Off-line power plants under scrutiny amid unusual alert

SACRAMENTO (AP) - Skeptical inspectors examined California power plants Wednesday to verify an unusually high number of forced shutdowns that could lower supplies and potentially hike prices amid a statewide electricity emergency.

The Independent System Operator, the Folsom-based agency that manages the state's power grid, said about a fourth of the system's capacity - some 11,000 megawatts of electricity - was down Wednesday. That figure included 7,000 megawatts from power plants that reported they were forced to halt operations because of broken equipment or other reasons.

That reflects an unusually high number of idled plants, the ISO said.

The Public Utilities Commission, which was conducting the inspections, said power plants at a dozen sites in Northern and Southern California were being checked. The inspections were expected to be completed by late Thursday.

Paul Clanon, the PUC's energy director, said teams of electrical engineers accompanied by ISO experts were visiting the sites and collecting information. He did not discuss the results of the inspections, but said they would be reported to the PUC.

''We're making sure that state government understands why these generators aren't producing,'' Clanon said.

For ISO, the statewide round of inspections was unprecedented.

''This is the first time the ISO has done this,'' said ISO spokeswoman Stephanie McCorkle. ''This is not an ongoing measure. It is something we are doing because of the dire situation. We are making no assumptions at this time, but we are certainly going to verify that their operating status is preventing them from producing power.''

Publicly, there was no indication from the ISO or PUC that officials were concerned about deliberate shutdowns in order to pinch supplies and drive up electricity costs to utilities.

Privately, however, officials at two state energy agencies said they were concerned that the shutdowns could result in cost spikes ultimately benefitting the power plants.

The shutdowns come at a critical time: Usage is up because of cold weather and power is leaving the state, under contract, to other areas such as the Northwest.

The ISO and the PUC began making the inspections Tuesday night, when a Stage Two alert was declared, then continued Wednesday as the ISO declared another Stage Two power emergency.

A Stage Two alert - such as those declared repeatedly this summer - means power reserves have fallen below 5 percent, or are expected to. At the maximum, there are about 48,000 megawatts in the grid. One megawatt is enough energy to power 1,000 homes.

The alert also entails a request to electricity users to conserve energy. The ISO requested that holiday lights be kept off until 7 p.m., when power needs are expected to drop.

Details of the specific power plants that reported shutdowns were kept confidential, under state law. The ISO did not provide details of the inspections or how many were involved.

A spokesman for one of the major power producers, Texas-based Duke Energy, said its two California facilities, totaling about 900 megawatts, were down for routine maintenance.

''These are major capital projects. They take two to three months, but we will try to get them done as fast as we can,'' said Duke spokesman Tom Williams.

The maintenance at Duke's 750-megawatt Moss Landing plant is expected to cost $25 million, and its 150-megawatt Chula Vista facility improvement will cost about $8 million, he said.

Williams also noted that dramatic increases in the cost of natural gas, which some power plants use to run their generating equipment, are likely to be reflected in the costs of electricity. Natural gas cost roughly $40 per wholesale unit on Wednesday, compared with $28 on Tuesday and $22 the day before. Last year at this time, the price was about $3.

''Clearly, there is a direct correlation between gas prices and power prices,'' Williams said.

Meanwhile, the California Energy Commission announced the licensing of two power plants, including a 500-megawatt facility in Elk Hills in Kern County. The action brings to eight the number of new plants licensed since 1998; the first will go into operation next summer.

Customers' electricity rates skyrocketed this summer in San Diego and southern Orange County after the local utility, San Diego Gas and Electric Co., passed on to its customers the rising cost of wholesale electricity.

Under California's 1996 deregulation law, investor-owned utilities can operate without a cap on rates once the companies sell off their power-generating assets. SDG&E, with 1.2 million customers, was the first utility to complete the transition to a fully deregulated utility and buy power on the open market.

The goal was to lower rates by having utilities buy power at competitive rates. Instead, the cost of wholesale electricity rose dramatically, fueled by high demand, scarce supplies and unfavorable weather.

Pacific Gas and Electric Co., with 4.5 million customers, and Southern California Edison, with 4.2 million, still operate with a rate freeze. Both utilities have asked the PUC and the federal courts to be allowed to lift the rate cap and pass on costs to their customers.

The two utilities say they have paid some $5 billion in excess energy costs.

The Federal Regulatory Energy Commission has conducted an investigation into California's deregulated market. Its report in the case is expected next week.