Feeling the Aftershocks of the California Crisis

Is utility deregulation essentially over in California? With the state government buying long-term power supplies—and currently in the process of purchasing transmission lines—there has been a shift to government monopoly ownership of the process.

Here’s a look at some outcomes of the past year’s power problems in California:

• Power line shortage. “The seeds of what has grown in California have been sown over the United States as a whole by our failure to keep up with our [transmission] infrastructure over the past decade,” said Karl Stahlkopf, vice president of the Electrical Power Research Institute (EPRI). EPRI predicts growth of 20 to 25 percent in electric demand over the next 10 years—but only a 4-percent increase in power lines and grid installations.

• Rental boom. Generator rentals were booming last winter in California. “A San Diego laboratory arranged for a generator to keep the ventilation going for research rats,” reported The Orange County Register . Rental units capable of producing one megawatt (MW) of power cost about $30,000 a month.

Demand for generator rentals was up 200 percent in Riverside, Calif., at Johnson Power Systems, says company spokesman Ken Weaver. “If it happens in December, what’s going to happen in July?”

• Impact in Philadelphia. California’s power crisis may have had an impact on Philadelphia, according to PSEG Energy Technologies of Edison, N.J. A PSEG-commissioned survey of energy users found that 75 percent of Philadelphia-area respondents think rising energy prices will adversely affect their companies; 40 percent said they have undertaken efforts to make their companies more energy efficient.

• Business increases. Manufacturers and sellers of uninterruptible power-supply and other backup power systems—especially in California, but elsewhere as well—have seen booming interest in their offerings as a result of the crisis. Darrick Finan, director of marketing communications for Invensys Power Systems, Herndon, Va., told Communications News that his company’s Web site was fielding 15 to 20 percent more hits from California compared with one year ago.

• Optimism for microturbine maker. The Wall Street Journal quotes Aki Almgren, CEO of Capstone Turbines, Chatsworth, Calif.: “The company needs to sell 10,000 [microturbine] generators a year. A continued power crisis could help make that possible.”

• Will it get worse? A report from Cambridge Energy Research Associates (CERA), Cambridge, Mass., predicts that California “[can expect] as many as 20 hours of extreme shortage, in which demand exceeds supply by 3,000 MW, requiring the state to implement rolling blackouts.”

Further, say researchers, the long-term power-supply contracts into which the California state government was entering “are likely to create risky, potentially above-market obligations for the state in the future.”

From Pure Power, Summer 2001.

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