Further blackouts likely as Californian power crisis deepens

California faces a further round of rolling blackouts today as the state struggles to meet demand for electrical power.

Hours after electricity was abruptly switched off yesterday, Governor Gray Davis declared a state of emergency and signed an order allowing the state to buy power. The move is designed to prevent further blackouts and appease electricity generators who are threatening to call in the debts of distribution firms Southern California Edison (SCE) and Pacific Gas and Electricity (PG&E) unless emergency action was taken.

The rescue plan was developed after the operator of the state power grid yesterday imposed afternoon outages in Northern and Central California, including the San Francisco Bay area.

Television stations went off the air, and cash machines and traffic lights failed whilst some of California's high-tech industries switched to their own back-up generators.

Sun's launch of a range of low-end servers at the Stanford Court Hotel, San Francisco was interrupted by the blackout yesterday.

General Manager of Sun's server appliance business unit, Stephen DeWitt was in the middle of praising the broadband revolution just as the plug was pulled on satellite links. When power returned, DeWitt suggested that the Internet servers he was plugging "consume less electricity than a light bulb" and would help the energy crisis, which is obviously bollocks given the depth of the problem, but a piece of spin even our own Dr Spinola might be proud of.

Customers lost power for around an hour in each of the affected areas and more severe outages were only prevented after emergency supplies were brought in from Canada.

It's not clear who will foot the ultimate bill for the emergency electricity purchases, and California's legislature needs to authorise longer term contracts which set a price for electricity. Bloomberg reports that Governor Davis is urging the legislature to approve spending at least $500 million.

California has struggled for months with the effects of a decision to deregulate its electricity supply market in 1996. Generators like SCE sold most of their power plant and moved more into distribution, but this business model has buckled as energy prices have soared whilst prices to consumers have been capped - leaving them with spiralling debts.

The crisis came to a head this week when PG&E defaulted on $76 million loan and Edison suspended $596 million in payments to bondholders and suppliers. Power generators responded by pulling the plug on the state's supplies, leaving it 14,000 megawatts or 45 per cent short of its power requirements. ®

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