FEDS KEEP THEIR COOL POWER DEAL ENSURES U.S. FACILITIES IN STATE WILL AVOID SUMMER BLACKOUTS.

Byline: Bill Hillburg Washington Bureau

WASHINGTON - When California deregulated electricity five years, skeptical federal officials quietly set about insulating themselves by lining up low-cost power under long-term contracts.

The plan worked out so well that federal facilities now are safe from the blackouts and sky-high bills expected to plague millions of Californians this summer. In fact, they've got surplus power to sell - at a profit to the energy-starved state.

``I did not have a warm and fuzzy feeling about the new law,'' said Mark Ewing, director of the General Services Administration's Energy Center for Expertise in Kansas City, Mo.

``Everyone said we were stupid and that we should compete in the new market. But it turned out we were smart.''

Ewing, whose office develops energy policy for the GSA, which manages more than 8,300 federal facilities nationwide, said his staff was concerned that deregulating wholesale electricity prices while keeping a lid on rates paid by consumers would lead to serious problems.

So in 1998, the GSA signed a five-year contract with the Bonneville Power Administration to provide electricity for California's federal courthouses, office buildings and other nonmilitary facilities for $35 per megawatt-hour. A megawatt-hour can supply the power needs of 1,000 single-family homes for one hour.

The Bonneville Power Authority, which generates hydroelectric power from 29 taxpayer-financed dams along the Columbia and Snake rivers in the Pacific Northwest, is wholly owned by the U.S. Department of Energy.

By early this year, GSA energy planners were looking like geniuses. Electricity prices in California's flawed market averaged more than $350 per megawatt-hour and soared to as much as $1,900 during peak demand periods. That brought charges of price gouging and calls for temporary federal price caps from Gov. Gray Davis and other officials.

As blackouts and higher energy bills rolled through the state this spring, there were few problems for California's federal buildings. In fact, GSA was selling its excess electricity to the state for $55 per megawatt-hour and using its $20 per megawatt-hour profit to pay for energy-saving improvements at federal facilities.

GSA's experience mirrored that of the Los Angeles Department of Water and Power. As a city-owned utility, DWP was exempted from the state deregulation plan but could have opted to ally with the effort.

DWP officials were criticized when they opted to stay independent. They have since been vindicated. Los Angeles customers have escaped outages and steep rate hikes and the DWP has been selling excess power to the state.

Ewing cautioned that the feds will eventually be caught up in California's energy mess. State officials have moved to eliminate GSA's special deal, a move being challenged in the courts. And, at best, the feds are expecting a sizable price boost when their contract with BPA expires in 11 months.

``We're working to find new sources and contracts,'' Ewing said. ``But we know we are going to see our energy costs in California rise like everyone else's. So far, though, we've been able to save taxpayers a lot of money.''

GSA, the nation's largest property management operation, has also been seeking savings by cutting electricity deals in other states and regions.

In March, as the Washington, D.C., area deregulated its energy market, GSA signed a 25-month contract to supply key government facilities at an average of $42 per megawatt-hour.

The Washington area has adequate energy supplies, and no shortages or blackouts are expected this summer.

Bruce Milhans, spokesman for the Office of the Architect of the Capitol, which manages day-to-day operations of the seat of government, noted that conservation programs have cut his agency's energy use over the last decade, although costs have risen.

In 1990, the Capitol complex, which is heated and cooled by its own power plant, used 329,097 megawatt-hours. Last year, usage fell to 298,241 megawatt-hours, a reduction partly due to installing 160,000 energy-saving light bulbs.

The White House is not covered by the new energy deal, and getting a handle on the White House's energy bill is a lot tougher, said Chief Usher Gary Walters, who has managed the first household for 31 years.

``We're just like every other home,'' said Walters, who has been serving at the pleasure of presidents since Richard M. Nixon made his home at 1600 Pennsylvania Ave. ``We get utility bills, and we have to pay them, although our system is a bit more complicated.''

The White House thermostats are generally kept at 73 degrees, although Walters notes that rooms housing art and antiques require more stringent climate controls.

``Operating the White House requires a delicate balance,'' he said. ``We have a 200-year-old building trying to fill the conflicting roles of residence, office, museum and tourist attraction.''