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California faces more blackouts

The state saw its worst blackout yet on Monday - focusing nation's attention.

Blackouts in California and increasingly sharp warnings from the Bush administration have focused the nation's attention anew on its energy needs.

Energy Secretary Spencer Abraham this week likened the severity of today's rising prices for oil and natural gas to the nation's energy crisis of the 1970s.

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More dramatically, California suffered its most extensive electricity blackout to date, a nasty warning of what may lie ahead this summer for America's largest state.

Still, however urgent the energy "crisis" here and in the nation as a whole may be, any fixes most certainly will not be quick - and are probably years in the making.

California's problems stem mainly from the state's peculiar and failed attempt to deregulate its electricity market. But more broadly, there's no consensus on energy policy in the US - and lawmakers in Washington have not been compelled, so far, to bridge the deep ideological divisions that characterize this issue.

For California, the return to blackouts on Monday was a reminder of the complexity and heated politics of energy.

Rolling blackouts first occurred in January. But despite interventions by California Gov. Gray Davis (D) and the state Legislature, including expenditures of nearly $3 billion of taxpayer funds, the state had to pull the plug on more than 1 million residents this week to ration an inadequate electricity supply.

"We can't fix this problem overnight," says Mark Bernstein, an energy expert with the Rand Corp. who is advising the California Legislature. "There will be uncertainty for the next few years."

Underscoring the notion of a protracted problem, Secretary Abraham said that "the situation in California is not isolated, it is not temporary, and it will not fix itself."

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More oil won't fix California crisis

While there is a relationship between the electricity problems of California and the broader national energy concerns, many experts are suspicious of attempts by the Bush administration to link the two.

"Frankly, I don't see any relationship between blackouts and ANWR," says James Bushnell, an analyst with the UC Berkeley Energy Institute. Mr. Bushnell and others suggest the Bush administration will use the California crisis to leverage support for oil exploration in ANWR, the Arctic National Wildlife Refuge in Alaska, which environmentalists oppose.

Clearly, more oil will not solve California's electricity problems. But the Bush administration sees the inhibitions that have made the US increasingly reliant on imported oil as typical of wrongheaded energy policy across the board. US policy has focused on "taxing demand, limiting supply, and ignoring the rapidly expanding needs of the future," says Abraham.

The US currently imports more than half its oil, a fact that makes some analysts anxious, particularly when OPEC agrees to cut production to keep prices high, as it did this past weekend.

But greater US energy independence would not come easily or quickly. Countervailing political and environmental pressures have developed over the years, making it less easy for the US to ratchet up domestic production of oil, natural gas, coal, and other conventional fuels. Power plants, transmission lines, and refineries are all, to some degree, either unsightly, harmful to the environment, or just not wanted in most neighborhoods.

The price question

Removing restrictions on the energy market, as the Bush administration proposes, could also founder on the question of prices. The administration argues that greater supply would bring down today's tripled natural-gas prices and steep gasoline costs, but some consumer groups are pushing in the opposite direction for greater controls on pricing.

The crosscurrents are evident in California. Governor Davis has refused to lift the cap on retail electricity prices, fearing the political backlash.

Yet critics say Davis must accept higher rates as the only way to force consumers to conserve. "In the short term, there are only two ways Davis can limit electricity consumption: through higher prices, or blackouts. He's chosen the latter," says Adrian Moore, director of the Reason Public Policy Institute, a free-market advocacy group in Los Angeles.

While Davis has refused to raise retail prices, the state has become a major player in the electricity crisis. The state has for weeks been buying power for Californians' use, using taxpayer monies that will, in theory, be reimbursed at some point through state-issued bonds.

Meanwhile, the state is negotiating to buy the major utilities' transmission lines. The transaction would give California some assets in exchange for helping bail out the utilities, which remain threatened with bankruptcy. The state has also sped up its approval of small "peaker" generating plants, which it hopes will be on line by summer to help during peak demand.

But this week's unseasonably warm weather, which triggered use of air conditioners; a high number of power-plant shutdowns for repairs; and a dearth of imported electricity from the Northwest all showed the state's continuing vulnerability to blackouts. Added to the mix this week: California's smaller, alternative power generators were shutting down because of non-payment by the state's utilities.

According to recent projections by the California Energy Commission, the state could be some 5,000 megawatts short of the power it needs this summer. That translates to 5 million customers going without electricity for a few hours at a time, unless conservation, added capacity, favorable weather, and more imports provide the margin needed to avoid blackouts.

(c) Copyright 2001. The Christian Science Monitor


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