Why the Lights Go Out in California

JULY'S HEAT WAVE broke many highs, and it confirmed another dubious California record: Its residents endure more hours of blackouts than people in any other state.

When blackouts hit, utility executives invariably say there aren't enough power plants. Yet the California Independent System Operator, which manages much of the state's power grid, says there is ample capacity to generate electricity. So why all the blackouts?

The state's electricity transmission and distribution system is antiquated and dilapidated. A recent Department of Energy study cited Southern California as one of two U.S. regions (New York is the other) facing critical shortages of power lines. Grid under-capacity in the Bay Area is severe. A member of the Federal Energy Regulatory Commission called the transmission bottleneck between Northern and Southern California "the worst electric supply situation in the entire country."

Why is our power grid in such dreadful condition? Chronic neglect by the state's three investor-owned utilities — Southern California Edison, San Diego Gas & Electric and Pacific Gas & Electric.

Even with a changing regulatory environment, the utilities retain control over the transmission and distribution of electricity — and the responsibility to plan for and build new power lines. But they have failed to modernize the grid. In short, the utilities have violated the public's trust.

Utility spending to upgrade and maintain the system has steadily declined since the 1970s. The effects go far beyond July's outages. In February, Cal-ISO contended that a new high-voltage transmission line from gas-turbine generators in the Palo Verde area west of Phoenix would deliver enough electricity to enhance reliability, lower bills and encourage the development of renewable energy. Tellingly, this project, approved in the 1980s, has languished in the planning stages for 20 years.

Conspiracy theorists see sinister forces at work. SoCal Edison, SDG&E and PG&E, they say, have subtly and consistently opposed measures to spur renewable-energy development and to open power markets to competition. Too few transmission lines to generators outside the state limits access to renewable power and restricts the free flow of electricity throughout California, thus protecting the investor-owned utilities from outside competition.

SoCal Edison, SDG&E and PG&E also receive revenue for transmitting electricity. This rises when the grid is overloaded, creating a perverse economic incentive to defer scheduled maintenance and system improvements. Utility executives, not surprisingly, blame others, particularly regulatory agencies consumed with infighting and a Legislature whose energy policies seemingly shift with the political wind.

California's existing and planned power plants are sufficient to satisfy future electricity needs. But SoCal Edison, SDG&E and PG&E, rather than build much-needed transmission lines to generators outside the state, have invested in non-energy businesses elsewhere in the country and in overseas power markets. Edison International, for instance, now owns significant wind-energy capacity in Minnesota — of all places. Such ventures have produced huge losses.

The utilities are trying to reverse their decades-long neglect of building more high-voltage power lines. Several such projects are in the regulatory pipeline, including SoCal Edison's Devers-Palo Verde No. 2 and SDG&E's Sunrise Powerlink, to tap renewable energy in the Imperial Valley.

Still, it would be foolhardy to assume that the utilities will add transmission lines on their own initiative. We learned that in the early 1990s, when the state held a contest to see who could build new generating capacity at the lowest cost. The utilities held a big advantage because they merely had to refurbish existing plants, rather than build new ones. When the bids were opened, however, SoCal Edison, SDG&E and PG&E finished dead last.

Public frustrations about blackouts and high electricity bills add urgency to solving California's long-term energy problems. Legislators and regulators should turn to the state's many competent and honest energy suppliers — the companies that wouldn't cheat when Enron did — rather than depend solely on SoCal Edison, SDG&E or PG&E for change. Indeed, one step in that direction would be to relieve these utilities of some of their service obligations so they can concentrate on building more high-voltage lines.

One important step has already been taken to reduce the utilities' workload. State laws now allow cities and counties served by SoCal Edison, SDG&E and PG&E to buy power in wholesale markets throughout the Western states. The investor-owned utilities remain responsible for transmission, distribution, billing and metering services — and they must cooperate with local governments implementing this program, known as Community Choice Aggregation.

This program offers many benefits. When energy suppliers compete for a city's electricity business, the city can pay less for its power and can use the savings to hire more police and firefighters, build more schools and repair roads. More local control can mean more energy options for residents and businesses.

Equally important, this program gives local governments a say in the delivery of electricity. Unlike most state regulators, local officials run into their constituents at the grocery store, workplace and polling booth. Greater public accountability can keep energy markets more consumer-oriented. San Francisco and Chula Vista are already implementing this program. Many more cities are considering the move.

California will continue to be plagued by blackouts — more hot weather is forecast this week — until electrical transmission bottlenecks are ended by building more power lines to generators outside the state. With Community Choice Aggregation programs, SoCal Edison, SDG&E and PG&E have one fewer excuse not to starting building.