Mudslides May Strike Already Flooded Calif.

Jan. 13, 2001 -- California residents are on alert today for mudslide threats following two days of a heavy drenching of the region from an extremely heavy winter storm.

This comes a day after a power crisis caused by the nasty weather threatened to leave some parts of the state without electricity.

Already, some Hollywood Hills residents are cleaning up from a mudslide on Friday that crashed into an apartment complex and flooded a garage.

The state's energy regulators downgraded Friday the power emergency to a Stage Two alert — meaning reserves had fallen, or were expected to fall below 5 percent — but California power sellers said this week they will need higher prices and longer contracts with the state's two biggest utilities than those offered by Gov. Gray Davis.

The secretaries of the U.S. Energy and Treasury departments wereexpected to meet today with the chief executives of California'stwo largest utilities and several state officials by video conference to discuss proposals, The New York Times reported.

Electricity shortages linked to California's botched deregulation of the power industry have produced soaring prices andsporadic threats of blackouts in California since last June.

"We can expect these alerts daily," said Jim Detmers, general manager for the California Independent System Operator, the state's grid manager.

The regulators came close to ordering scattered blackouts Thursday night as electricity reserves dropped below 1.5 percent. More than 7 inches of rain fell over Southern California Thursday, downing trees and power lines. High waves forced the Diablo Canyon nuclear plant to cut its energy output by 20 percent. Winds gusted up to 32 mph.

ISO officials credited an influx of power fromOregon and Washington state while fending off outages.

California's power production fell more than 15,000 megawatts, one-third of the state's generating capacity, California ISO spokesman Pat Dorinson said on Thursday. He said the state was "losing megawatts by the hour." Onemegawatt is enough to power 1,000 homes for an hour.

Richardson Extends Emergency Order

U.S. Energy Secretary Bill Richardson extended an emergencyorder Thursday to keep the state at full power. Theorder, which required out-of-state power suppliers to keepselling to California utilities despite their poor credit, expiredat midnight after Davis let pass a deadline to give federal energy officials an electricity conservation plan. The California ISO, keeper of much of the state's power grid, continued combing the nation to findmegawatts, but tight supplies kept theStage Three alert in place. The highest alert level is Stage Five.

To try to forestall blackouts, the ISO asked Pacific Gas &Electric Co. to interrupt customers who volunteered to cut poweruse in exchange for lower rates, Dorinson said.

Controlled blackouts are a last-ditch step that utilitiescan take to avoid a widespread collapse of the entire grid. With the winter storms knocking out power plants and creating record cuts in supply, the ISO's chief operatingofficer, Kellan Fluckiger, said the blackouts "could last as longas four hours … with the possible level as high as 2,000megawatts."

A loss of 2,000 megawatts would affect around 2 millionof the state's 34 million residents. Power cuts would rotatewith customers losing power for one hour before the blackoutmoved to another group.

ABCNEWS Radio and The Associated Press contributed to this report.