Power Plays in Energy Crisis.

Businesses Angling To Keep Power On

As summer nears and the threat of more rolling blackouts looms, hundreds of L.A.-area businesses and public agencies are making dramatic assertions that shutting off their power would endanger human lives, thereby qualifying them for an exemption from the power shutdowns.

Giant aerospace facilities and oil refineries, supermarkets, local government agencies, all the way down to the corner liquor store and hair salon are among the local entities seeking exemptions for so-called "essential customers."

With only a few hundred additional exemptions available, all but a small fraction of the more than 10,000 entities that have applied will be denied.

Local applicants include Boeing Co.'s Long Beach aircraft division, Lockheed Martin Inc.'s Palmdale facility, the huge Exxon-Mobil Corp. oil refinery in Torrance, the Long Beach Fire Department and the Long Beach Aquarium of the Pacific.

Also on the list: more than 100 Albertson's stores statewide and dozens of Sav-On Drugs stores. Even the tiny Beverly Hills Liquor and Deli applied.

"If there is one thing that businesses hate, it's uncertainty -- in this case, of not knowing if and when the lights will go out," said Larry Kosmont, a local economic development consultant. "Just the threat of this makes it nearly impossible to plan, and that's why these businesses are clamoring for the security that comes with being exempted from rolling blackouts."

But while thousands of businesses may understandably want these coveted exemptions, it will be tough to make the cut under procedures set by the state Public Utilities Commission -- proving that people's health would be endangered if their power doesn't stay on.

"Only those businesses that can demonstrate that a loss of power would pose a significant threat to public health and safety will be granted exemptions," said Laura Martin, senior engineer with the energy division of the PUC. The agency is expected to release its final decision on exemptions by Aug. 2.

Some facilities, like hospitals and sanitation districts, have already been granted exemptions from rolling blackouts under previous PUC decisions. In fact, an average of 50 percent of all the electricity being used on the statewide grid goes to customers that have already been exempted, Martin said. For Southern California Edison, that's approximately 3,600 customers already on the exemption list.

But as the power crisis has worsened in recent months, thousands of businesses have been pushing whatever levers they can to get on the list of exempted facilities. Some, like Universal Studios Hollywood and oil refineries, have pushed for special legislation to exempt them. Others lobbied the PUC to expand the pool of those exempted.

But for every user exempted, the frequency of blackouts for everyone else increases. That's why the PUC on May 21 decided only to allow an additional 10 percent of electricity on the grid to go to exempted customers.

"The utilities must maintain about 40 percent of their total summer peak load for rolling blackouts," Martin said.

But once the decision was announced, so many businesses rushed to apply online and via fax that the PUC had to extend the June 1 deadline to June 4.

On their application, each power-user had to estimate the impact of rolling outages on the safety of their employees and the general public. They had to give projected estimates of the number of people who would suffer minor health effects, require emergency room visits or actually die if the power went out.

Over the next four weeks, Menlo Park-based Exponent Inc. will rank those applications according to the perceived health and safety risk. Those entities that pose the greatest risk to public health and safety will be put on top.

Then the ranked list will be turned over to the state's three investor-owned utilities -- Edison, Pacific Gas & Electric and San Diego Gas & Electric. The utilities' officials then will go down the list and put down the number of kilowatts or megawatts that each exemption-applicant facility uses. The PUC will then decide where the cutoff should go, depending on how many megawatts the entities at the top of the list consume. A draft list of exempted companies is due to be released July 10, with the final order due out by Aug. 2.

For some facilities, like fire stations and medical offices, dire consequences resulting from power shutdowns are fairly obvious. But for others, like Beverly Hills Liquor and Deli, the case might be harder to prove.

"Our meat and dairy products could spoil in a blackout," said An Tabian, owner of the Wilshire Boulevard eatery. "It's quite possible that if I sell food that has turned bad, people could get sick."

When asked why not just throw any food away that could possibly spoil, Tabian said that would be very expensive.

"In the last rolling blackout we suffered, last month, I had to throw away hundreds of dollars of ice cream and meats," he said. "If I had to do that every time, it would be a nightmare."

But PUC officials say that economic hardship is no excuse. The ranking will only be based on health and safety risk.

At Boeing, spokesman George Sillia said the company cited several reasons for seeking exemptions to rolling blackouts for both its military and commercial business lines.

Sillia said the company is concerned that unannounced blackouts could pose safety risks for people on the manufacturing floor moving or operating heavy equipment.

Boeing also has contractual obligations with the U.S. military and commercial airlines that require continual 24-hour operations to provide parts and, assistance in emergency situations, Sillia said.

Despite the fact that the ranking depends on the stated health and safety impacts, many companies are wary of estimating those impacts, for fear of liability should any harm occur during a rolling blackout.

"We don't want to speculate on health and safety impacts," said Ann McLeod, spokeswoman for Exxon-Mobil's Torrance refinery. "We could see things like flaring off of excess material from our tanks."

Exxon-Mobil instead focused on the economic impacts of shutting down the refinery. "It would take a minimum of two days to get back on line after a plant shutdown," McLeon said. "That would result in a cutoff in fuel supplies."