Though triggered by different factors than the energy crisis that gripped California last year, it was nevertheless the state's worst power shortage since July 3, 2001, the last time the ISO went to a Stage Two.

Energy officials said they hoped voluntary energy conservation and cuts to industrial users would avert the need to call a top-level Stage Three emergency, which would trigger rolling blackouts in a desperate bid to save the grid.

California has not seen blackouts since May 2001, just four months after the state ditched its disastrous power deregulation experiment and embarked on an aggressive campaign to build much-needed power plants.

But the system's continued vulnerability has been amply underscored this week by a heat wave scorching the U.S. West, driving power reserves perilously low and unleashing urgent pleas for the state's 35 million residents to ease the strain on the grid.

"This is unusually hot weather up and down the state, and our resources are being severely tested ... We're in better shape this year, but we still need some conservation from Californians," Gov. Gray Davis said in a radio interview.

Grid operators also cited the sudden mid-afternoon loss of a 750 megawatt power plant, roughly enough to run 700,000 homes, had dealt a low blow to the already struggling system.

PRE-ARRANGED CUTS

The Stage Two emergency - which enables the ISO to cut power to large commercial and industrial customers which have agreed to step off line in the event of power shortages - was declared at 3 p.m. PDT, was to remain in effect until 6 p.m., when the worst of the afternoon heat abates, shops and factories close, and energy demand typically tapers off.

By late afternoon ISO officials said they could see the combined effects of industrial power cuts, falling temperatures and voluntary conservation efforts were gradually bringing down electricity use across the state.

"We should make it OK tonight," said ISO spokesman Gregg Fishman, noting by early evening some industrial customers were already seeing their service restored.

This week's shortages have been attributed to power plants going down for maintenance just as the heat wave hit across the region - unlike last year's power crisis, which was exacerbated by independent generators manipulating the state's newly-deregulated energy market.

But officials said the crunch was likely to continue as the regional heat wave drags on for another day, raising the prospect of more rough going for the grid Thursday.

The soaring temperatures spurred the National Weather Service to issue a heat advisory for the inland portions of the San Francisco and Monterey Bay areas with high temperatures forecast to reach or exceed 105 degrees Fahrenheit (40 C) in some places.

California's capital Sacramento hit a blistering 108 degrees Fahrenheit (42.2 C) this week compared with a normal reading of 91 degrees (32.7 C), and triple digit temperatures were reported throughout the state.

As officials urged precautions against forest fires and heat-weary residents turned to pools, lawn sprinklers and public fountains to cool down, weather forecasters said the high temperatures were likely to last through Friday.

The soaring temperatures which stretched from Washington state to southern California and Arizona made it more difficult for California to import power from neighboring states, which usually step in to cover the state's supply shortfall, Fishman said.