California Capsule: Benign Weather Soothes Cal-ISO

LCG, Feb. 20, 2001—With drizzles in Northern California and patchy clouds in the south – with moderate temperatures throughout the state – peak electric power loads are not expected to test the state's limited generating capacity, which means a fourth day without a Stage 3 power emergency and the possibility of rolling blackouts.

The California Independent System Operator expects a peak load today of 30,867 megawatts in the early evening, in that portion of the electricity market it controls.

Many Californians will rejoice, thinking that the state's power crisis is over, but they will be wrong. Here are some of today's reasons:

Officials of Pacific Gas & Electric Co. and Southern California Edison Co. met yesterday in Sacramento with representatives of Gov. Gray Davis to negotiate terms for the governor's proposed takeover of the utilities' transmission facilities. But not much was accomplished other than the exchange of poles-apart values for the wires. Davis spokesman Steve Maviglio said "They're filling in the numbers, crunching the numbers." The utilities wouldn't admit that much. "It's their meeting," said Jonathan Franks, a PG&E spokesman. "They invited us to attend and we were happy to oblige."

Even without considering the $3 billion to $9 billion the transmission system could cost the state, California needs a lot of cash to carry out its $10 billion plan to purchase power for the cash-strapped utilities to resell at cost. Yesterday, the state engaged J. P. Morgan Chase & Co. as lead underwriter for what will likely be the largest municipal bond issue in U.S. history. Bond issues take time and the state needs money right now to keep the lights on, but officials at Morgan said that $3 billion in "bridge" financing was not out of the question.

Spoilsports yesterday pointed out a hidden obstacle to Davis' plan to have 5,000 megawatts of new generation on-line by July. Where are you going to get the natural gas to run them? the gloomy Guses asked. Though applications have been made for new gas pipelines, the system serving California has not had an addition in more than eight years, and consumption of natural gas has grown as rapidly as that of electricity. The pipelines are running near capacity right now, experts say. Bill Wood, a gas forecaster with the California Energy Commission, said "It's going to be tight. All the ducks have to line up to make it work."

Living next door to an ailing giant may not be healthy. Sierra pacific Resources Corp., owner of Nevada's two electric utilities, reported a fourth-quarter loss because of the high price of power and natural gas. The company lost $18.2 million for the period, compared with a profit of $26.8 million last year, prompting Mark Ruelle, its chief financial officer, to say "The cost of fuel and power is close to crippling our ability to serve the needs of our customers."

http://www.energyonline.com/news/articles/b20ca.asp

-- Martin Thompson (mthom1927@aol.com), February 20, 2001