THe NG Crises Begins in he West. WIll in head eastward?
Spate of Cool Weather Could Bring
Trouble to California Power Grid
By REBECCA SMITH
Staff Reporter of THE WALL STREET JOURNAL
LOS ANGELES -- California is learning there is no "off season" for the electric industry as an unexpected electrical emergency struck the state despite generally moderate temperatures. The underlying cause of the problem: tight supplies of both electricity and natural gas.
Tuesday, a top official at the agency that operates the state electricity grid said there is a "high probability" that electrical-generating plants in California could be forced to reduce their output within the next few days because of insufficient supplies of natural gas to fuel the plants. Such an event almost certainly would trigger rolling blackouts. It would be ironic if a gas curtailment were the force that finally pushed the state into blackouts -- threatened but averted all summer -- since the California Independent System Operator had assumed that it was past the worst danger as temperatures cooled.
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But a cold snap in the Pacific Northwest threatened to undo that with temperatures expected to be anywhere from five degrees below normal in Seattle to 16 degrees below normal in Denver in coming days. A dearth of rain so far this season means there isn't much water to power hydroelectric plants, putting pressure on gas-fired plants in California to meet the Northwest's needs as well as its own.
"Now we're wondering how much gas should we eat up today when it may make the problem worse next week," said Terry Winter, chief executive of the ISO, the organization responsible for keeping the state supplied with electricity.
Amid all the uncertainty, prices on California's competitive electricity auction market bumped up against a price cap of $250 per megawatt hour, no longer dropping at night. But even that price -- eight times the level of a year earlier -- has been inadequate to attract enough supply. The ISO put out a special plea early Tuesday for extra power. It then found it had to compete with utilities and generators in the Pacific Northwest that were willing to pay as much as $1,200 per megawatt hour.
There are several reasons why electricity supplies are tight. In California, nearly one-third of the state's generating capacity is shut down for repairs after operating at full capacity throughout the summer. Several Los Angeles-area plants were shut down because generators said they had exhausted the air-emission credits they need to operate. Reliant Energy Inc. said it would turn on some small units if the state's electrical problems became particularly acute, utilizing a special waiver from the local air-pollution control board.
What is more, demand just keeps climbing in the state. A still-robust economy combined with the holiday shopping season is expected to push demand beyond last year's already record levels. Edison International called on consumers not to switch on holiday lights until after 8 p.m.
The high price of natural gas, needed to fuel most plants, also complicated the picture, hitting near-record levels of $22 to $27 per million British thermal units, both in California and on the border between Washington state and British Columbia, 10 to 12 times the price gas sold at a year ago.
The California Energy Commission warned that exports of natural gas to Mexico from California are compounding the state's energy problems. That's because California already imports from outside the state 85% of the gas it consumes. The combination of greater internal demand -- much of it from gas-fired power plants running more hours -- and Mexican exports -- has strained supplies.
Natural-gas storage levels dropped to less than half the level of a year earlier, raising the possibility that gas use by power plants could be cut to protect supplies to residences. So far, that happened only in the San Diego area, where electric plants were able to switch to burning oil. |
