July 24 (Bloomberg) -- California declared an electricity emergency as it endured another power-demand record because of a heat wave. Energy conservation and cuts in electricity to selected customers helped the state avoid rolling blackouts.

A stage 2 emergency was declared by the California Independent System Operator, indicating the reserve margin, a measure of surplus power, was below 5 percent. Utilities withheld 800 to 1,000 megawatts of electricity to some customers who accept cuts during emergencies in exchange for lower rates, said Lorie O'Donley, a spokeswoman with the system operator, which manages most of the state's power network.

California, with an economy twice the size of Russia's, has struggled to boost power supplies as a growing population spurs demand. The limited curtailments and energy-saving efforts helped the state escape its first episode of rolling blackouts since 2001, when market manipulation by traders and an industry restructuring led to power shortages.

``We have a number of voluntary conservation programs that were activated today,'' O'Donley said.

Even with the energy savings, electricity demand peaked at 50,270 megawatts at 2:44 p.m. today, breaking the record of 49,036 megawatts set at the end of last week, the system operator said. One megawatt is enough for about 800 U.S. homes.

The state at 10 a.m. issued a stage 1 emergency alert, which is a public call for conservation, before upgrading it at 1 p.m. to the first stage 2 of the year.

Officials warned conservation was necessary to prevent a stage 3 emergency, which would result in rolling blackouts, and would occur when the reserve margin falls below 1.5 percent. Another stage 1 emergency is likely tomorrow, while a stage 2 is possible, with demand expected to peak at 50,547 megawatts, the system operator said. A stage 3 is unlikely.

Beating Forecasts

Consumption has surpassed previous forecasts made by the system operator, which previously said this year that demand would peak at about 46,000 megawatts under ``most likely conditions'' and about 49,000 megawatts under adverse conditions.

``A dangerous heat wave with record-breaking temperatures in California and other parts of the western U.S. continues to tax the electricity system to the limits of its capacity,'' Governor Arnold Schwarzenegger, a Republican, said in a statement.

California ran commercials on 235 radio and TV stations calling for energy conservation. Schwarzenegger ordered state agencies to reduce power consumption by 25 percent by limiting air conditioning and lighting.

``We remain confident that with the appropriate level of conservation, the lights will stay on,'' Joe Desmond, undersecretary of energy affairs at the California Resources Agency, said at the press conference.

Excessive Heat Warning

Meteorologists blamed scorching temperatures on high pressure that heats air, damps sea breezes and reduces cloud cover.

``The high-pressure system is dominating the western portion of the country,'' Diana Henderson, a National Weather Service forecaster in Monterey, California, said in an interview.

The heat and humidity led the weather service in Los Angeles to issue an excessive heat warning for southwestern California until at least 7 p.m. local time, indicating a prolonged period of dangerously high temperatures will occur.

Yesterday in the Central Valley, temperatures soared to 113 Fahrenheit (45 degrees Celsius) in Modesto, beating a record of 105. Temperatures in Stockton topped 115, exceeding a record of 107, the weather service reported. The previous records were both set in 1960.

Deaths

State officials are investigating one fatality yesterday at a nursing home in Stockton, where the air conditioning system failed, and reports of a death at another facility are also being looked into, state health officer Mark Horton said at the press conference. Two workers died yesterday of possible heat-related stress, including a landscaper and someone building a pool, state Labor Secretary Victoria Bradshaw said.

The heat and excessive power demand have caused the failure of transformers and fuses, resulting in scattered blackouts. About 17,000 customers of Edison International's Southern California Edison were without power as of noon, the utility said in an e-mail. Since July 13, 765,000 customers have suffered blackouts.

Sempra Energy's San Diego Gas & Electric has restored service to 53,000 customers who lost power over the weekend, spokesman Peter Hidalgo said. Each customer may represent a single home or business, so the total number of people impacted may be higher.

`Run Longer and Harder'

At PG&E Corp.'s Pacific Gas & Electric, equipment failures have deprived 939,000 customers of electricity since July 21, with 104,000 still lacking power as of 4:40 p.m., spokesman Brian Swanson said.

``It's the tremendous heat combined with record demand that's requiring our equipment to run longer and harder than it normally does,'' Swanson said.

Sixteen-thousand customers served by the Los Angeles Department of Water & Power are also without electricity, down from 30,000 yesterday, the agency said.

The state's system operator first called for conservation during the current heat wave on July 14. California set records for power demand on July 17 and July 21, breaking the high established a year ago. The state endured its first stage 1 emergency of the year two days ago after a power plant unexpectedly shut down.

To contact the reporter on this story: Greg Chang in San Francisco at gchang1@bloomberg.net

Last Updated: July 24, 2006 20:50 EDT