A viewpoint by Thomas D. Elias: Green power firms flex muscles

April 17, 2001

Suddenly, California has a new and powerful interest group. It's one created by state and federal policies encouraging renewable energy. And it's a group that now has demonstrated it will act strongly for its own self-preservation when it feels pressed.

Members of this suddenly significant group are windmill owners, biomass operators, geothermal producers and cogenerators — "green" power producers. No one quite believed them when they warned for weeks they hadn't been paid in so long they couldn't keep providing electricity much longer.

When many of these companies finally acted the other day, the result was a spate of rolling blackouts. If and when they act again, it might be to force bankruptcy on the state's biggest utilities, Southern California Edison and Pacific Gas & Electric.

They insist they are ready to do just that if their shutoffs have not served as a wake-up call and spurred action to preclude forced bankruptcy.


"Blackouts were certainly not our goal," said one of their leaders, David Sokol, president of the geothermal firm CalEnergy, which did not shut down.

"We just want to get paid. We're kind of like the guys with their finger in the dike and we're getting tired and we just want to go home."

Added Jan Smutny-Jones, executive director of the Independent Energy Producers Association, "We see no movement at all lately. We're running out of time before we have to force bankruptcy."

The actors here are the providers of renewable energy who account for about 25 percent of all power consumed in this state. All have to sell their output within California, unlike Duke Energy, Reliant Energy, Dynergy Southern Energy and Calpine, big companies that bought up big oil- and natural gas-fueled power plants during the deregulation fire sale of the late 1990s. Also unlike the big companies, the "green" power folks have never been accused of profiteering or gouging anyone.

Rather, they've been gouged. Many built their businesses under a 1978 federal law that's allowed them to charge more for their kilowattage than the utilities normally figured was the cost from their own plants, but much less than the big producers have been getting over the last year.

As utilities like Southern California Edison, San Diego Gas & Electric and Pacific Gas & Electric mismanaged themselves almost to death last fall and winter, they didn't pay these small outfits. For some, that's a disaster.

"People have been taken to the limit," said Jay Lawrence, spokesman for many of the renewable, "green," operators. "They haven't been paid since October and some of them can't even make payroll."

Meanwhile, these companies, from mom and pop wind farms to subsidiaries of large companies, have been a critical element of California's power supply, never letting anyone down until some finally were forced to close — which helped force this month's blackouts.

And now they're not even asking the same privilege enjoyed by Duke and Reliant, which bought power plants built with money from California rate-payers and now refuse to sell their full output within the state. All the little guys want is to be able to sell to the Independent System Operator, which operates the state's power grid for now. Under the law, they still can only sell — rather, give — their wattage to Edison, PG&E or SDG&E, and they're going broke doing so.

For now, the small, independent, "green" power producers say they only want to be paid what they're owed so they can go back to peacefully producing power.

But now that they've become a political and public relations presence, that may not be possible, for the renewables have established themselves as a major new force in the state, one capable of taking difficult actions when it deems they are necessary.

"I would expect them to be heard from in the future whenever energy issues come up," says Alan Hoffenblum, a longtime Republican political consultant.

Like the Roman hero Cincinnatus, they may say they want nothing more than to go home and meet their payroll and pay the bills. But they've now made themselves so important they will probably never be ignored again as they were in the early months of the electricity crisis.

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