Reliant executive warns of summer blackouts

Jan. 31, 2001—Reliant Energy Wholesale Group Pres. Joe Bob Perkins warned there could be 1,100 hr of blackouts in California for the rest of the year in testimony before the U.S. Senate Energy and Natural Resources Committee Wednesday.

Perkins based his gloomy forecast on a hot summer and other conditions that include the following:

• Low hydroelectric availability. Bonneville Power Administration estimates are currently 68% of average—one of the worst years on record.

• Loss of imports reflecting concerns about credit of California’s investor-owned utilities.

• Continued high demand because of the strong economic outlook for California and the entire West.

• Plant outages remaining at high levels.

• Continued strict local environmental constraints.

With a normal summer and other optimistic assumptions California could get by with only 50 hr of blackouts, he said. With cool weather, high hydroelectric availability, and unprecedented conservation, he said, the state might avoid blackouts altogether. Reliant Wholesale, a unit of Reliant Energy Inc., owns 3,800 MW of generation in California.

Blackouts this summer could involve a lot more megawatts and more consumers than what has occurred so far this winter when the California Independent System Operator (ISO) ordered rolling blackouts on 2 days to keep the system from collapsing.

Perkins said 5,000 MW might have to be cut compared to 500 MW this winter. Outages could last as long as 6 hr/day instead of 1-2 hr. The economic cost of such massive outages affecting 20-30 million people would run in the “multiples of billions of dollars,” he said.

Perkins warned it’s too late for new power supplies to be brought on line to help avoid a summer emergency. Solutions should focus on regionwide demand reduction programs before time runs out, he said.

“There is little time left to take action, and very little new generation is coming on line before we hit the summer peak,” he said.

Perkins estimated stop gap solutions could free up about 10,100 MW in the West. He recommended using incentives to make more voluntary interruptible load available. Use of interruptible power has helped the ISO stretch available megawatts, when supplies were low. Perkins estimated interruptible programs for industrial customers could add 2,800 MW, if there are economic incentives to participate.

By extending the programs to states outside California, he said, an additional 1,800 MW might be added. Perkins also suggested buying power back from industrial customers could add as much as 3,000 MW to interruptible programs.

Conservation programs could add as much as 600 MW to the pool, he said. But, Perkins said, without accurate retail price signals consumers may not respond to calls for conservation. Other sources of power could from temporarily relaxing environmental restrictions resulting in 1,900 MW of additional power.

Perkins stressed that any solutions—short or long term—need to be regional rather than confined to the state of California.

“The energy interdependence of the region is undeniable and solutions need to be crafted that take regional implications into account,” he said.