California Power still at premium

greenspun.com : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

Power still at premium S.J. retailers dim lights Staff and wire reports

A wild week of energy crunches -- which resulted in California's first-ever Stage 3 power emergency -- showed signs of slackening this weekend, but a cold snap, idle power plants and skyrocketing natural-gas prices kept utility watchers on edge.

Friday's move to lift a cap on statewide electricity prices eased power flow to utilities and consumers Saturday, according to the California Independent System Operator, which controls 75 percent of statewide power flow.

"It turned the electricity market into a market again," ISO spokeswoman Stephanie McCorkle said.

Creating a so-called "soft cap" on energy prices also drew the ire of Gov. Gray Davis, who blasted the move as "outrageous."

But with a renewed statewide call for energy conservation, retailers in San Joaquin County pledged to save power where they can.

"We always turn off half the lights at night," said Brent McClendon, manager of Stockton's Target store. Parking lights will be cut after midnight, he said.

And Weberstown Mall has already turned down some lighting to conserve energy, officials said.

But compounding the electricity crisis was the specter of soaring natural-gas costs, which have tripled in less than a week, and soaring electricity wholesale prices.

"In the football analogy, we're down to the final seconds of the game clock," said Greg Pruett, a spokesman for Pacific Gas and Electric Co. "I don't know how long this can go on."

Natural-gas prices were set to cripple Ripon-based Fox River Paper Co. and force two-week layoffs this month. But last-ditch negotiations with its gas supplier saved many local jobs Friday, according to reports.

In what is becoming almost routine, the managers of California's strapped electricity grid declared a statewide alert at 9 a.m. Saturday, urging millions of homes and businesses to conserve power. The alert was scheduled to remain in effect until 10 p.m.

The grid, which has roughly 34,000 megawatts available, is stressed by an unusually large number of power plants idled for repairs or maintenance, including the 1,100-megawatt Diablo Canyon nuclear-power plant.

McCorkle said workers are trying to bring that plant online by Monday, in a move that would ease the electricity crunch.

"That's a lot of power," she said. One megawatt can serve about 1,000 homes.

Uncertain imports, flaws in the deregulated market and high demand have also limited electricity production in the state.

California braced for the cooler weather expected across the Northwest by Saturday night, fearing new demands for electrical power and diminished energy imports from nearby states. On Thursday, the state narrowly avoided blackouts when its power reserves dwindled dangerously.

"Once again, it's the supply issue," ISO spokesman Patrick Dorinson said.

"We're told that it might not be as cold down here as up there (Washington and Oregon), but it could still create a problem because of the import picture. California is not an energy island. We're all drawing off the same system," Dorinson said.

"We're encouraging our customers to conserve energy and use it wisely. It's going to be tight, but we're feeling like things are covered," said Gail Baker, spokeswoman for Portland General Electric, which has about 720,000 customers in Oregon and supplies power for 60 percent of the state.

At midday Saturday around California, temperatures were rather mild, ranging from just below freezing to the high 40s. Although the real cold snap wasn't expected until late today or Monday, officials were beginning to think it wouldn't be as bad as first feared.

Late Friday, the Federal Energy Regulatory Commission approved ISO's request to lift price caps on wholesale electricity, a move the grid regulators said would provide power to ease the crunch.

But Gov. Davis, in his most heated language yet on California's power crisis, said the FERC decision would push electricity prices higher.

"This ruling, issued in the dark of night without notice to anyone in California, is an outrageous assault on the consumers and businesses of California by a federal agency answerable to no one," said Davis, who asked for a congressional investigation.

But apart from FERC's decision, the cost of wholesale electricity has soared.

Last year, utilities paid roughly $22 to $45 per megawatt hour, said Tom Williams, a spokesman for Duke Energy, a wholesale-power provider.

This year, they have paid an average of 15 times that amount, or more.

In the state of Washington, prices at one point reached an astronomical $3,000 per megawatt hour for power to be used Monday, Williams said.

In California, the two largest electrical utilities -- PG&E and Southern California Edison Co. -- operate under a rate freeze and cannot pass those wholesale spikes on to their customers.

Pruett says PG&E has absorbed $4 billion in losses since June; SoCal Edison slightly less.

"We have a wholesale market that has gone wild. We are seeing prices that are not only astronomical but have never been seen before," he said.

But the sellers of electricity note that most power plants use natural gas to produce energy. A week ago, wholesale natural gas sold for less than $20 per million British thermal units, a standard measurement.

On Saturday, it was selling for about $60.

"The bottom line is that what's driving this is the price of natural gas. It's as simple as that," Williams said.

California in 1996 approved a phased-in deregulation of the electricity market. The goal was to obtain lower prices for consumers through competition on the open market.

The law required the monopoly utilities, which had been regulated for decades, to sell off their generating assets. When that transition is completed -- no later than March 2002 -- they could operate without a rate freeze and buy open-market power.

The first utility to complete deregulation was San Diego Gas and Electric Co., with 1.2 million customers. The utility, its rate cap removed, passed its wholesale costs onto its customers. Bills there doubled and tripled.

PG&E and SoCal Edison still have a rate freeze. Both companies have sought permission -- thus far, unsuccessfully -- from state and federal authorities to lift the rate cap

http://www.recordnet.com/daily/news/articles/2news121000.html

-- Martin Thompson (mthom1927@aol.com), December 10, 2000


Moderation questions? read the FAQ