California Sells Surplus Power At A Loss : LUSENET : Grassroots Information Coordination Center (GICC) : One Thread

California Sells Surplus Power At A Loss LOS ANGELES (AP) 7.24.01, 6:45a --

State officials sold excess electricity at a loss of nearly $14 million in the first 16 days of July -- roughly 4.5 percent of the total amount the state spent on power during that period.

According to the Department of Water Resources, the state purchased 3.5 million megawatt-hours at an average price of $118 per megawatt-hour. It sold off 177,000 surplus megawatt-hours at an average price of $36.95 per megawatt-hour.

Industry officials told the Los Angeles Times it is routine for utilities and electric companies to at times either sell power at a loss, work out an exchange or give it away when they find themselves with surplus power. However, some say this is an indication that the state government does not belong in the power business.

The sales of surplus power "get to the issue of, do these people really know what they're doing? Are they really competent to be managing this to the lowest cost for the ratepayers?" said Assemblyman John Campbell, R-Irvine. "It reinforces to me that we should get the state out of doing this as soon as practically possible."

Department of Water Resources Director Thomas Hannigan disclosed the details in response to an inquiry by Campbell.

Assemblyman Roderick Wright, D-Los Angeles, said he did not see a problem with DWR's power sales.

"Right now the summer is cool," said Wright, who is also chairman of the Assembly utilities committee. "If this had been a normal July, we would have used all that power."

Department of Water Resources officials expect the sales to stop if temperatures heat up later this week.

Department spokesman Oscar Hidalgo said the sales show that the water department has stabilized the state's electricity market. The average price the department has paid for a megawatt-hour is falling, from $271 in May to $119 in June to $89 so far in July.

Since January, the state has spent more than $8 billion buying electricity for the customers of three financially ailing utilities -- Pacific Gas and Electric Co., Southern California Edison Co. and San Diego Gas and Electric Co.

The state had to take over buying electricity to keep the state's lights on after federal energy regulators ruled that only creditworthy entities could buy electricity.

-- PHO (, July 24, 2001

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