In Times of Crisis

A year ago, an energy crisis had businesses in California reeling. Today, the blackouts have stopped rolling, but energy prices remain far above pre-crisis levels. And, despite regulation, legislation, conservation and other efforts, there's nothing to prevent a repeat of the crisis-in California or elsewhere.

Victor Critchfield, 38, who was interviewed for an April 2001 Entrepreneur article on the crisis ("Feeling Powerless"), says the blackouts weren't so bad. "But the other story is how much my electricity bill is now," says the owner of BPM Records in San Francisco. Bills for his 750-square-foot dance-music store have doubled to $250 or $260 a month.

Critchfield conserves by switching off lights when the store is closed and running his sign only at night. "I used to leave my sign on 24 hours a day," he says. "Now, I'm very adamant about conserving electricity." That type of penny-pinching has become second nature to Critchfield, who is also facing San Francisco's down dotcom economy. As entertainment spending slowed after September 11, he laid off his three employees and now runs the store alone.

Some say the energy crisis isn't likely to return. "A perfect storm of negative consequences converged in late 2000 and 2001 and caused the problem," says Greg Fishman of the California Independent System Operator, a quasi-governmental organization charged with maintaining the state's competitive energy market. "By the middle of 2001," he says, "many of those factors had turned around." Positives included a cooler and wetter summer, new generating plants and conservation, he says.

The problem isn't over, however, stresses Kelly Cunningham, research director for the San Diego Regional Chamber of Commerce. "It's still a major issue," he says. "It seems we've secured the energy supply. But we're paying a lot of money for it, and that's causing a real economic problem." Cunningham says some companies have announced plans to move out of state. Others still tack energy surcharges onto prices for such things as movie tickets. Energy bills won't drop soon, either, he notes, thanks to long-term contracts the state signed in summer 2001 when prices were inflated.

Outside California, the Federal Energy Regulatory Commission plans a national network of regional transmission authorities to prevent the imbalance that put California in an energy shortfall while supplies elsewhere were plentiful. A federal energy bill also promises answers, but was still being debated at press time. Meanwhile, small businesses in California and elsewhere can only dim the lights and hope another Perfect Storm doesn't roll in and turn them off.