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Electricity Update

Q & A

Anaheim Public Utilities wants you to understand the issues surrounding the California electricity market, how it affects Anaheim and how it affects our ability, addressing some of your concerns. Following is a list of the most frequently asked questions and our answers to them.

What is Anaheim doing to prepare for the possibility of energy shortages?

What happened to the electric industry in California?
What about Anaheim's electric rates?
Why did other utilities raise their rates?
How is Anaheim different from the IOUs?
What is a Stage 3 Electrical Emergency?
What is a rotating outage?
What if the statewide electrical emergency continues?
Is Anaheim subject to rotating outages? 
Are there any areas that are exempt from rotating outages?
I thought Anaheim generated its own electricity?
Why does Anaheim have to participate in the rotating outages?
What is Anaheim doing to avoid rotating outages?
How can I help prevent rotating outages?
Where can I obtain more information?

What is Anaheim doing to prepare for the possibility of energy shortages?
Anaheim Public Utilities has the resources in place to meet anticipated electricity demands of our customers during the hottest summer months. However, because Anaheim must use the statewide energy transmission grid, it is required to participate in load reductions along with other utilities, as they may be called by the California Independent System Operator (California ISO). To meet California ISO load curtailment requirements, Anaheim has established a number of Load Reduction Programs to help mitigate the need for rotating outages.
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What happened to the electric industry in California?
Under deregulation, the state's investor-owned utilities (IOUs), including Southern California Edison (SCE), Pacific Gas & Electric (PG&E), and San Diego Gas & Electric (SDG&E), agreed to sell most of their power generating facilities and instead purchase their power from a daily wholesale market. The theory was that this would increase competition and prices would fall, thereby ultimately benefiting consumers. Instead, those prices rose significantly. Why? Over the last 10 years, environmental constraints as well as the potential risk that investors might no longer be able to recoup long-term investment in power generation resources, resulted in fewer power facilities being built. Therefore, demand for electricity began to outpace supply. Natural gas prices and emissions costs also skyrocketed. All of these factors, combined with what we now know was market manipulation, created very high prices in the wholesale energy markets. The increase in wholesale prices caused the state's IOUs to pay more to buy wholesale energy than they were allowed to recover from their ratepayers, creating a "collection gap."
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What about Anaheim's electric rates?

Anaheim Public Utilities' electric rates are the lowest in Orange County. Anaheim residents pay rates averaging more than 25 percent lower than rates in neighboring communities. In addition, Anaheim Public Utilities offers its customers a value-packed array of dozens of Anaheim Advantage Services -- energy efficiency measures and incentives designed to help Anaheim residents and businesses reduce their power costs by using less electricity.
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Why did other utilities raise their rates?

Under deregulation, the state's investor-owned utilities (IOUs), including Edison, PG&E, and SDG&E, agreed to sell most of their power plants and instead purchased their power from a daily wholesale market. Power shortages caused wholesale prices to soar to levels far above what the IOUs were allowed to charge their ratepayers. The state granted the IOUs permission to raise their customers' electric rates significantly to help those utilities recoup their costs.
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How is Anaheim different from the IOUs?
Anaheim is a publicly owned utility, Anaheim owned and Anaheim focused. We were not required to participate in the state's deregulated electric market. We maintain our partial ownership in various power plants located across the Western United States, we continue to generate some of our own power right here in Anaheim, and we purchase electricity at predictable rates through power contracts. We buy only small amounts on the daily wholesale market, which can fluctuate tremendously based on the weather and electricity demand and supply. On occasion, Anaheim sells surplus energy into the market and uses the proceeds to help keep rates low.
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What is a Stage 3 Electrical Emergency?
A Stage 3 Electrical Emergency may be declared by the California ISO when the state's electric reserves fall below 1.5 percent. The utilities may be asked to cut power to their customers through rotating outages to prevent large-scale uncontrolled outages across the state. 
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What is a rotating outage?

When the California ISO, the agency that manages the power grid, notifies utilities to quickly reduce electricity deliveries to their customers, it calls for rotating outages. The utilities must shut off electricity to select groups, or blocks, of customers on a controlled basis to prevent large-scale power outages across the state. These customers will generally be without electricity for one hour or less. At the end of the hour, power is restored. A rotating outage can result from shortages in generating capacity or the inability to deliver power to regions of the state due to problems or interruptions in delivery of electric over portions of the state-wide electric transmission grid. There may be advance notice of a rotating outage or there may be no advance notice at all, depending upon the circumstances causing the need for the outage.
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What if a statewide electrical emergency continues?
If the California ISO says the system is still in a state of emergency as the time for the first outage block is coming to an end, the block of customers without electricity will be restored and electric outages will be "rotated" to another block of customers. This cycle will continue until notification is received that the state has ample power reserves.
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Is Anaheim subject to rotating outages?
Because Anaheim receives electricity from the statewide electric grid, we are required by the California ISO to participate in load reductions, which may include rotating outages. Action plans are in place to reduce, shorten, or eliminate the impact of rotating outages to Anaheim customers. We will implement a series of load reduction programs and will press city-owned emergency generators into service. If further customer reductions are required, we must initiate rotating outages.
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Are there any areas that are exempt from rotating outages?
All areas of Anaheim are subject to rotating outages. However, Anaheim takes into consideration locations that might affect public safety. For example, police and fire stations, large hospitals and large venues of 5,000 people or more.
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I thought Anaheim generated its own electricity?
Anaheim obtains electricity from different resources. We have partial ownership in power plants from Southern California to New Mexico and contractual interests in resources from Nevada to the high plains of central Utah and as far north as Wyoming. We also generate some of our own electricity right here in Anaheim. Our ownership resources and long-term contracts generally   provide electric power at lower rates than the daily open markets. However, we do, on occasion make spot market purchases.
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Why does Anaheim have to participate in the rotating outages?

Although Anaheim has secured enough power to meet the needs of all of its customers, we are part of the statewide grid system and we are required by the California ISO to participate in load reductions, which may include rotating outages, to help prevent large uncontrolled statewide outages.
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What is Anaheim doing to avoid rotating outages?

Anaheim Public Utilities has action plans in place to reduce, shorten, or eliminate the impact of rotating outages to our customers. We will press City-owned emergency generators into service and implement our prearranged voluntary Load Reduction Programs with our business customers. As always, we encourage all our customers to conserve.
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How can I help prevent rotating outages?
You can help prevent rotating outages by conserving electricity during the peak hours, without jeopardizing your health and safety. Following are some tips:

  • Set thermostats at 78 degrees during the summer months.
  • Avoid using appliances during the peak use hours from 2 to 7 p.m.
  • Use portable or ceiling fans instead of central air conditioning.
  • Turn off appliances and equipment when they are not needed.
  • Reduce lighting. Turn off unnecessary lights, switch to efficient fluorescent lights, or take advantage of natural sunlight to brighten your home.

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Where can I obtain more information?
Call us at 714/765-3300.  .
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