Olivier Douliery/Techway

Dominion Virginia Power says it has plenty of energy to meet the demands of the technology community now, and plans to generate 8,000 to 10,000 megawatts over the next three years.

Perhaps because it is more than 2,500 miles away, it's hard to imagine: skyrocketing energy prices, rolling blackouts, bankrupt utility companies, and a state spending a large portion of a budget surplus set aside for schools and roads to buy electricity.

To make matters worse, there doesn't appear to be an effective short-term solution for California's energy crisis as the summer, the state's peak season for energy demand, quickly approaches.

As a result, some of California's biggest energy consumers — Silicon Valley tech companies — are faced with more than just a collapsing Nasdaq, and a slowing demand for their products. Sun Microsytems and Agilent Technologies, both of Palo Alto, have already warned in recent quarterly reports that the ongoing blackouts could harm their businesses.

Could it happen here?

After all, Maryland and the District of Columbia are at the early stages of utility deregulation — a process California pioneered in 1996 — and Virginia is scheduled to begin deregulating in 2002.

The answer appears to be no.

The differences between California's deregulation scheme and this region's plans are "quite large," says Maurice May, a utility analyst with Friedman, Billings, Ramsey & Co. Unlike California, where no new power plants were built in the last 10 years to accommodate increasing demand, there appears to be an adequate supply of power in this region.

"We have plenty of existing capacity right now," says Kent Hill, manager of economic development for Dominion Virginia Power.

Hill says Dominion can generate enough of its own power to cover Virginia's peak demand of 15,000 to 16,000 megawatts per day, though it buys about 20 percent of its power through long-term contracts because it's cheaper than producing all of it in-house. Dominion also plans to generate an additional 8,000 to 10,000 megawatts of capacity over the next three years.

Similarly, Maryland and Washington, D.C., also have more than enough power. Both Pepco, which serves the District and parts of Maryland, and Constellation Energy, which serves the Baltimore area, are members of PJM — which stands for Pennsylvania, Jersey and Maryland — a wholesale electrical market that requires its members have a reserve of 19 percent above peak demand.

Other major differences between California's deregulation scheme and those of Maryland, the District and Virginia demonstrate that this region appears to have learned from California's deregulation mistakes. "The region is ultimately subject to higher fuel costs, but it's highly unlikely that it will be subject to brownouts," says Michael Beal, a utility analyst at Davenport and Co. in Richmond.

So does that mean this area is free from energy-related challenges? Not exactly.

In Loudoun County, power-hogging data centers are causing high-voltage transmission lines and substations — buildings where power from high-voltage lines is reduced before traveling to the end users — to reach capacity much sooner than expected. This equipment was originally projected to reach capacity in 2007 or 2008, but Dominion says it will hit capacity next year.

Although Loudoun County has had a dramatic population boom in the last decade, Hill says the bulk of the new demand for power is coming from data centers that have sprouted in the eastern part of the county. John Bailey, coordinator of permitting and siting for Dominion Virginia Power, says there are about 50 data centers open, under construction or planned in Loudoun County.

Internet data centers, says Hill, consume about 10 times more power than a regular office building. Though the range varies, these data centers often use 50 to 80 watts of power per square foot, while regular office buildings use about 7 watts per square foot.

The increasing demand for power has forced Dominion to propose additional high-voltage power lines and substations, and there has been a disagreement about where to locate them.

"A lot of residential areas will be potentially affected by these high-voltage lines," says Charles Harris, a member of the Loudoun County Board of Supervisors (D-Broad Run).

In mid-March, Dominion selected two sites for the high-voltage lines and applied for a building permit to the State Corporation Commission, which will ultimately decide where the lines are placed.

"This is the first of more to come," says Harris. "The [the transmission infrastructure] is going to have to be upgraded."

Lewis Shadle, vice president of business development for US Dataport, a San Jose, Calif., company that is building an Internet data campus in Prince William County, believes it is an even larger problem.

"The transmission infrastructure is totally inadequate to support the distribution of energy around the county," he says.

To ensure a reliable power supply and transmission at its Internet data center campus, US DataPort intends to build its own energy plant, a $300 million, 250-megawatt cogeneration plant. The plant, which will make US DataPort's campus self-sufficient, could provide enough electricity for 2,500 homes.

US DataPort is building a similar facility in San Jose where it expects to save even more money by generating its own power for the Internet data center. "The price of power has just gone up 40 percent in California," says Shadle.

Though several data centers declined to comment on how much they spend on power, Shadle says a data center consuming about 80 watts per square foot pays an annual power bill roughly equivalent to the cost of its annual lease. And two-thirds of every dollar spent, he adds, goes toward air conditioning.

Does that mean California tech companies will be moving to this region? Probably not.

A report by issued by UCLA's Anderson School of Business in early April stated that the power crisis "will not likely have a major impact on business decisions to remain in California in the near term." But it did conclude that the effects of prolonged blackouts could significantly discourage business expansion within the state.