no action, pending the legislativenegotiations. Also pending is a draft CPUC decision on creating amechanism to transfer investor-owned utility revenues to the stateDepartment of Water Resources to cover costs of buying power forthe utilities’ net-short position. It had been expected lastThursday, but there was no clear indication of whether it willsurface before March 27, when the CPUC is expected to make a finaldecision.

In other California action, reports of impatience with thegovernor among state legislators and utility negotiators are morewidely circulating. While hearings and negotiations continued onnew laws covering qualifying facility generators, power plantapprovals, increased conservation programs, distributed generationand more, the lawmakers were mostly waiting for progress in twomajor negotiations: one to purchase the transmission lines ofailing utilities Southern California Edison and Pacific Gas &Electric and the other, the signing of long-term power contracts.

In Washington, Energy Secretary Spencer Abraham said the federalgovernment would not try to second-guess California politicians ontheir decision to buy out the utilities — BUT — theadministration will urge the Federal Energy Regulatory Commission”to condition any such sale on adherence to open accessrequirements….to maintain effective wholesale competition in theregion and to ensure grid reliability.”

©Copyright 2001 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.