Risk planning for power crisis

IN A FERTILE VALLEY in the heart of the country's most populous state, visionaries and entrepreneurs replaced the apricot, plum and olive trees with semiconductor plants, supercomputers and data centers, driving the country to record levels of prosperity.

Then the lights went out.

That's the short version of how California and Silicon Valley -- the nation's economic engine during 10 years of record growth -- were broadsided by an energy crunch that has shaken the state and sent ripples all the way to Washington, D.C. For many of Silicon Valley's high-tech giants, the rolling blackouts have provided a shrill wake-up call: Local governments and utilities can't reliably provide the energy needed to keep critical IT systems and data centers up and running all day, every day.

Even for businesses miles from California's energy crisis, with energy needs considerably smaller than those of the power-hungry Internet server farms that dot Silicon Valley, the West Coast-style woes could be looming on the horizon.

Energy experts say increasing demand and an aging electrical transmission grid mean that power shortages could soon affect neighboring Western states, and even certain parts of the East and Midwest. "Other parts of the country, such as New York City and Long Island, are saying they are short of capacity and getting shorter," says Steve Taub, director of distributed resources at Cambridge Energy Research Associates, an energy consultancy in Cambridge, Mass. The simple problem, Taub says, is that prices for natural gas (on which utilities rely) soared as the economy and demand for electricity took off.

Although most regions are not facing a California-type power crisis, experts have advice for IT leaders dependent on local utilities and legislatures: Better think outside the grid by dusting off Y2K contingency plans and investing in backup systems that will cover you in case someone pulls the plug on your power supply. And better look closely at what some companies have been doing for years to guard against power failures.

"Most of us took it for granted that power was always going to be there," says David Cooper, CIO at the Lawrence Livermore National Lab in Livermore, Calif. "From now on, power will always be a concern. As CIOs, we need to focus on risk planning and backup scenarios."

Less than two years ago, energy lagged far behind the staffing crunch, housing prices and gridlocked traffic as major concerns for high-tech companies trying to lure talent to Silicon Valley. Unemployment rates hovered just over 1 percent in the cities and towns between San Jose and San Francisco, and modest bungalows sold for more than $1 million. Slowly but surely, however, the state's flawed electricity deregulation plan combined with rising natural gas prices to put a squeeze on power supplies, eventually leaving the state teetering on the brink of disaster.

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