As California kept its string of Stage One and Two power alertsgoing Thursday, the plot in its now six-month-old drama thickenedwith an endless array of actors and subplots. Without a break forintermission, the spotlight shifts to FERC today and what itsaction might bring in settling the chaotic western wholesaleelectricity market.

The possibility of rolling blackouts hung around most of the dayagain Thursday as state and federal officials tried to work out along-term deal that would allow the state grid operator to avoidits daily round of power alerts and near-emergencies. Bymid-afternoon, officials confirmed the state again was “seeingbenefits” of the announcements Wednesday by DOE Secretary BillRichardson and “good response from a number of Pacific Northwestmarket participants, particularly Bonneville Power Administration.”

The state got through the day with “a little less excitementthan yesterday [Wednesday],” according to the CalifornianIndependent System Operator’s (Cal-ISO’s) COO Kellan Fluckiger, whonoted that he understands the federal energy department has yet toissue a formal order and that most of the initial benefit infreeing up supplies outside California came from Richardson’sannouncing his intent. “We expect to receive ongoing and sustainedbenefits when the DOE order is actually issued. Its anticipationhas been a significant help in bringing supplies to the state.”

As tempers and electrons remained short, a veritable Who’s Whoof the energy industry found their corporate names being taken invain by federal and state officials, along with California’sprivate sector utilities and vocal consumer watchdog groups thatthink avarice has replaced reasonableness among generators andmarketers, most of whom have major national and regionalreputations.

Internationally known power plant developer/operator AES Corp.,based in Arlington, VA, settled with a regional air qualitydistrict this week, paying a record $17 million fine, for airemission violations at one of the three major former SouthernCalifornia Edison Co. coastal plants the company now owns. The2,000-MW Long Beach plant, although still in violation, receivedspecial exemptions that have allowed it to operate through thecurrent crisis and it has not been part of the 11,000 to 8,500 MWof load that has been unavailable this week because of planned andunplanned outages.

Following an abatement order last September, AES curtailed about2,000 MW of power in mid-November while it was working on asettlement with the South Coast Air Quality Management District,according to Aaron Thomas, a San Francisco-based manager for AES’sPacific Region operations. The power was brought back on line lastweek with an interim emissions permit.

“The settlement brings us back into compliance and allows theunits to operate during the next six months while emission controlsare being deployed so the plants will be available to help the gridthrough this continuing crisis period,” said Thomas, noting thatall 4,000 MW of AES’s three plants should continue to be available.”We hope to have all of the emission control work done by thesummer, preparing for another high-peak-demand period next year.”

Other major national energy players were among the list of 13western supplier/marketers who Wednesday reportedly refused to sellinto California until there were assurances given about thecredit-worthiness of the state-chartered independent transmissiongrid operator, Cal-ISO, and the three investor-owned electricutilities. Several of those companies have issued statementsdenying they were refusing to sell into the state and thus bringingCalifornia to the brink of having to institute rolling blackoutsWednesday afternoon.

The list released by Gov. Gray Davis’s office included: DynegyPower Marketing; Trans Alta; Eugene (OR) Water and Electric;Southern Energy Trading; PowerEx (British Columbia Hydro); PublicService Company of Colorado; Enron Power Marketing; PortlandGeneral Electric; Avista (Washington Water Power); Idaho PowerCompany; PPL Montana; Seattle City Light; and Puget Sound Energy.

Dynegy’s President/COO Steve Bergstrom said his company was”inadvertently” included on the list, noting Dynegy “is notwithholding power from the California electricity market.” Southernand Enron echoed these denials through spokespeople in Atlanta andHouston, respectively.

“There has been a misinterpretation of the list of the companiesand the specific ones who expressed concerns about credit and/orwithheld supplies from the state,” said Patrick Dorinson, Cal-ISO’sspokesperson. “There were concerns about the credit issue, but thelist did not necessarily mean that all the firms were not sendingany power to California because some of them were.”

Late in the unfolding near-crisis Wednesday, California’s majorutility, Pacific Gas and Electric Co., applauded the work of stateand federal officials to not only avert the need for rollingblackouts, but for emphasizing “the irreplaceable role thatCalifornia’s utilities have in powering the state’s economy,” areference indirectly aimed at stemming the continuing negativeviews of the financial community toward the mounting debt, now morethan $8 billion that the PG&E utility and Southern CaliforniaEdison have taken on in the face of spiraling wholesale powerprices they have been forced to pay since the summer.

Almost simultaneously in San Francisco, the California PublicUtilities Commission announced that it has revised a proposedaction for its Dec. 21 business meeting to address “theextraordinary financial situation facing PG&E and Edison as aresult of current problems in the wholesale electric market.”

The CPUC and utility responses prompted the state’s SanFrancisco-based utility watchdog group, The Utility Reform Network(TURN), to blast the prospect of regulatory relief alleging thatthe CPUC was “caving into pressure from Edison and PG&E, whoare complaining that they are going bankrupt despite risingcorporate profits and billions in ‘stranded cost’ collections.”TURN and other consumer groups asked Gov. Davis to “rein in” theregulators to keep them from “saddling the entire state with theback-breaking bill for the most expensive public policy mistake inhistory.”

©Copyright 2000 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.