Rescue California

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Power worries linger
Study: State must develop electricity infrastructure, plan

May 23, 2003

Though California's energy crisis has passed, a Bay Area business group released a study Thursday saying that electricity shortages could return in a few years if the state does not invest in its power infrastructure and develop a cohesive energy policy.

"There is still a meaningful risk that future power supplies will come up short," said the report by the Bay Area Economic Forum.

The study, which based its conclusions on data from the California Energy Commission, said that by 2006, if California does not take more aggressive steps to improve its supplies, the state again could be faced with reserve margin shortages that led to rolling blackouts in 2001.

But a spokeswoman for the California Energy Commission, which monitors power supply and

regulates plant development, called the report pessimistic and said it was based on outdated figures.

New information released this week shows that the state will have reserves of 8 to 10 percent above user demand, commission spokeswoman Claudia Chandler said.

While that level is short of the 13 to 15 percent margin sought by the operator of the state electricity grid, the California Independent System Operator, it is far above the 2 percent margin where blackouts begin to occur, she said.

"Just because you have lower margins doesn't mean you have blackouts," Chandler said.

Still, nearly two years after California's energy crisis subsided, the state has no cohesive policy on what kind of electricity system should be in place for the future.

A bill by state Sen. Debra Bowen, D-Marina Del Rey, calls for a return to the regulated power system that California had before deregulation began in 1998.

But free-market champions, including members of the Federal Energy Regulatory Commission, which sets federal power policy, continue to push for maintaining, or even furthering, a deregulated power market.

That policy uncertainty is discouraging companies from building power plants in the state, according to the report. The Bay Area Economic Forum, comprised of top executives, politicians and academics, believes in "promoting an environment in the state that is more attractive to competitive, private- sector investment."

The report also urges varying rates for electricity depending on demand levels at certain times of the day.

The report says that higher prices during peak hours would encourage consumers to be more conscious of their electricity consumption and cut back to what is necessary.

California already ranks among the lowest per-capita energy consumers in the nation, yet pays some of the highest rates, in part due to the aftermath of the crisis -- which increasing evidence shows was caused by manipulative tactics by energy companies.

Retail energy prices in California are 42 percent higher than the national average, and business rates are 71 percent higher than the national average.

E-mail Christian Berthelsen at cberthelsen@sfchronicle.com.