Let There Be Light

Why California's electricity problem may leave you in the dark.

March brought the miners mixed news. The upside: The company had shielded itself from possible price spikes by signing a fixed-price contract with Tucson Electric Power Co. for most of the summer, planning rotating work stoppages throughout all of its mines in the Southwest during the peak month, and building its own 40 megawatt power plant at the Chino mine. “Beginning in early May, our exposure to the electricity market was virtually zero,” says CFO Ramiro G. Peru.

Peru’s effort saved all but 130 jobs. But the remaining workers weren’t off the hook. The possibility of unexpected power disruptions still loomed, forcing the company to renew its WARN notice for another two months. On May 29, the company laid off another 80 workers and extended the notice for yet another two months.

“Obviously,” explains Peru, “given the situation in California and throughout the West, firm power is only as good as the ability of the producers to deliver it to you.” Last summer, that ability wasn’t very good. “We had a number of disruptions in 8-to-16-hour increments,” he says. “They can be quite costly.” In 1999, Phelps Dodge spent 11 cents on energy (electricity, gas, and diesel) for each pound of copper it produced worldwide. By fourth-quarter 2000, that figure had shot up to 17 cents per pound–the result of soaring costs and unexpected outages at its U.S. mines. –T.R.


A selection of some of the largest companies offering outsourced energy management and, in some cases, electricity procurement. 

DukeSolutions www.dukesolutions.com Car America, Boeing, Kraft, Formica
Enron Energy Service  www.enron.com  Starwood Hotels, Chase Manhattan, Polaroid, Simon Property Group
Sempra Energy Solutions www.sempraenergysolutions.co m DreamWorks, Venetian Resort Hotel
Service Resources www.serviceresources.com  Federated Department Stores, Home Depot, Toys R Us
Trigen-Pepc www.pepco-services.com Washington, D.C., Convention Center, National Institutes of Health
TXU Energy Services www.txu.com/us/ourbus/en ergyserv/ John Deere, Catholic Healthcare West, Crescent Real Estate

Source: E Source


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