Heat prompts California power emergency; blackouts possible

FOLSOM, California (CNN) -- High temperatures prompted the operator of California's electrical grid to issue a Stage 2 emergency Thursday, setting the stage for another wave of rolling blackouts.

Temperatures were expected to climb above 100 degrees in some areas of northern California, putting a strain on state energy sources as more residents stay indoors and pump up power-draining air conditioners.

A Stage 2 emergency is declared when operating reserves dip below 5 percent or are soon expected to do, the California Independent System Operator announced. Three weeks ago, with demand exceeding supply by 1.5 percent, authorities declared a Stage 3 alert and instituted rolling blackouts that affected hundreds of thousands of people statewide.

IN-DEPTH SPECIAL The energy crunch in California MESSAGE BOARD Energy crunch

Thursday's declaration comes two days after President Bush and California Gov. Gray Davis met to discuss ways to ease the state's chronic energy shortages. In a 35-minute meeting, Bush rebuffed Davis's request for Washington to impose wholesale price controls on power.

At peak operation, the ISO said 37,882 megawatts of power will be needed to supply the state's electricity. Friday's demand will be larger, the agency said.

In its announcing the Stage 2 alert on Thursday, the ISO asked commercial customers who have volunteered to curtail power use during high demand periods to begin cutting back.

Earlier, the ISO called for utilities on the interstate power grid to submit bids for energy that California can buy -- increasingly from out-of-state sources -- to ease the shortage. If California cannot buy enough power to make up deficits, its conservation measures do not have their desired effect or if reserves drop because of high demand, the CISO can order rolling power blackouts.

Earlier this month, the California Public Utilities Commission approved a controversial $5 billion rate hike plan that protects more than 60 percent of the state's residential customers from higher power bills. But few expect this action -- or Gray's efforts -- to prevent blackouts.

The new rates, which aim to protect low-income residential users and those using small amounts of power, take effect Friday.

Under California's 1996 electricity deregulation law, utilities bought power on the open market but rates for consumer increases were capped. When wholesale prices rose last year, the state's large investor-owned utilities reported billions in losses. The largest -- Pacific Gas and Electric -- filed for bankruptcy protection in April.