Contra Costa Times

WALNUT CREEK, Calif. _ The financial collapse of the electric utilities spilled out into the power grid on Monday as money problems contributed to the most widespread outages in California since the term “rolling blackouts” became part of the state’s lexicon.

From the office of an energy industry executive in the Silicon Valley to the high-rise offices of state electricity industry regulators in San Francisco, the darkened buildings provided an ominous look at what may be in store this summer, when power demand will be far higher than it was on Monday.

Problems in the East Bay were extensive, with several fender benders reported in West Contra Costa County, businesses in Tri-Valley in the dark for part of the afternoon and East and Central Contra Costa County hit with outages from Antioch to Walnut Creek.

“It’s just a part of doing business in California now,” said Kirsten Edmondson, a manager at Barnes & Noble in Dublin. “We just pull out the calculator and do things the old-fashioned way.”

For the first time since the state’s energy crisis began and rolling blackouts first struck in January, the lights went out in Southern California.

More than 1.2 million customers of the state’s big three utilities were cut off from the power grid, including 580,000 PG&E customers, 430,000 customers of Southern California Edison and 210,000 customers of San Diego Gas & Electric. The rotating outages extended for more than six hours Monday afternoon and into the evening.

The surprise that accompanied sudden outages at a time of year when they are not expected led to louder speculation that rate hikes might be in the near-term offing and that bankruptcy proceedings might be initiated against the state’s utilities. Such a move would take management of the crisis away from Gov. Gray Davis and throw it to the courts.

“Obviously, the state can’t handle this and time’s running out,” said Gary Ackerman, director of a the Western Power Trading Forum, an industry group that represents generators and traders.

Speaking from a room in Menlo Park that was darkened by the outage, Ackerman speculated the end might be near for Southern California Edison and possibly Pacific Gas & Electric Co. as energy firms continue to consider dragging one or both into bankruptcy.

“Some guys are talking about it. It might happen this week,” he predicted.

One state senator urged the California Public Utilities Commission to immediately hike rates for millions of customers, saying the time has come to get serious about solving the state’s power woes.

“You come to us with a rate increase and we’ll be there in full voice, saying yes,” said Sen. Don Perata, D-Alameda. “Everybody knows what’s gotta be done.”

A combination of developments reduced the state’s electricity supply so there was not enough juice to power the state on a day when demand was merely moderate. Demand peaked at about 30,000 megawatts, far less than summer peaks which can exceed 45,000 megawatts.

The first round of blackouts lasted about four hours beginning at noon, with outages ordered statewide from 500 megawatts to 1,000 megawatts at various times.

A second round of outages were ordered at 6:15 p.m. and lasted up to two hours.

“I have a little lantern flashlight,” said Harriett Burt, deputy chief of staff for PUC President Loretta Lynch, speaking just minutes after the commission’s San Francisco’s offices were darkened during the lunch hour. “The phone is ringing off the hook. We just keep working, whether the lights are on or off.”

On Monday, air conditioners fired up around the state to greet an unseasonably warm day.

Large power plants were out-of-service on a massive scale _ 12,000 megawatts or more than one-fourth of the state’s generation capacity were either down for scheduled maintenance or broken down.

A key conservation program that has averted blackouts in the past by requiring large businesses who accept cut-rate electricity to shut down in times of shortage is no longer available because it has been used so much.

And a transformer fire at a power plant on the California/Nevada state line took two large power units totaling 1,400 megawatts off line in the morning.

But it was the decision by the owners of a special class of power plants called qualifying facilities to shut down because they had not been paid in months that was the most immediate cause of the blackouts, officials said.

“Many different things contributed to the event that happened today,” said Jim Detmers, vice president of operations for the California Independent System Operator, which manages the power grid over three-fourths of the state. “Probably number one on the list are the QFs that are not generating.”

Born as part of a federal response to the nationwide energy crisis of the 1970s, qualifying facilities were part of a package to increase the domestic energy supply with environmentally friendly technologies. Today, QFs include solar, wind, biomass and other fuel sources, including natural gas.

Taken together, Pacific Gas & Electric Co. and Southern California Edison owe QFs $1.5 billion for electricity purchased since November, according to auditors’ documents on file with the state Public Utilities Commission.

For weeks, those companies have been closing their power plants out of concern that they will never be paid or because they simply no longer have the credit available to pay their bills. By Monday, the amount of electricity taken off-line by the QFs reached between 2,000 megawatts and 3,000 megawatts, according to the ISO.

A bill that would address the payments due to the QFs has stalled in the legislature.

“We’re finding solutions for the fossil fuel generators to get paid be we haven’t found anything for the renewable,” said Chris Thompson, a spokesman for a committee of eight alternative energy companies that have formed to consider initiating bankruptcy proceedings against Edison, which Thompson said owes the eight companies more than $200 million.

“If that (legislation) is not forthcoming, they would have to examine other options,” Thompson said.

In Sacramento, lawmakers bemoaned the latest round of blackouts and warned of dire consequences this summer without further action to shore up California’s shaky energy network.

“This is what happens when the system takes a hit of one kind or another, whether it’s an accident or fires or plants shutting down,” said Assemblyman Joe Canciamilla, D-Pittsburg. “There’s no wiggle room anymore.”

One consumer group issued a report Monday calling the energy crisis a product of manipulation by utilities, energy companies and Wall Street firms.

“We predicted the energy industry would go back to pulling power offline, creating blackouts to blackmail Gov. Davis and lawmakers into increasing consumer rates for energy,” said Doug Heller, a spokesman for the Foundation for Taxpayer and Consumer Rights.

But Davis attributed the blackouts to a lack of water behind power-generating dams in the Pacific Northwest and the fire at the Nevada power plant.

“I assure you, we are working night and day in Sacramento to stabilize the electricity supply for California,” Davis said.

Perata, the East Bay Democrat calling for rate hikes, proposed a four-tiered structure that would freeze rates for low-income customers. Those in the other three tiers would see their rates increased, with those in the top tier receiving the biggest hike.

“We’re going to have to finally get around to the rate issue,” he said. “Right now it is very unhealthy that so much of the population seems to believe that this is not a real crisis.”