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Calpine Corp. Message Board

  • ChanceIs ChanceIs Mar 13, 2003 7:13 AM Flag

    Water Short in Pacific NW Worries Cali

    Its the last line that really gets me: "But because energy rates are locked in by state regulators, consumers would not be affected."
    Is this 2000 all over again??? Is that why posters keep referencing "Ground Hog Day" - the movie. Cali did fix this problem didn't they?
    Water Shortage in Pacific Northwest a Worry in California

    By Michael Bazeley, San Jose Mercury News, Calif. -- Mar. 12

    State energy buyers are starting to worry about a water shortage in the Pacific Northwest, where unusually dry weather is threatening to crimp the supply of hydroelectric power that helps keep the lights on in California.
    River flows in the Columbia River Basin, which affect how much water is available for hydroelectric power, are expected to be at just 70 percent of normal through July, according to the National Weather Service in Portland, Ore.

    So far, energy officials do not think the shortage will directly affect California utility customers. There are probably more than enough other power sources -- including recently built power plants -- to prevent rolling blackouts.

    "Overall, I think we'll meet our demand," said Susanne Garfield of the California Energy Commission.

    Nonetheless, the people responsible for making sure homes and businesses have enough power on any given day are not looking forward to a late spring and summer with a shortage of Northwest hydroelectricity.

    "There just isn't as much water as we'd like to see up there," said Gregg Fishman, spokesman for the California Independent System Operator (CAISO), which manages the state's power grid. "It's not looking too good. California is reliant on Northwest power for a significant amount of power."

    California has generally been able to depend on about 3,500 megawatts of hydroelectricity from the Northwest, Fishman said. Demand in California fluctuates wildly depending upon the time of day and the weather, from as little 19,000 megawatts or less to 50,000 megawatts or more on hot days.

    "Yes, there's been progress with new plants coming on line," Fishman said. "But we don't know how much hydro we might lose."

    The shortage of hydroelectric power could add to power woes this summer if California and other western states experience a widespread heat wave, driving up demand for power.

    Fishman stressed that CAISO's outlook on the Northwest power situation is preliminary. CAISO officials will have better information when they compile their summer power outlook in late April or early May.

    The root of the problem is dry weather.

    "We're not seeing normal or above-normal snowpack over the last few years," said Andy Bryant, a hydrologist with the National Weather Service in Portland.

    Storms expected to roll across the West later this week will help some. But the region is quickly moving out of its prime rain and snow season.

    Officials at the Bonneville Power Administration in Portland said they are trying to figure out how to meet Northwest energy demands and manage river flows without harming migrating salmon -- all with far less water.

    "I can tell you this, we're not going to have as much surplus power to sell to California, or anyone else," said Mike Hansen, a spokesman for the BPA, which manages 31 federal dams along the Columbia and Snake rivers.

    At the worst, officials said, the shortage of hydroelectric power might drive up wholesale prices for other types of power. But because energy rates are locked in by state regulators, consumers would not be affected.


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    • Interesting weather pattern. Lots of moisture. Snow above 5,000 ft, but, low lying snow getting spanked. Flood watched in western washington/cali.

      Will crush prices in the short term, but bullish for summer. Especially Mid Auggie/Sep/Oct. If we get a little heat.


    • No. The problem is not fixed.

      The problem is that huge increases in wholesale prices have no effect on reducing consumer demand. Because consumers pay fixed, regulated rates, even if wholesale rate go up 1000%. So the normal price/supply/demand mechanism has been disconnected. Even when rates went up 500%+ in 2000 the CPUC (California Public Utilities Commission) denied utilities the necessary rate increases to reduce demand.

      • 3 Replies to bigfancpn
      • the fact that CA consumer prices are fixed but wholesale prices fluctuate with the market is bad public policy but good for Calpine. Consumers have no incentive to conserve, demand is high, wholesale prices rise. The loser the the local distribution company which is buying at market but selling at low fixed rates. This is what killed Pg&E in the last crisis.

      • >>>Even when rates went up 500%+ in 2000 the CPUC (California Public Utilities Commission) denied utilities the necessary rate increases to reduce demand<<<

        Sounds like a job for load-shedding (aka rolling blackouts), the ultimate demand reducer.

      • Thanks for the update. I trust you but I find it hard to believe.

        The whole nation looked at the Cali energy crisis and kind of collectively sighed "That's not very smart, letting wholesale float and pegging retail." I would have thought that that was what would have been addressed first. But again we are dealing with California.

        Maybe they are too busy bashing RRI, MIR and the FERC to figure out they should fix the core problem. Maybe they are counting on FERC imposing price caps again to bail them out of trouble if we get a repeat of '00-'01.

        I still say one of the funniest things going today is Gray Davis bashing FERC while asking him to seize the $9 billion from the merchants on Cali's behalf. Gray must be awfully confident that Cali will not have a second crisis and need FERC's intervention again. In case Gray didn't notice, Cali went for Gore in '00 and from what I can tell will not go for Bush in '04. Why does the FERC owe him anything, aside from common decency which Gray certainly doesn't lavish on the FERC.

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