Business recruiters milk power crisis

Judge's order provides an energy reprieve

From staff and wire reports

SAN FRANCISCO, California (CNN) -- A judge's order may have given California's power grid a brief reprieve Wednesday, but the state's chronic power crunch has given industrial recruiters in other states a new tool.

Forget high-tech gimmicks -- the hottest gadget for out-of-state business development officials who come wooing in California these days is a flashlight.

A package from the Tennessee Department of Economic and Community Development boasts: "The lights are always on in Tennessee."

VIDEO With companies in California suffering, CNN's Rusty Dornin shows states with abundant power trying to woo away business Play video (QuickTime, Real or Windows Media)     IN-DEPTH SPECIAL Online coverage of the energy crunch in California  RESOURCES Status of state power deregulation     ALSO Calpine signs $4.6B deal   MESSAGE BOARD Power crisis

"You open it up, and it's a flashlight asking companies that the next time the lights go out in California, you use this flashlight to find their way to Tennessee," state recruiter Alex Fischer said.

And Richmond, Virginia, prospector Gene Winter took one to a high-tech conference in San Jose, the heart of Silicon Valley.

"It helps convey the message that things here are a little unstable right now," Winter said.

Recruiters say they're not trying to convince existing businesses to leave California, just draw new business from growing companies. Companies like computer chip maker Intel, for instance, have said they will not expand operations in the state because of the power crisis.

"Those are sending a very strong message to Sacramento that this needs to get resolved quickly and decisively and not get dragged on," said Paul Saldana, of California's Tulare County Economic Development Corp.

Wholesalers keep power flowing until hearing

A federal judge in California effectively extended federal orders to keep power flowing to California, telling a major electricity wholesaler to continue selling to utilities in the state until a Wednesday hearing. The White House order to continue power sales expired at midnight Tuesday (3 a.m. Wednesday EST).

The order from U.S. District Judge Frank Damrell applies only to wholesaler Reliant Energy Services, Inc., but two other wholesalers said they would follow Damrell's order until a the hearing Wednesday afternoon.

Damrell said the order was needed to avoid "obvious, irreparable harm to the public" from the state's shortage of electricity. Officials from California's Independent System Operator -- which manages the power grid -- said losing power from the three wholesalers could have triggered rolling blackouts like the ones that hit the state twice last month.

Utah, however, has plenty of cheap coal to make energy, and Utah Gov. Mike Leavitt used that as a selling point to Silicon Valley executives.

"You can, as a Utah company -- or a Silicon Valley company with a Utah operation -- rest with some certainty that you will have power," Leavitt said.

State remains on high-level alert

California's power grid remained at its highest level of alert Wednesday, meaning that it had reserves of 1.5 percent or less. Under those conditions, the ISO can order rolling blackouts to conserve power.

The Clinton administration ordered other Western states and private wholesalers to continue selling power to the state, but the Bush administration has refused to extend that order.

The crisis was prompted by the near-bankruptcy of California's two largest utilities, Southern California Edison and Pacific Gas and Electric. The state is buying power for the utilities because energy producers have refused to sell to them directly, fearing they won't be paid.

California Gov. Gray Davis said Tuesday the state Department of Water Resources has reached its first agreement on long- term electricity contracts, expected to provide cheaper power to customers. Lawmakers are working on a long-term solution to the problem, but California is spending between $40 million to $50 million a day to buy power on the open market.

The industry's chaos is blamed on a 1996 deregulation law that ordered the utilities to sell their power plants and buy energy wholesale, but capped the rates they could charge customers when the price of that energy rose.

CNN Correspondent Rusty Dornin and The Associated Press contributed to this report.

Western governors, Bush team hold electricity summit
February 2, 2001
California governor signs bill to buy power for utilities
February 1, 2001
Utility bailout falters in California assembly
January 31, 2001
Stage 3 power alert continues in California
January 30, 2001
White House forms energy task force, but offers California scant hope of aid
January 29, 2001

The State of Tennessee Department of Economic and Community Development
Tulare County Economic Development Corp.
Reliant Energy
The California ISO
PG&E Corporation
SoCal Edison
  • Deregulation - What this means to you - Electricity Market Issues
California Power Exchange
System Conditions - The California ISO
California Public Utilities Commission
California Utilities Emergency Association
Foundation For Taxpayer & Consumer Rights

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