SPENCER MICHELS: California barely avoided power blackouts today. But three times in the past week, the power has gone out for up to two hours in parts of the state. Stores went dark and some had to be closed. Restaurants lost their lights, and in some cases, their ability to cook. Traffic lights didn't work, causing accidents, a lot of delays, and a lot of headaches for those trying to control the traffic.
GUY MOORE, Parking Control Officer: They give us maybe 30-minute notice that they're going to shut down major grids all over the city, so then our supervisors decide which are the major intersections, which ones to cover, and basically you just cover until they're done.
SPENCER MICHELS: The outages resulted when the California independent system operator couldn't buy enough power to keep comfortably ahead of demand. Officials say that's because there isn't enough power generation in the state, and because some electricity producers won't sell to California for fear of not getting paid. In San Francisco and other cities, the crisis so far has been inconvenient but not devastating. But the economic effects are mounting up, and to political leaders like San Francisco Mayor Willie Brown, the future looks ominous.
MAYOR WILLIE BROWN, San Francisco: It has already had a profound effect on the city. We budgeted a certain number of millions of dollars for power, and in six months, that millions of dollars have disappeared. I am so worried about it that I am toying with the idea of putting the city and county of San Francisco in the energy generating business beyond what it currently... its capacity currently. I am about to press the airport to build its own energy plant, energy-producing plant, because I'd like to make sure that that airport is not adversely affected.
SPENCER MICHELS: Throughout the city, even in places that haven't yet lost their power, the crisis has triggered conservation efforts. At the Embarcadero Office Center, lobby lighting has been reduced, elevator service has been curtailed during power alerts, and the pumps in the ornamental fountains have been shut off for the duration. Altogether, up to a 20% reduction has been achieved on critical days. At a few businesses, like the Web site news provider CNET, electricity generators stand at the ready in case the power goes out. One power plant in Oakland, belonging to Duke Power, is not operating, because it has run out of fuel. But the issue is more complex than simple shortages of electricity, and the economic impacts of the crisis-- immediate and potential-- are already widespread, not just in electricity. Most of the state's power plants burn natural gas, which is in short supply and expensive. Grace Baking is luckier than most energy-intensive companies. When the bakery moved into its new plant in Richmond, California, a few months ago, it installed a highly efficient state-of-the-art gas oven to turn out 25,000 loaves of bread a day. Nevertheless, CEO Fred Dohr has seen his gas bills skyrocket.
FRED DOHR, CEO, Grace Baking: For example, our gas bill went from... We were paying 47 cents per therm in September, and it's gone up steadily into the 50s, 60s, 70s, and now we've found out for January we'll be paying $1.42 per therm. So our gas bill has tripled in the last four months.
SPENCER MICHELS: But it's not just the expense; it's the uncertainty of a continuous power supply that worries Dohr.
FRED DOHR: The threat of blackouts alone is a huge problem for us, for our suppliers, for our customers. In addition, the rising cost of energy not only affects us, but it affects our suppliers.
SPENCER MICHELS: In the world of high tech, the giant semiconductor firm Intel Corporation has not suffered any blackouts, but has voluntarily cut its electricity consumption 5% to 10%. The CEO recently said if Intel were to expand, California would not even be considered because of the uncertainty of power availability. In the past month, San Jose has turned down a proposal to build a new power plant in Silicon Valley because of objections from nearby residents. In San Francisco, Mayor Brown says the crisis could have a major effect on the area's power-hungry economy.
MAYOR WILLIE BROWN: If it continues, it clearly will have, because the increased use of power by the high-tech industry-- and we really are the center of the high-tech world in this region-- we will be adversely affected, and the economy will take a devastating hit, more so probably than any other part of the state of California.
SPENCER MICHELS: California's vast agriculture industry, which uses a lot of power, is already hurting. Natural gas used to dry crops is very expensive, and power interruptions threaten milking machines and other farm operations. In Half Moon Bay, the flower industry is already hurting from the shortages and high prices. With Valentines Day just around the corner, a cut flower grower, Stan Pastorino, won't have as many roses to sell this year.
STAN PASTORINO: We started to grow roses, and then we were entirely roses, and then the roses became so heat- intensive that we switched over to cooler crops like the snapdragons. See right here?
SPENCER MICHELS: The T&E Pastorino nursery uses natural gas to heat many of its 51 greenhouses. And of late, there are more snapdragons.
STAN PASTORINO: That's why we grow the snapdragons. They don't require as much heat as roses. They're not as heat intensive.
SPENCER MICHELS: In addition, Pastorino uses pumps to circulate steam and water, and electricity to refrigerate walk-in coolers for cut flowers. He is just as power-dependent as his high-tech colleagues in Silicon Valley, and agrees with0 them that the crisis is real.
STAN PASTORINO: One of two things is going to happen: Either people in industry are going to leave California, or we're going to find a way to provide power for the people who are here.
SPENCER MICHELS: That's what the California legislature is wrestling with even today, as the state continues with an electricity reserve of less than 1.5% for the eighth straight day. Key bills before the lawmakers include allowing the state to make long-term purchases of power, and possibly taking over the hydroelectric plants of independent utilities. It's a speeded up legislative effort to keep electricity flowing at rates that won't drive industry away.