Mar. 31, 2001

Energy Firm's Unit in California Is Shut Down

By Michael Davis

California once again was threatened with blackouts Friday, which put Reliant Energy on the spot when it announced it had taken one of its units out of service at its second-largest power plant in the state.

The announcement by the Houston company, which is California's third-largest independent power producer, showed it is aware that a shutdown for repairs can turn into a major event.

Shrinking power reserves Friday prompted California's Independent System Operator, which runs the state power grid, to declare a Stage Two emergency, the last stage before it orders rolling blackouts to avoid a grid meltdown.

California critics have called power producers pirates, saying practices like taking plants out of service at key times push up prices.

The companies, however, have said the problem is a shortage of generating capacity and the shutdowns were all justified for repairs or other factors.

Reliant went out of its way to explain why it had taken its No. 3 unit in San Bernardino County off-line at midnight for maintenance needed because of steam and water leaks.

The company said if the leaks at the 48-year-old Etiwanda plant, the oldest of Reliant Energy's five power plants in California, were not repaired, they could lead to "catastrophic" problems.

If those were not dealt with now, they could cause a longer shutdown when demand peaks this summer.

"Our plants this past year have run two to three times harder than they ever did before," said Richard Wheatley, spokesman for Reliant in Houston. "We have been putting off the maintenance that was required since the summer, and we have to do this now."

That unit, which produces 320 megawatts, will be out of service for about 10 weeks.

However, the Etiwanda plant's four other units will continue to produce power while the No. 3 unit is off-line.

Reliant is owed about $370 million for power sales to California.

A federal judge has ordered the company to continue selling power to the state with no guarantee of payment. The company estimates it hasn't been able to collect as much as $2 million a day in sales.

Also Friday, Edison International and PG&E Corp., parents of California's largest electric utilities, said they planned to delay filing their annual reports as they assess how this week's electricity rate increase and other regulatory actions will affect their balance sheets.

The filing delays came three days after the California Public Utilities Commission awarded the utility units more than 40 percent rate hikes.

Yet analysts said the increases do nothing to address the utilities' mountain of debts, which helped trigger the power shortage.

The utilities, which serve 24 million Californians, cannot recover more than $14.3 billion of past wholesale power costs because of a rate freeze under the state's 1996 utility deregulation law.

In more grim news, the state Department of Water Resources' sensors showed the Sierra Nevada snowpack at about 60 percent of normal Friday.

California draws about a fourth of its power from in-state hydroelectric plants, and the state relies heavily on winter rain and snow to fill the reservoirs.

California already expected little hydroelectric power from the drought-stricken Pacific Northwest.

copyright 2001 Houston Chronicle