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California dodges 3rd straight day of blackouts

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SAN FRANCISCO, California (CNN) -- As Californians narrowly missed a third straight day of possible rolling blackouts, the Public Utilities Commission proposed rate hikes of up to 50 percent.

Record high temperatures in the state Wednesday created a spiraling demand for energy that could have led power grid operators to temporarily cut electrical service as reserves fall too low. About 400,000 customers were affected by the outages Tuesday, the sixth time this year that Californians were involuntarily unplugged.

In Thermal, 81 miles (130 kilometers) northeast of San Diego, the temperature was expected to approach Tuesday's record of 110 degrees Fahrenheit.

State power grid managers said residents sweltering in the pre-summer heat wave were ignoring pleas to conserve electricity.

New rate hike proposed

Heavy electricity usage will cost some residents up to 35 percent more under a new rate proposal outlined Wednesday by the state's Public Utilities Commission.

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Commission President Loretta Lynch said the proposed tiered billing structure for residential customers is designed "to encourage conservation" because the heaviest users would see the highest increase in their bills.

Customers using less than the 130 percent baseline -- about 50 percent of residential customers -- would see no increase, Lynch said. But those who consume 300 percent over the baseline would see rate increases as high as 35 percent. Moderate-use customers would see their rates rise only as much as 12 percent.

Commercial customers, Lynch said, would see rate increases of up to 45 percent, and industrial customers would pay up to 52 percent more.

The commission approved the largest rate increases in California history on March 27. Since then, officials have been scrambling to put together rate design proposals for customers of Pacific Gas & Electric and Southern California Edison, the state's two largest utilities. Those proposals will be voted on by the commission Monday.

Lynch said her proposal contains a "bill limiter" that would prevent "bill shock." Residential bills will be capped at 300 percent over baseline. "That won't discourage conservation since 300 percent is still a very high bill," she said.

Thousands powerless for two days

Maintenance at power plants this month has left the state with 12,000 fewer megawatts of power. A 750-megawatt power plant, one of several undergoing maintenance, was expected to return to service Wednesday.

The high demand for electricity created rolling blackouts Tuesday that left nearly 300,000 customers without power in pockets from San Diego to Sacramento.

The state Independent System Operator, which manages the state power grid, said it imported more power from the Northwest and Canada to avoid blackouts earlier in the day.

Most of the outages occurred in areas served by PG&E and SoCal Edison.

California Gov. Gray Davis urged residents to cut back electricity consumption by as much as 10 percent. But Jim McIntosh, director of grid operations for the ISO, said Californians used about 1,000 megawatts more power Tuesday than Monday.

Monday's power cuts affected more than 88,000 customers of PG&E and SoCal Edison. Other customers of San Diego Gas and Electric and smaller utilities in the Los Angeles area were also affected.

Cheney blames ignoring supply issues

California officials expect the state to be plagued with outages this summer and have asked federal officials for help with the ongoing problem. The Bush administration has so far refused most aid.

President Bush has urged federal agencies to cut energy consumption, but Vice President Dick Cheney has said conservation efforts aren't enough -- and has criticized the state for failing to add generating capacity.

"They've got a whole complex of problems that are caused by relying only on conservation and not doing anything about the supply side of the equation," Cheney told CNN in a Tuesday interview.

Cheney is leading a White House task force on energy that is expected to urge expanded oil exploration efforts and the construction of hundreds of new power plants.

California's two largest utilities have been hammered by a 1995 electricity deregulation law that capped the power companies' ability to raise rates. When wholesale power costs skyrocketed, both SoCal Edison and PG&E suffered billions of dollars in losses, and PG&E filed for bankruptcy protection in April.

The state has been buying power on long-term contracts with money from a $10 billion bond issue the Legislature approved in February.

That legislation drew protests from consumer advocates, who say the bill amounted to a taxpayer-financed bailout of the two utility companies -- both of which supported the deregulation bill at the time.







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