Never mind, here's one that's only 4 days old. One of those "the mind reels" variety, in my view. See bolded para at end.
POWER POINTS: California Had Good Summer; Can It Last?
By MARK GOLDEN
A Dow Jones Newswires Column
NEW YORK -- The good news is that California's electricity usage is growing faster than expected, possible evidence of an economic rebound, and the state handled the high demand smoothly this summer. The bad news: Rising power consumption brings the state that much closer to the day when demand may close in on supply, as happened in the 2000-2001 energy crisis.
Electricity demand in the California Independent System Operator's area topped 40,000 megawatts 26 days this summer, compared with six times in the summer of 2002 and none in 2001, the ISO said in a press release Thursday. Yet average power prices were relatively low, and the ISO didn't have any electrical emergencies during the summer.
Perhaps most impressive - and not in the press release - customers of Edison International (EIX) utility Southern California Edison set a record for peak usage on Aug. 12 and then again on Aug. 14, ISO spokeswoman Stephanie McCorkle said. PG&E Corp. (PCG) utility Pacific Gas & Electric's customers didn't set any records, but they came impressively close given that Northern California has been at the center of the technology bubble's collapse.
The contributions made to higher power use by weather, slackening conservation habits, more electronic equipment in modern life and the economy aren't yet known. California's weather was warmer than normal this summer, but not excessively so.
Back To The Crisis
Clearly, California's electricity consumption is growing faster than most people expected, which brings into sharper focus a debate that has been going on in the state for a while: How long will the current cushion of excess generation last?
"There is a meaningful risk of another supply shortfall in the State within only a few years," the Bay Area Economic Forum, which represents many Silicon Valley companies and Northern California municipal governments, said this spring.
The California Energy Commission shortly thereafter issued a somewhat more optimistic outlook, and PG&E on Friday said it's confident supplies will remain ample through 2008-2010, thanks in good part to excess generating capacity in neighboring states that California can import.
Still, even those numbers show why there might be cause for concern. According to an update from the California Energy Commission on Monday, some 8,300 megawatts of new capacity has come on line in California since spring 2001, which is substantial in a 55,000-megawatt state.
At the same time, though, some 5,000 megawatts of old plants have been retired or will be in the next three years. A few turbines still under construction can be counted on for a total of 2,000 megawatts more capacity in the next two years. Then add just 600 megawatts that municipal utilities will go ahead with in.
After that, forget major new plants for a while. Virtually none of the U.S. merchant power companies have the cash to build the plants that have been proposed, and current market prices don't justify other companies doing so. Besides, permitting and the public vilification of plant owners in California make it just about the last state in the country where a merchant power company would invest.
Must Offer, Might Pay
Currently, generators in California must offer all unsold capacity to the ISO at cost plus a small profit, as ordered by the Federal Energy Regulatory Commission. Most plant owners can't recover anything close to their capital investment and fixed costs selling power this way.
"It's like making a taxi driver wait outside your house 24 hours a day, but you won't pay him for the waiting time, just for the meter when you get in the car and go someplace," said Jan Smutny-Jones, executive director of the Independent Energy Producers Association in California.
Unless and until California starts paying plant owners for standby capacity, all merchant plants that aren't brand new and needed at least two-thirds of the time could be shut down. That's several thousand megawatts of capacity.
What are the prospects of California's changing its rules to fair treatment of generators, which in turn would encourage new investment? The Federal Energy Regulatory Commission has promised to revisit the "must offer" rule, but the ISO is fighting any big changes.
Like rising demand, the must-offer rule could create new shortages quickly, because plant owners will shut down plants completely to get out of fixed costs. But in the short-term, the rule keeps power costs artificially low.
In California, at least until the recall vote in 11 days, the short-term is king.
-By Mark Golden, Dow Jones Newswires; 201-938-4604; mark.golden@dowjones.com |
