US West's Power Crisis Offers Tough Choice

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http://www.nytimes.com/reuters/business/business-utilities-ca.html

February 3, 2001

US West's Power Crisis Offers Tough Choice

By REUTERS

Filed at 4:54 p.m. ET

PORTLAND, Oregon (Reuters) - Sacrifices must be made if the lights are to

stay on in power-starved western U.S. states and regional governors at an

emergency ``summit'' are being forced to contemplate stark choices.

The welfare of endangered salmon, plans for cleaner air and the jobs of

thousands of workers were hanging in the balance this week as governors from

10 states groped for answers on how to tackle the chronic shortage of

electricity that already has caused rolling blackouts in northern

California.

A bungled California deregulation experiment coupled with an unexpected

surge in demand have created an acute electricity shortage, sending

wholesale power prices skyrocketing.

At the governors' meeting here, leaders of Native American tribes in the

Northwest made a plea to protect the salmon as water normally used to help

their spring migration has already been partly used up for power generation.

``We have run the hydro system harder than it was supposed to be run this

year,'' said , acting administrator for the Bonneville Power

Administration (BPA) which operates massive hydropower dams in the region.

``We are drawing down the reservoirs thereby compromising the spring flush

for salmon,''

The dams and their massive power-generating turbines pose a threat to the

salmon which swim the rivers of the Northwest.

BPA usually redirects millions of gallons of water in the spring to ensure

the fish are not killed by the turbines' huge blades.

Several summit participants pointed out that the salmon could be saved, but

only at the cost of another environmental goal: cleaner air.

Power plants' 2001 pollution allowances have been cut and reversing that

move would allow the plants to generate more electricity.

``We need a moratorium on having the air cleaner for a period,'' said

Esposito of independent power producer Dynegy (DYN.N), who argued that an

extra 3,000 to 4,000 megawatts of electricity would show up if emission

controls were not tightened. One megawatt can power around 1,000 homes.

However, Los Angeles is already one of the most polluted cities in the

United States and power plant emissions there have been linked to serious

illnesses such as asthma.

Many of California's power plants are more than 30 years old and the

struggle to avoid blackouts has also meant that the plants could not be

idled for months to allow upgrading to reduce pollution emissions.

``These are dirty plants,'' noted Esposito.

Sky-high power prices have already led to thousands of job cuts in the

region. Operators of power-hungry aluminum smelters are among those who have

opted to shut down. Other power-intensive industries like food processing

and refrigeration have also been hard hit.

Alan , chief executive officer of utility PacifiCorp, a unit of

ish Power Plc. (SPW.L), said his company was talking to farmers in

Idaho, Utah and Oregon and asking them to consider taking ``a long summer

holiday.''

Farmers use much needed water and energy to irrigate their crops and

utilities like PacifiCorp are willing to pay them for power they will save

if they decide not to plant this year.

said current prices of many crops are already depressed, so the

utility was getting a good response.

``We are using the willing buyer, willing seller concept,'' he told the

emergency meeting.

The quest to conserve power may have other consequences this summer as

commercial consumers seek to moderate their use of power-hungry air

conditioning systems.

``I think this will be a casual summer in California with a lot of short

sleeves and no ties,'' said Severin Borenstein, director of the University

of California Energy Institute.