What power crunch? That’s the response most East Valley-based business owners, or those who operate in Los Angeles Department of Water and Power territory, are likely to have when asked how they are faring in the state’s energy crisis. But put the same question to business owners, big and small, on the west and north ends of the Valley say in Valencia, Thousand Oaks, Calabasas or Agoura Hills and it’s a completely different ballgame. Welcome to Southern California Edison country, where the apron strings of mother DWP don’t quite reach. And the blackouts expected to roll repeatedly across the state this summer, now made all the more unsettling by the certainty of rate increases, are bound to give the expression “June gloom” a whole new meaning. “Those folks in the Valley on SCE, I feel sorry for them,” said Ronald Davis, general manager of the Burbank Public Service Department. “The utility really let them down.” Davis can say that, of course, because like Los Angeles where Department of Water and Power customers are thanking their lucky stars they live and work where they do, Burbank relies on its own power plants to generate electricity. As does Glendale. In fact, last month representatives from the two cities, along with those from Pasadena, huddled in a small conference room at the Glendale Hilton to discuss plans to actually share their power supplies and generate more income by selling off their surplus to the state. Meanwhile, businesses located west of the DWP boundary line are scrambling to come up with conservation measures, contingency plans in case of rolling blackouts and what could amount to as much as a 46-percent utility rate increase. Some already anticipate the fallout will, one way or another, trickle down to their customers. “The things that we are suffering today are because of decisions made five and 10 years ago (by the utility providers) and by their inability to take measures to supply us with abundant power,” said David York, vice president, operations, for Ram Enterprises Inc. in Valencia. “I don’t think SCE has done their job, and I think it’s a shame that that’s now being passed on to the consumers and there is no short-term answer for this other than conservation.” York said the 16-year-old company, which does about $17 million worth of business each year, invested in a generator a couple of years ago because summer blackouts are common in Valencia even under the best circumstances. “There is a tendency for the power to go out during the summer because of delivery issues and overuse,” he said. “So we will survive.” But, said York, in addition to the added, very costly expense of running on a back-up generator, there is the possibility the company, which distributes electronic connectors and accessories to the aerospace industry, could fail its customers. “Because we are national, I’m not sure what the compassion level will be with our customers when we say, ‘Oops, we can’t ship those products to you because we had a power outage,”‘ York said. “We are capable of sustaining our business, should a power outage occur, but as far as the rate increases, that’s something that trickles down and we will have to pass on to our customers.” Glen Becerra, SCE’s public affairs regional manager, confirmed blackouts are likely. “When the summer months do set in and we are engulfed with high temperatures, it looks like we could be facing rolling blackouts,” Becerra said. When temperatures hit the 80-degree mark, said Becerra, kilowatt-hour usage is at about 12,332 for the entire 50,000-square-mile area SCE provides service to. But when the thermometer soars into the 90s, as it so often does between the Fourth of July and Labor Day, kilowatt-hour usage can be closer to 50,000. Becerra said conservation is key and SCE has done its part, offering incentive programs for businesses that install energy-efficient lighting or heating and cooling systems, for example. He also said the expected blackouts, which will occur inside grid groups selected at random, aren’t likely to bring a company down since they rarely last longer than an hour. Businesses selected for blackouts will have warning, Becerra said, but not much. “The California Independent System Operator is responsible for managing the high voltage distribution system, or schedules the electricity,” Becerra said. “The cities know what groups they are in. But we may not get more than five or 10 minutes notice.” Here’s another kind of “notice” businesses may get that won’t bode well for the bottom line. Every bank, according to Michael Ward, CEO for Charter Pacific Bank in Agoura Hills, naturally scrutinizes the financial health of borrowers before approving their loan applications. And if a company is having to make extra expenditures to cope with rolling blackouts, incentive programs, conservation efforts and utility rate increases, even the largest generator in the world isn’t going to make it look better on paper. “Someone who has a major reliance on energy could be credit-worthy now, but their energy costs could make it hard for them to obtain a loan,” Ward said. “While the increasing cost of energy obviously has an impact, it’s not a major expense of ours. But it’s a scandalous increase and it certainly has an effect on the bottom line.” Ward said the bank is in good shape and prepared to handle blackouts. But when they hit, he said the bank has to shut its doors, lock the vault and force customers to an electronic walk-up window to complete a transaction. “It’s tough on business, but we are prepared.” Chris Thompson is president of Wexler Video Inc., a Burbank-based broadcast equipment and service provider to the TV and cable industry. He said although his company feels very fortunate not to have to grapple with rate increases and blackouts, it does have a conservation plan in place that includes cutting back on lighting use. “We feel so blessed to be in Burbank. They had the foresight to be ahead of the curve and they have done a fabulous job of being business savvy,” said Thompson. “But we are trying to conserve because we feel bad that other people are going through this, and unfortunately, a lot of our customers are in that boat.” Even the blessed behemoth that is DWP knows, although its energy surplus remains solid, it cannot sit idly by while its neighbors in the West Valley and across the state are being affected. The DWP recently approved the purchase of 141 microturbine power systems from Capstone Turbine Corp. in Chatsworth to help reduce the power draw on the state’s energy grid and make its own supply more efficient. “We have enough reserves but, to make enough energy available to the rest of the state, we are putting on new peaking units and adding almost a thousand megawatts to our system,” said Frank Salas, chief of staff for the DWP. “We are all part of the state and the region and what affects our neighbors also affects us.” Burbank’s Davis said, while there are no planned rate increases for consumers and the energy surplus remains strong, the city has been preparing nonetheless for expected fuel cost increases, which threaten to drive up the wholesale cost of electricity for everyone. “Are we immune? Absolutely not,” said Davis. Burbank doesn’t have $4 million to toss out for microturbines and most of its six generating units, particularly those now supplying emergency power to the rest of the state, are old and extremely expensive to run. In other words, while there might be plenty of reserves available to help SCE and Pacific Gas and Electric customers out this summer, it will come at a very high premium. “The problem with emergency power is it’s very expensive and limited,” said Davis. “I would bet that there may be a day this summer where no amount of money in the world is going to get you power.”
