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Blackouts as a way of life
Adventures in Utility Deregulation--part 2
Second in a series
By Tim Bousquet
The Republican National Convention of 1996 was held in
the San Diego Convention Center, architect Arthur
Erickson's celebrated creation of "concrete
geometries" that overlooks the San Diego harbor.
Opening day of the convention was Sunday, August 11,
and delegates, the press, and on-lookers began
arriving on Saturday, the 10th. About 3:45 that
afternoon, workers and journalists setting up in the
convention center noticed the lights flicker, but
after only a moment of darkness they got on with their
work uninterrupted.
But down the street, at the Hyatt Islandia Hotel, the
power was out for an hour and forty-five minutes. The
hotel housed the Texas delegation, and the power
failure inconvenienced the convention-goers
somewhat--State Chairman Tom Pauken had to walk down
from his 16th floor room, U.S. Sen. Kay Bailey
Hutchison's husband Ray had to walk up 17 floors--but
most kept in high spirits as the hotel staff waited
for the reservation computer to power back up by
serving complimentary soft drinks, fruit juices and
cookies in the lobby.
The lights came back on just minutes before Texas
Governor George W. Bush arrived at 5:40 p.m.
**
San Diego's power failure was part of the largest
electrical blackout to ever hit the United States.
>From Idaho and Oregon in the north to the Mexican
border in the south, some 4 million people lost power,
including 2 million PG&E customers in northern and
central California and 1.2 million San Diego Gas &
Electric Co. customers. The failure was seemingly
random, with a checkerboard pattern of lighted and
darkened areas. While problems were reduced somewhat
because it occurred on a weekend, there were still
hundreds of people trapped in elevators, hospitals and
police dispatch centers were without power, and six
million gallons of raw sewage were dumped on a 10-mile
stretch of beach in Los Angeles.
The cause of the blackout was initially said to be a
brush fire on the Oregon border, which interrupted
transmission lines, but this explanation was discarded
by Sunday afternoon. The utilities then said that the
problem rested with the extremely high summer
temperatures-- it was over 100 degrees in eastern
Oregon and the San Joaquin Valley, 113 in Red Bluff,
and 104 in Boise-- causing a high electrical demand
for air conditioners, coupled with the complicated
means by which power is distributed across the
country.
"We're going to make sure we're getting the attention
of top management of all the utilities on this," Bill
Comish told USA Today. Comish was a spokesperson with
the Western Systems Coordinating Council, an industry
consortium that oversees electrical transmission in 14
states.
"Four or five" transmission lines went down almost
simultaneously in Oregon and Washington, Comish said,
citing one line that "shut itself off" after high
temperatures caused it to sag into an overgrown tree.
Perhaps realizing that blaming a service failure to 4
million customers on one untrimmed tree was a bit of a
sell, Comish went on to say that the effect of the
wayward tree on the distribution system was magnified
because a transmission line at the California-Oregon
border was carrying near-capacity loads of
hydroelectric power.
But "changes in the system could boost utility costs,"
Comish said.
The Western Systems Coordinating Council called an
emergency meeting in Portland on Monday the 12th to
take an "in-depth look at the outage's causes--from
the systemic to the mundane--and at the likelihood of
it happening again," explained Leslie Helms, Shawn
Hubler, and Patrick Lee, staff writers for the Los
Angeles Times.
"The blackout underscored the vulnerability of the
Western power grid to disruptions as the system
becomes increasingly complex," continued the Times
writers. "The power industry is being transformed
across the nation as it deregulates and opens itself
to market forces that can sometimes pit the needs of
customers against the need to contain costs."
Indeed, although an exact sequence of cause-and-effect
has never been produced to explain the blackout of
1996, the underlying causes were understood at the
time: deregulation of the nation's power distribution
system had led to a reduction in expenditures for
transmission line maintenance, to the degree that when
the system was stressed to its limits any single
event--such as a fallen tree limb-- could cause a
cascading failure across the whole system.
As Brandy Hardy, chief executive of Oregon-based
Bonneville Power Administration, explained it to the
Times, "If you increase the number of players in the
marketplace, there is pressure to invest less,"
leading utility companies to cut costs wherever they
can, especially in line maintenance.
The blackout, commented the TImes writers, "pointed up
the need for more conscientious line maintenance: A
similar large-scale outage July 2 was also traced to a
tree that came into contact with a power line--in
Idaho--and numerous smaller outages have been blamed
on poor maintenance in recent years. Indeed,
maintenance is a key concern of those who are
monitoring the deregulation issue. Tree trimming costs
money, especially in places like the Pacific
Northwest, and utility officials fear that increased
competition will be a disincentive to maintain lines."
Recognizing the problem before them, immediately after
the power outage, "utility companies in the Pacific
Northwest began furiously trimming trees along the
Pacific Intertie line that shares power up and down
the West," reported the San Diego Union-Tribune.
Regardless, "We're concerned about the future
ramifications" of deregulation, Hardy concluded.
**
"Cost containment," in the form of reduced
expenditures for line maintenance, had been an issue
long before the blackout of 1996. Although hardly
alone among cost-cutting utility companies, Pacific
Gas & Electric serves as a good case study.
As early as the late 1980s the Doe Mill Ridge fire in
Butte County had been blamed on a PG&E line arcing to
uncut trees. There had also been a series of other
small fires across the state started by power lines,
but as no significant damage was done by these fires,
little attention was paid to them, either by the press
or by PG&E.
But on August 6, 1990, power from a PG&E transmission
line in southern Tehama County arced into 50-foot
digger pine. The tree was "clearly visible from both
the air and the ground as being in violation" of
California laws mandating a ten-foot clearance around
power lines, said Ken Roye, a Chico attorney.
The pine sparked the fifth largest wildland fire in
California history, as the flames raced from the
valley floor up through the foothills east of the Ishi
Wilderness and into the mountain community of
Campbelville. Some 133,000 acres were torched, and
millions of dollars in property destroyed.
Roye represented many of the property owners in a suit
against PG&E, but rather than simply settle and pay
the claims, the company forced the issue into a
courtroom. "They spent millions of dollars fighting
the claims instead of spending millions of dollars
cutting trees," said the attorney.
Eventually, Roye's clients prevailed, and the company
paid out claims totaling a million dollars.
The experience of the Campbellville fire, however,
does not appear to have affected PG&E's shoddy
maintenance program, as a series of fires and service
interruptions through the 1990s demonstrates.
In August of 1994 the Trauner fire, burning 500 acres
near Rough and Ready in Nevada County destroyed 12
homes and 22 other structures, including a schoolhouse
built in 1868. Fire investigators, reported Jim Doyle
of the San Francisco Chronicle, "determined that the
blaze began when a 21,000-volt power line brushed
against a tree limb that the utility was supposed to
keep trimmed. In random spot inspections, the
investigators found several hundred safety violations
in western Nevada County. Nearly 200 of the violations
involved 'burners,' where there was contact between
vegetation and a power line."
After the fire, PG&E paid the state $ 1.3 million for
the cost of fighting the fighting, as well as $5
million for the 1990 Campbelville fire.
During a three-month trial in 1997 related to the
Rough and Ready fire, "a prosecution expert testified
that PG&E bilked its customers of nearly $80 million
by diverting funds from its trimming program into
shareholder profits," wrote Doyle.
PG&E was convicted of 739 counts of criminal
negligence and fined $1.6 million.
A year and a half later, in mid-December 1995, a
series of storms slammed the west coast with hurricane
force winds and gusts of up to 134 mph. The storms
"left sections of the utility's transmission system a
shambles, damaging or destroying 1,385 power poles,
toppling 32 high voltage towers, and downing 450 miles
of electrical lines," reported Erik Ingram of the
Chronicle.
After a four-day hearing before the Public Utilities
Commission, which was called to investigate PG&E's
response to the storms, the company signed an
agreement which required it "to conduct several
studies for retrofitting high voltage towers in
extreme wind areas; identifying towers in salt marsh
and saltwater areas that have weak and deteriorating
foundations; and identifying and fixing wood poles
that are overloaded with electrical, phone and cable
television lines. The pact also calls for the company
to adopt higher safety standards for determining the
strength and life span of wooden poles."
**
PG&E's history of poor maintenance was attributed
directly to deregulation by its employee union. On
December 14, 1994, some 500 PG&E employees,
represented by the International Brotherhood of
Electrical Workers Local 1245, showed up for a rally
on the steps of the state building in San Francisco,
where the PUC was discussing possible deregulation.
"Deregulation is bad for the environment, bad for
ratepayers and bad for service," said Maureen
Anderson, a union spokesperson.
The union had good reason to be concerned: PG&E had
just announced that it was laying off 3,000 workers
"to save $180 million a year and hold the line on
prices to customers."
PG&E President Stan Skinner said the layoffs were the
result of impending competition. "You can't pick up a
paper without seeing notices of downsizing
everywhere," he told the Chronicle. "Our industry has
tremendous strains of restructuring and great pressure
to reduce prices. There's probably more uncertainty
than at any time in my career."
In a company memo sent to employees, the company
explained that staff cuts were needed to "help PG&E
prepare for inevitable competition in the electric
power industry."
**
The Republicans meeting in San Diego were not inclined
to investigate electrical deregulation--the convention
opened with a video tribute to Ronald Reagan, the
political godfather of deregulation--but if they had,
they weren't going to find much information in the
California press.
Blackouts are the stuff of cheap journalism, and
blackout of August 1996 was no exception. Reams of
silly copy were produced by lazy reporters who had
only to interview the affected, or drag out tired
cliches about air conditioner-less summer days.
Readers learned about darkened shopping malls, hair
dryers going out in salons, and a man calling the cops
to complain that his iron wasn't working, but very
little about the causes of the blackout, even less
analysis of the industry and the problems it faced,
and almost nothing at all about the utility
deregulation legislation then making its way through
Sacramento.
"Coverage of the 1996 [deregulation] legislation and
the changes it set in motion was scant," comments
Susan F. Rasky, a professor of Journalism at UC
Berkeley, in last Satuday's Times. "Why? Because the
legislation was considered and approved near the end
of the legislative session when reporters are busy
with hundreds of other bills. Because committee
hearings on the bill were held late in the afternoon,
around deadline time, and were therefore inconvenient
for news organizations to cover. Because state Sen.
Steve Peace of San Diego was the man who put the bill
together and reporters regarded him as a policy
wonk--too knowledgeable to do anything really bad and
too boring to cover on those hot summer afternoons.
The hearings were dubbed the 'Steve Peace death
march.' As any Sacramento reporter would agree, it
wasn't hard to convince an editor that the details of
this eye-glazing deregulation stuff didn't make much
of a story."
Instead, press reports tended to flippantly
concentrate on the wealthy, and how the power outage
earlier in the month affected them. "In Palm Springs,"
wrote Rich Connell in the Los Angeles Times, "hotels
dragged gas barbecues to their pools and grilled
hamburgers and hot dogs. Tourists drank margaritas on
the rocks, because the blenders didn't work. And even
though the air conditioner was only working weakly,
gamblers crowded into the Spa Casino, where a backup
generator kept the slot machines ringing bells,
flashing lights and collecting money."
But had any of the politicians waded through the
journalistic wasteland and found the few oases of
substance cited earlier in this article, they might
had concluded that the blackout 1996, and the long
history of poor line maintenance attributed to utility
deregulation by industry experts like Bonneville's
Hardy, should have raised doubts with about further
utility deregulation.
Apparently, though, none were up to the task. Only
three weeks after the biggest power failure in
history, the entire California political establishment
voted in favor of AB 1890, Peace's legislation
enacting utility deregulation. The Assembly passed the
bill on August 30, on a vote of 71-0. The State Senate
passed it on the following day, with a vote of 38-0,
or "almost by acclamation," in the words of James
Sweeney of the Union-Tribune. Governor Pete Wilson
signed the bill on September 23, 1996.
**
It is perhaps fitting that the four-year transition
out of utility regulation was framed by the blackout
of August 1996 and the rolling blackouts of January
2001.
The basic structure of energy production and
distribution in the current age is seasonal. In the
summer, when demand is low in the northern states,
excess production is sent to California and the south,
where demand is high because of air conditioner use;
in the winter the situation is reversed, as
northerners' demand soars and Californians enjoy the
relatively mild season.
In the past there were occasional stresses on the
system--unusually cold weather in California in the
Winter, or low production from hydroelectric plants
because of lack of rain, for example--but these
stresses did not overwhelm the grid because regulators
saw to it that generation and transmission came before
utility profit.
Under deregulation these assurances simply no longer
hold. The market is chaotic and unpredictable as the
thousands of players make decisions based not on
overall integrity of the system, but rather on their
own narrowly defined prospects for profit.
The result is the occasional collapse of supply, as is
the case in any market. While there is a great deal of
politically inspired rhetoric being spouted currently,
most observers expect blackouts to continue for the
foreseeable future.
"You don't need to be a rocket scientist to see that
things could get a whole lot worse," Frank Wolak, a
Stanford University professor who specializes in
utility deregulation, told the Times on Monday.
"California could face more than 1,000 hours of
blackouts this year, Joe Bob Perkins, president of
Reliant Energy, told the Washington Post last
Thursday.
Blackouts, it seems, are now a way of life.
=====
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