Silicon Valley Cos. Talk Power Woes

Friday, January 19th 2001, 12:00 am

By: News On 6

SANTA CLARA, Calif. (AP) â€” California's energy crisis has not yet caused a mass exodus of businesses but a group of Silicon Valley leaders warned state lawmakers Thursday that having reliable power is crucial to their future plans.

``We intend to grow in California, and power is important to our growth,'' said Ellen Hancock, chief executive officer of Exodus Communications, Inc. ``There are two things our customers need: They need bandwidth. They need power.''

Exodus Communications, a Santa Clara-based company that provides data-storage services for Internet companies, including eBay and Yahoo, hosted a private meeting Thursday with 80 members of the Silicon Valley Manufacturing Group and state legislators.

The meeting, planned over a month ago, coincidentally fell on the second consecutive day of rolling blackouts, which affected half a million Northern Californians on Wednesday and millions more Thursday. Many lawmakers planned to attend the meeting, but were called into an emergency session on power in Sacramento. Five participated in the meeting by phone.

The region's technology business leaders have tried to hammer in the point for some time â€” that the New Economy could be short-circuited unless steps are taken to upgrade California's power grid.

At a regional energy summit last June â€” after a record heat wave drained the state's power supply and forced scattered outages in Northern California â€” Silicon Valley executives warned the U.S. Department of Energy that extended blackouts could represent the potential loss of billions of dollars to high-tech firms that rely on uninterrupted power sources.

The cost of Wednesday's rolling blackouts to Silicon Valley businesses was still being tallied but it's already in the ``tens of millions of dollars,'' said Carl Guardino, president of the Silicon Valley Manufacturing Group, which represents 200 companies.

During the power outages on June 14, Guardino said, members of the trade group collectively lost about $100 million in a single day.

While the high-tech industry consumes massive amounts of the region's power, it does want to be part of the solution as well, Guardino told reporters at a press conference following the meeting.

The region's high-tech employers agreed to take the following steps:

â€”reducing their power consumption by 10 percent over the next two years, even as they grow.

â€”increasing participation in a campaign to create more energy reserves.

â€”creating more power generation plants, including at company sites.

â€”lobbying and working with state leaders on effective deregulation of the power industry.

Though leaving California was not raised during Thursday's meeting, Guardino said several companies' chief executives had told him earlier they were considering exit strategies if California did not get its power act together.

``It's not a threat. It's a reality of business,'' Guardino said.

For its part, Exodus Communications is moving ahead with plans to build an onsite power co-generation plant, Hancock said. She would not disclose a specific location but said the company hopes to win the support of the local government for such a project.

Exodus has more than 30 Internet data centers in the United States â€” five of them in Silicon Valley â€” where client companies store their servers inside a secure vault. The centers are equipped with backup generators in case of emergencies, but a reliable source of power is key to the company's growth, Hancock said.

``What's important to us is the generation of power to meet the growing demand of the growing economy,'' Hancock said. ``The message we want to give is that conservation is not enough.''

The state's population has grown by more than 6 million people over the past decade, yet there has been little increase in power sources, Guardino said. ``That means 6 million more refrigerators, washer and dryers, cell phones, computers and Palm Pilots,'' he said.

Guardino said the trade group is urging state and local leaders to work together on ways to increase power generation and transmission across California.

High-tech employers also said they would like to see more government incentive programs, including tax credits, that would reward energy-conserving businesses.

A spokesman for State Sen. John Vasconcellos, a member of the Senate Energy Committee who joined Thursday's meeting by phone, called the session with Silicon Valley leaders ``productive'' and ``candid.''

The group of lawmakers, said Rand Martin, Vasconcellos' chief of staff, learned more about the difficulties companies face in building their own generation plants. They learned that two state laws seem to contribute to the problem: an arbitrary limit of a so-called mini-turbine plant to 50 megawatts and the lack of a statewide standard for transmission between those power distribution points.

The legislators did not immediately agree to any action, but Martin said they would explore issues ``that we think we can do some good on.''

At the same time, the lawmakers urged the business leaders to lobby federal regulators to do their part in getting energy suppliers outside California to place limits on how much they charge.

``We're at their mercy, and as long as the generators can charge (California utilities) whatever they want, we're at a loss to fix the system,'' Martin said.

â€”â€”â€”

On the Net:

Silicon Valley Manufacturing Group â€” http://www.svmg.org