The situation "is an important wake-up call," said Jan Smutny- Jones, executive director of the Independent Energy Producers, a trade association for energy sellers.

"It isn't time to hit the panic button but supplies are very tight."

The concerns stem from a forecast prepared by the California Independent System Operator, which manages the state's power grid.

The forecast predicts a new all-time high peak demand -- fueled in part by an economic recovery -- at the same time that power available will be 873 megawatts less than was available last summer. One megawatt is enough to power about 750 homes.

"We will be asking people to conserve power," said Gregg Fishman, spokesman for the ISO. He declined to discuss the report until it is finalized in the next few days but agreed to speak in general about what lies ahead.

"Load growth typically in California is about 2 to 2 1/2 percent," he said. "This year, we're expecting about a 4 percent increase. We assume there is some economic recovery going on, and that's part of it. That's good but it has some implications for power use."

In a best case scenario -- with no natural disasters, transmission outages or national catastrophes -- the ISO expects the state's power supply to meet the anticipated peak demand in August. That's when demand is anticipated to be about 44,422 megawatts, but it would leave only 1,176 megawatts of power in reserve for any variation in demand that might arise, according to the draft report.

In addition, hotter temperatures than expected or downed transmission lines caused by wildfires could cause the state's power system to hit peak demand at any time during the summer, the report said.

A home building boom concentrated in the state's warmer areas, including the Central Valley, and a number of older power plants being shut down have combined to set the stage for potential problems this summer.

"The ISO's concern stems from the fact they already had a Stage 1 alert in March on a particularly hot day and that was unexpected," said Claudia Chandler, spokeswoman for the California Energy Commission. "We don't disagree wit the ISO."

According to Chandler, about a third of the increase in demand for power will be because of air conditioners in all of those new homes built in Southern California and the Central Valley.

"It's important to use our power efficiently," she said. "It will be important to set the thermostat at 78 degrees when you're home and 95 degrees when you're away. It will shave that spike off our peak time of day when we use the most electricity, from 4 to 7 p.m."

Energy officials also are concerned that the heat wave last month will melt the Sierra Nevada snowpack earlier than usual, which would provide less runoff to power hydroelectric dams that generate electricity at a time it is needed most.

"The report shows there is a need to start building out some new energy capacity in California," said Smutny-Jones of the independent operators association. "People need to get busy putting out bids to get some power plants built."

Chandler of the energy commission said the state is in better shape than it was during the energy crisis of 2000-2001, with about 11,000 megawatts of power being added to the system since then.

"But we still have several power plants that have not been built," she said.

Spokesmen for utility companies said the situation stresses the need for businesses and residents to start using energy efficiently. That can be as simple as replacing older appliances with newer ones, which require less energy to operate.

"Each year, we're seeing an increase in demand," said Jennifer Ramp, spokeswoman for PG&E, "but we have lots of rebates for our customers to replace older appliances."