It remains to be seen whether the effort of California state regulators and the incentives in the new energy law will be sufficient to curb the appeal of California's consumer group-driven energy reregulation ballot measure in November. Unlike much of the rest of the nation, which will begin seeing cooler temperatures in another three weeks, the Southwest, including California, probably will be broiling and that won't be good for an already stressed power grid, according to Stephen Conant, senior market analyst at Massachusetts-based Energy Security Analysis, Inc. (ESAI).
Last month's high temperatures and near-record electricity demand necessitated two Stage Two power alerts in the southern half of the state. That makes Conant think a Stage Three emergency -- with resulting rolling blackouts -- may still be a very real possibility.
He conceded it would take a collection of "perfect storm" elements coming together at once -- including widespread Western heat for a sustained period, several major generators going down unexpectedly, and a transmission outage via fire or overloading -- although he thinks the key variables are all "still within the realm of possibility."
"Clearly, if you wind up with some blackouts in August or September, it will provide a lot of publicity that the people trying to repeal deregulation are looking for," he said. "This adds an interesting element to what's going on."
The ballot measure, Proposition 80, will be considered in the Nov. 8 special election. If the California Independent System Operator (CAISO) grid runs into problems, Conant does not think the reliability problems by themselves would change the direction in which the California Public Utilities Commission, California Energy Commission and the governor are all moving mostly in harmony. It could accelerate ongoing efforts to get resource adequacy rules and a capacity market for generation in place, he said. CAISO still might move up its transition to a redesigned market.
"I don't think they could speed them up any further, however, because I think they are moving as quickly as possible to get those things in place," Conant said. "Beyond the ballot initiative itself, these measures sort of underscore that something still needs to be done, and that California is not out of the woods yet."
Even with an added 2,000 MW of new capacity coming on line just before summer this year -- the first significant new capacity in two years -- and 2,000 MW due to come on line before next summer (2006), California is facing retirements of major plants, such as the environmental/court-ordered closing of the massive Mohave (NV) coal-fired power plant in which Southern California Edison Co. is the majority owner/operator. Beyond 2006, Conant said he doesn't see a lot of new generation on the horizon for California.
"There is clearly more work that needs to be done," he said. "If there are blackouts still this summer, it will put the issue before Californians this fall. Last year, there were no (Stage Two or Three) power alerts called so the issue was pretty much off the residents' radar screens."
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