San Diego Union-Tribune

March 30, 2001

Abraham tells major suppliers to boost efforts, cut shutdowns 

Copley News Service

WASHINGTON -- Energy Secretary Spencer Abraham wants companies that provide power to California to speed up and coordinate plant maintenance and to pre-empt other problems that could
aggravate electricity shortages and blackouts this summer.

In a closed-door meeting at the Energy Department yesterday, Abraham told representatives of 10 power marketing and generating firms that the Bush administration would "view seriously any action
that diminishes supply that could have been anticipated," a senior administration official said.

"No one should proceed over the next six months as business as usual," the official said.

The meeting underlined the administration's pessimistic view of California's situation as it heads toward the peak power-using season. Abraham has said blackouts are inevitable this summer, putting him at odds with Gov. Gray Davis, who has expressed confidence that the state can avoid outages.

Critics have accused the Bush administration of hyping the state's problems to further its plans for more domestic oil and natural gas drilling.

Energy company officials who attended the meeting with Abraham said they were doing everything they could to maximize power supplies in California and complained that they were still encountering too much red tape in siting new power plants in the state, according to sources familiar with the talks.

They also said that reducing power demand in California was the key to making it through the summer without widespread disruptions.

Davis insists the state has taken steps to expedite the approval process for new power plants. And state utility regulators hope the electricity rate hike they approved Tuesday will encourage conservation.

Companies represented at the meeting with Abraham included Reliant Energy, Duke Energy, Dynegy, AES Corp. and Williams Cos., all major players in California's power market. Abraham asked the executives to think through their maintenance schedules and do needed work now so that plants don't have to be shut down this summer, the administration official said.

Abraham also asked for a list of potential problems that they foresee in maximizing power output so that federal and state officials can help them work through the problems.

He wants "enough advance notice that we may be able to solve a problem before it has more drastic consequences," the official said.

Power plant shutdowns have played a major role in California's power crunch, aggravating the sporadic blackouts that have struck the state in recent weeks. Consumer advocates and some state officials have charged that many of the shutdowns were unnecessary and were done to tighten power supplies and drive up prices.

The Federal Energy Regulatory Commission said earlier this month that it suspected Williams and AES idled a pair of generating units in Orange County last year to inflate prices. It ordered the companies to prove otherwise or pay refunds totaling $10.8 million to utilities.

The power providers have denied manipulating the market.

Tom Williams, a spokesman for Duke Energy, said the company would do its best to maximize power output at its four California plants this summer. "But," he said, "there are limits to what our plants can take."