California Capsule: The Boy Who Cried Wolf

LCG, Feb. 16, 2001—Today is another Stage 3 power emergency in California and according to the California Independent System Operator there is the possibility of rolling outages if its hardworking staff doesn't find enough megawatts.

Cal-ISO has been saying that every day for 32 days, and after more than a month of these warnings the message has lost much of its immediacy. However, today is the day that U.S. District Judge Frank Damrell Jr. is scheduled to consider the case in which he temporarily ordered Reliant Energy Inc., Dynegy Inc. and AES Corp. to continue selling power into the California grid. According to the ISO, if that order isn't extended the wolf will be at the door.

In other news:

A group of wind, solar, geothermal, biomass and landfill gas electricity generators said yesterday evening that they have formed a creditors' committee in response to Southern California Edison Co.'s ongoing failure to pay for the "environmentally friendly, renewable power" produced by the group in California. The group claims its members are owed $210 million.

The California Public Utilities Commission at its meeting yesterday extended by six months Pacific Gas & Electric Co.'s gas supply program that uses the revenue stream from customer bills as collateral for wholesale purchases of natural gas. PG&E serves about 3.9 million gas customers.

California Gov. Gray Davis laid out plans to buy 32,000 miles of power lines from PG&E and Southern California Edison Co. during a four-hour caucus last night with Democrats. Assemblyman Fred Keeley said the Democrats discussed paying $7 billion for the 75 percent of the state grid owned by investor-owned utilities.

No one was talking about how the state would pay for the transmission lines but legislative sources say it would be through a surcharge on electric bills. Lenny Goldberg, a consumer advocate with The Utility Reform Network, said he had also been told of a rate increase, and worried it would be a "a blank check" to raise prices for the utilities' customers.

Efforts to cut the high prices PG&E, SoCal Edison and San Diego Gas & Electric Co. pay for "green" power they are forced by law to buy are meeting resistance. The utilities have been paying $170 per megawatt-hour (and selling the power for about a quarter that) and it was hoped that wind, solar and biomass generators would settle for a 50 percent reduction, but they are balking. Green power simply costs more to generate, they say.

We got a haircut yesterday from a barber who has been giving us a trim for close to 40 years. Like a lot of old folks, Aram has been socking his money away in conservative, high-yield stocks, against the day when he can no longer stand at a barber chair all day. He has a lot of PG&E, at an average cost of more than $25 per share. His investment is worth half what he paid for it and no longer has any yield at all. "Aram," we said, "for every 100 shares of PG&E you own, you have subsidized low electric rates for other people to the tune of one thousand, two hundred and fifty dollars." Luckily, he no longer uses a straight razor to trim around the ears

http://www.energyonline.com/news/articles/b16ca1.asp

-- Martin Thompson (mthom1927@aol.com), February 16, 2001