California declares state of emergency

Power supplies are still dangerously low

The governor of California has announced a state of emergency after power shortages led to a wave of blackouts.

About a million people in the San Francisco Bay area had their electricity cut off, as the state tried to avoid a total collapse of its electricity system.

The state of emergency gives us the authority to keep the lights on in California

Governor Gray Davis

Television stations went off the air, and cash machines and traffic lights failed - as America's richest and most populous state suffered its first mandatory blackouts since World War II.

The cuts were halted after emergency supplies were brought in from Canada, but officials said more might occur later.

Governor Gray Davis said the state of emergency would ensure funds were available to keep electricity flowing for another week to 10 days.

San Jose post office was left without power

He said the threat of more power cuts on Thursday left him no choice but to act.

"It is our obligation to provide power to the homes and businesses that drive California," he said in a live television address.

The state would only have 55% of the power it needed for Thursday, he said.

Officials are trying to find supplies elsewhere.

Huge debts

The crisis was brought about by financial problems at the state's two major power companies.

Southern California Edison and Pacific Gas and Electric have incurred massive debts following the deregulation of the state energy market in 1996.

The traffic light went out and my associate was almost run over by a car

Man in San Jose

They have seen wholesale power prices rocket, but are barred from passing on the costs to consumers.

Governor Davis said four major power generators had threatened to call in their debts at the two utilities on Thursday - which would have effectively forced them into bankruptcy.

On Tuesday, SoCal Edison temporarily suspended at least $596m of debt payments, and confirmed it was in default to some of its bondholders.

Pacific Gas and Electricity, and parent company PG&E Corp, said on Wednesday they had defaulted on a total of $76m of commercial paper.

The move sent jitters through US financial and stock markets.

Rolling blackouts

Wednesday's power cuts hit parts of San Francisco, Sacramento and San Jose, as well as other sections of Silicon Valley.

The blackouts had an immediate impact in San Francisco

Individual neighbourhoods were subjected to hour-long blackouts.

"It went off as we were walking across the street. The traffic light went out and my associate here was almost run over by a car," said one man in San Jose.

Restaurants lost power during the middle of the lunch hour, and some of California's high-tech industries switched to their own back-up generators.

The outages were ordered just before noon local time (2000GMT) and had been expected to last through the afternoon and possibly into the evening.

But a Canadian producer, which officials refused to name, agreed to send about 500 megawatts of electricity, enough to power 500,000 homes.

Earlier, the US Energy Secretary Bill Richardson extended an order forcing firms to sell electricity and natural gas to the Californian market until 23 January.