FERC asked to help with California energy crunch

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FERC asked to help with California energy crunch Friday, 8 December 2000 20:50 (ET)

FERC asked to help with California energy crunch By HIL ANDERSON, UPI Chief Energy Correspondent

LOS ANGELES, Dec. 8 (UPI) -- The agency that oversees California's increasingly strained power grid turned to Washington for help Friday by asking the Federal Energy Regulatory Commission for permission to pay prices above their self-imposed $250 price cap for much needed supplies of electricity.

The California Independent System Operator filed an Emergency Tariff Amendment 33 request with FERC Friday afternoon that would permit electricity buyers in the state to pay above the current limit of $250 per megawatt hour for electricity to be delivered immediately to the state's system.

Rising demand due to cold weather on the West Coast coupled with maintenance projects that have a number of power plants offline has made it increasingly difficult for the state to import enough electricity from other states.

"California ISO has recently been placed in the position of having to negotiate prices for power in real-time and is finding it increasingly difficult to manage these negotiations while at the same time balancing supply and demand -- causing significant risk to the California ISO's ability to maintain reliable control of the power grid," Cal-ISO said in a statement.

The price tag for electricity purchased in California during the first five days of December averaged $5 million a day, Cal-ISO said. Thursday's bill, however, totaled $81 million.

Under the request made to FERC, more than $250 may be paid for each megawatt hour, although the supplier would have to provide documentation that their generation costs have made it impossible to sell the power for below $250.

The supply squeeze has caused Cal-ISO, the agency that oversees the state's wholesale power transmission system, to issue a Stage Two Power Alert every day this week as power reserves drop to 5 percent of total capacity. The alert kicks in a program that requires large commercial, industrial and institutional customers to shut off lights and air conditioning and otherwise slash their electricity consumption.

The situation earlier this week prompted Cal-ISO and the state's major utilities to publicly urge residents to shut off computers and appliances such as dryers and dishwashers during the peak demand hours of early evening, and to leave their Christmas lights off until after 8 p.m., a full three hours after sunset.

The situation worsened Thursday night when reserves fell below 1.5 percent, triggering the state's first Stage Three alert. Although Stage Three alerts include plans for "rolling blackouts" that would shut off power to blocks of residences for an hour at a time, the state managed to get out of the jam with the lights still on.

Weather forecasts for the weekend were relatively mild. However, a coldwave was expected early next week over much of the nation, including California where night temperatures were expected to dip into the low 50s inthe Los Angeles area.

Cal-ISO's request to FERC came a day after San Diego Gas and Electric Company asked the agency to reinstate a price cap on natural gas imported into the state of $10 per million BTU. Such imports on the spot market were running at around $42 per million BTU in Northern California and more than $50 in Southern California.

January natural gas futures on the New York Mercantile Exchange climbed 21.1 cents Friday to $8.584 per million BTU.

SDG&E said natural gas cost around $3 per million BTU last December, and the soaring prices were both adding to their electricity generation costs and boosting residential gas bills from $37 per month last year to around $70.

"We are concerned that our customers continue to face such high energy prices," said Edwin Guiles, president of regulated operations for Sempra Energy, the parent of SDG&E. "SDG&E has been working to blunt the impact of high natural gas prices. However, we still cannot account for the high cost of gas delivery to the state border. We believe FERC needs to act now." -- Copyright 2000 by United Press International. All rights reserved.

http://www.vny.com/cf/News/upidetail.cfm?QID=142880



-- Martin Thompson (mthom1927@aol.com), December 08, 2000


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