California Capsule: Davis Admits Power Won't Materialize

LCG, April 4, 2001—California Gov. Gray Davis conceded yesterday that he would not be able to produce his 5,000 megawatts of new electric generation by July 1. He now says that only 4,000 megawatts of new power will be on line by the end of summer.

That's 20 percent less power, 90 days late, and may still contain more than a little wishful thinking. "We're hoping for the best and preparing for the worst," Davis said.

The governor acknowledge that there may be days of rolling blackouts ahead, warning that May and June would be the most critical time for the state's stressed power supply system. "I hope we don't have major disruptions," he said.

Davis said the next two years are critical and that California could have a surplus of generating capacity in three years, when power plant currently under construction or in the late stages of the permitting process are on line.

The governor will take five minutes to explain the California energy crisis, and mostly on how he is solving it, on statewide television tomorrow at 6:05 p.m.

Other California politicians were talking like, well, California politicians. State Sen. Don Perata, an Oakland Democrat, said the governor must take bold action. What sort of bold action? Speaking of the outside forces that have caused the state's problems, he said "If, in fact, we're being taken advantage of by a school-yard bully, we need to put a roll of pennies in our fist and cold-cock the guy."

Clear thinking was evident all over California.

When Davis made his promise to have 5,000 megawatts of new electric generation on line by July 1, he said the electricity generated by the plants would remain in California. Lawyers for the California Energy Commission say the state can't impose that requirement on developers of new power plants, even in exchange for "fast track" permitting. "We're not supposed to take protectionist action against our fellow states," said Bill Chamberlain, the commission's chief counsel. There is agreement between the Governor's Office and the Energy Commission that new plants are needed, no matter what, because the energy crunch affects the entire West.

The California Public Utilities Commission yesterday ordered an investigation into money transfers between the state's two largest electric utilities and their parent holding companies. "This order is absolutely necessary to establish the credibility for any rate hike," said Commissioner Geoffrey Brown. "We should be assured that no assets were transferred imprudently to the parent companies and no assets in the parent companies were available" to help the cash-strapped utilities.

Greg Pruett, a spokesman for PG&E Corp., said "The commission, which is probably faced with one of the greatest challenges since the state was formed in 1850, is wasting its time reviewing old ground."

Just when the plan by Davis to acquire 32,000 miles of transmission lines from the state's three investor-owned utilities appeared dead, it inched back into the news yesterday when state administration officials met with executives of Pacific Gas & Electric Co. and made an offer. Details of the proposed agreement were not available, nor was much enthusiasm from state lawmakers.

U.S. DataPort, the Internet firm that wants to build a huge server farm in San Jose, has told San Jose City Council members that its facility will include a 250 megawatt power plant, the city's daily newspaper said this morning. The server farm was reported a week ago to anticipate an electric load of 180 megawatts, a stunning amount of electric demand to throw on the table during a time of scarcity.

According to the San Jose Mercury-News, the city council was of a mood to approve the server farm but not require U.S. DataPort to provide its own power. That's the same city council that voted unanimously against allowing Calpine Corp. to build a 600 megawatt baseload power plant in a rural area on the outskirts of town.

The California Independent System Operator had not yet declared a power emergency today at 10:40 a.m., PDT, but did say in an earlier notice that is expected deficiencies in operating reserve today. The ISO also declared today a "no touch" day, meaning "don't take anything out of service to maintain it as long as it's working."

http://www.energyonline.com/news/articles/d04-1ca.asp

-- Martin Thompson (mthom1927@aol.com), April 04, 2001