‘Overwhelmed’ Power Market Officials See Delay of Weeks

The complexity of devising a computer system to manage the state’s deregulated electric power industry “in the end overwhelmed us,” delaying the start of the free energy market for several weeks, a top market official said Tuesday.

Dennis Loughridge, chief executive of the Power Exchange, the electronic trading floor being set up by the state to match buyers with energy sellers, told reporters Tuesday that it may take weeks, possibly months, to get the system running and that a team of 150 technicians is scrambling to solve the problems.

The Jan. 1 start of electricity deregulation was delayed Monday after the computer system charged with pricing and scheduling power sales failed to perform adequately during tests. The system failed to supply prompt confirmation of energy deals and to interact properly with the Independent System Operator, the state agency charged with managing the power grid.

Marketers were upset about the delay, saying it will cost them large sums in lost revenue and additional overhead. But at least one consumer group said the delay may be a blessing in disguise if it leads to a more reliable electricity market and more scrutiny of marketers.

A definite start-up date will be announced Monday, Loughridge said. A special effort will be made to have the Power Exchange, or PX, up and running by March 1, because that’s when the PX contingency fund of $7.8 million may run out of money.

Loughridge said the PX and the Independent System Operator, or ISO, realized last summer they were having problems meshing their computer software. Communication is vital between the two because the PX computer will perform trading functions and then tell the ISO when and how much energy will be sent over the grid and to whom.

To help with the integration, the two bodies commissioned the Swedish firm ABB to create an “interface” computer program, which was delivered on time on Dec. 8 but is still not fully operational, Loughridge said.

The other major problem is that the computer system isn’t working fast enough. Trading on the power exchange is scheduled from 6 to 11 a.m. daily for electricity that will be delivered the following day. Although confirmation of transactions has been targeted for no later than 1 p.m. on each trading day, the system is taking several hours longer to get the information to the market participants.

On Sunday, after only two days of testing, Loughridge said he was ready to “admit the obvious” and recommend to his board that opening of the power market be delayed until the computers could be brought up to speed.

Enron, the Houston-based power marketer, said the delay means a “number of customers” it has signed up to receive cheaper energy will lose out. Enron questioned whether a central market mechanism like the PX is necessary, suggesting that power marketers and consumers deal with each other more directly.

“We will not be able to sell our commodity and therefore will not be able to capture revenue on the substantial investment we have made in advertising, marketing and establishing a sales force in California. So obviously we want this thing resolved quickly,” said Enron Vice President Steve Kean. Enron has 600 employees in California alone.

The Utility Consumers’ Action Network, an advocacy group based in San Diego, said the delay “offers regulators an opportunity to rethink the scheme they have conjured up for California consumers,” according to a statement. UCAN warned that its recent survey of power marketers found that many are offering “questionable deals.”

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Deregulation Information

* California ratepayers are financing a $73.5-million public education program called Plug In, California to inform consumers about power restructuring. The number for small-business customers is (800) 789-0550. The campaign also has a Web site at https://www.knowledgeispower.org

* The California Public Utilities Commission Web site at https://www.cpuc.ca.gov is loaded with deregulation information, including the latest legislative developments and a list of companies registered to sell electricity in California. Or call the agency’s deregulation hotline at (800) 555-7809.

* The California Energy Commission Web site at https://www

.energy.ca.gov has some useful archive material.

* Consumer watchdogs have some valuable tips. Check out the Utility Consumers’ Action Network Web site at https://www.ucan.org and the Utilities Reform Network site at https://www.turn.org

* Manufacturing companies interested in joining the California Manufacturers Assn.’s electricity-buying group can call (916) 441-5420 or visit the CMA Web site at https://www.camfg.com

* Owners and managers of commercial, industrial, apartment and retail properties can get similar information from the Building Owners and Managers Assn. In Orange County, call (714) 838-9960. In Los Angeles, the number is (213) 629-2662.