It was nearly four years ago, but it still seems like yesterday for some.
Starting in the winter of 2000, California’s energy crisis brought havoc to Orange County’s economy with rolling blackouts, power cuts for businesses and soaring electricity rates.
These days, electric bills still are a concern for businesses. But nearly all agree things are saner than they were during the height of the energy crisis in 2000 and 2001.
Still, the fundamental issue that got the state into the power mess in the first place remains: California electric bills are among the highest in the nation.
“Our electricity cost increases have leveled off in the past two years, but they’re still up significantly from where they were before the electricity crisis,” said Alex Bhathal, spokesman for Tustin swimwear maker Raj Manufacturing Inc. “We’re seeing a stabilization, but not really a reduction.”
Raj, which uses a sizable amount of electricity at its 100,000-square-foot plant, saw its 2001 and 2002 electricity bills grow 20% annually, according to Bhathal. Last year, its rate stayed even, he said, with a small decline this year.
“Any costs like utilities add to making for a more difficult business environment in California,” Bhathal said.
The average electricity rate for big industrial customers of Rosemead-based Southern California Edison during the electricity crisis was 9.4 cents per kilowatt-hour.
That’s nearly double the rate of 5 cents per kilowatt-hour those customers paid before California’s electricity market was deregulated in the mid-1990s.
Rates have fallen to 7.5 cents per kilowatt-hour from their peak during the electricity crisis,still 50% higher than the rates big users were paying prior to 2000.
Large electricity users include factories, building owners and supermarkets.
Midsize customers include smaller grocery stores and banks. Rates for them jumped from 9.9 cents per kilowatt-hour before deregulation to a peak of 15.5 cents. Since then their rates have fallen to 13.9 cents per kilowatt-hour.
Small businesses, such as real estate offices or barbershops, pay the highest rate for electricity. Before deregulation, they were paying 12.1 cents per kilowatt-hour. That rose to 17.5 cents during the electricity crisis and since has fallen to 15.2 cents.
“The costs a lot of our customers are paying relate to the period of the energy crisis,” said Akbar Jazayeri, Southern California Edison’s director of revenue and tariffs.
In 2003, Edison cut a rate surcharge put in place to pay off debts accumulated during the power crisis. And last week the Public Utilities Commission voted to shift $733 million in costs from the electricity crisis from Edison to San Diego Gas & Electric, which serves part of South County. Edison industrial users could save $145,000 in the next 10 years.
South County businesses could see higher bills as a result. SDG & E; said last week it was assessing what the impact would be.
But today’s Edison rates reflect long-term supply contracts signed at the peak of the crisis and new rules implemented by the state Public Utilities Commission.
Higher costs at Edison, from healthcare for workers to spending on its electricity network, also are a factor.
One way businesses are dealing with relatively higher costs is a technique honed during the power crisis: conservation.
“We have had the ability to put in more energy-efficient equipment in our facility to help alleviate the cost,” said Steve Ross, manufacturing manager at Los Alamitos-based Arrowhead Products, a maker of aerospace parts. “During the crisis, it went up 60% to 70% and then dropped back down. But it hasn’t gotten back to where it was before deregulation.”
Raj’s Bhathal said electricity costs alone won’t lead his company to leave California, something Raj has considered amid high workers’ compensation insurance and other costs here.
“For our business, electricity is important but isn’t a determining factor,” he said. “It’s one of many inputs,some companies are more energy dependent. But for the industry we’re in, we use sewing machines.”
Another executive who asked not to be named said workers’ comp and other issues continue to be bigger problems than electricity.
“Workers’ comp and other legislative issues like that are business killers,” he said. “Electricity is not the primary concern like it was back then.”
California’s sources of electricity are more expensive than other places, Edison’s Jazayeri said.
“Here we rely more on renewable energy, which is more expensive than coal,” he said. “We also rely on natural gas-fueled power plants, and gas also is more expensive than coal.”
Another reason for California’s expensive electricity: The state doesn’t generate enough of what it needs and has to buy power from outside the state, Jazayeri said.
“A lot of the out-of-state, long-term contracts signed by the state and allocated to utilities in recent years cost us a lot more than it would cost us to generate the electricity ourselves,” Jazayeri said. “As these high-price contracts start dropping off next year, we can replace them with something cheaper,then rates will start going down.”
