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Federal Help Coming for West Coast Power Crunch by CNN CNN.com, December 14, 2000

SACRAMENTO, California -- Federal authorities intervened to ease the electricity crisis plaguing California and the Northwest, as California narrowly escaped rolling blackouts.

California's Independent System Operator (ISO), which manages about 75 percent of the state's power grid, declared a Stage Two emergency on Thursday, meaning the state was down to its last 5 percent of power and some large commercial customers could have their power interrupted. Residential customers were also being urged to conserve power.

On Wednesday, U.S. Energy Secretary Bill Richardson ordered Northwest power suppliers to sell electricity to California's cash-strapped utilities on credit, after about a dozen of those suppliers began demanding payment in advance. Several suppliers complied with Richardson's order and diverted power to California.

"Our objective is to keep the lights on in California through this emergency situation," he said. "We're dealing with a potentially very serious situation here."

The ISO said Richardson's action was the deciding factor in not going to a Stage Three emergency, which could have led to rolling blackouts.

Price controls sought

Besides cold weather in the Northwest, where California buys some of its electricity, the crisis has been blamed on surging prices, driven by a gradual deregulation of California's electricity market.

Last Friday, after the Federal Energy Regulatory Commission lifted price caps in California, wholesale prices surged to record levels and the state's main utilities warned they were in financial danger.

On Friday, the commission will meet to order changes to ease the crisis.

"We believe in competitive markets," said James Hoecker, the commission's chairman. "We believe we can make them work, but they have to work responsibly and they have to produce reasonable prices."

Electricity prices in California are 11 times higher than they were at this time last year, said Southern California Edison spokesman Gil Alexander. Edison and Pacific Gas & Electric said they have lost about $6 billion combined because of the soaring wholesale prices, coupled with a rate freeze as part of the deregulation.

California Gov. Gray Davis wants the commission to impose a regional price cap. Washington Gov. Gary Locke urged similar action in a letter to President Clinton, Richardson and Hoecker.