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California Drought Carried Big Energy Impact

California's 2007-2009 drought, one of the severest in its history, carried a heavy impact on the state's energy markets both from an economic and environmental perspective, according to a report released by the Pacific Institute. Natural gas played a central role, the Oakland, CA-based nonprofit said.

Electricity users paid a direct cost estimated at $1.7 billion during the three-year-period due to substantially decreased hydroelectric supplies and corresponding higher costs for alternatives, mostly gas-fired generation. Indirectly, an estimated 10% increase in carbon emissions (13 million tons) was experienced in the state, said the three authors of "Impacts of the California Drought from 2007 to 2009."

While the research said the drought -- the 12th driest three-year period in recorded climate history -- most severely impacted the state's $30 billion-plus agricultural industry, the state's hydroelectric power declined substantially during the three years, accounting for well under 10% of California's power supplies in that period, compared with historic averages at the 15% level.

"The difference is typically made up by electricity from natural gas facilities," said the Pacific Institute study. "[Our data] demonstrates that the growth in overall electricity production has been dominated by increases in natural gas generation. Coal generation has been declining and renewable and other in-state production has been increasing, but at a slower rate than natural gas production."

In the 2007-09 drought, about 30,000 GWh of hydropower was lost and made up with additional gas-fired generation, the report said. Applying a levelized cost for in-service combined-cycle gas-fired generation at 11.5 cents/kWh and a similar levelized cost for hydroelectric supplies at 6 cents/kWh, the researchers estimated the added $1.7 billion cost for California's electricity users during that period.

Noting that its estimates for pollution volumes were conservative, the report said it used the assumption that all of the gas-fired generation came from the relatively cleaner, lower-polluting combined-cycle plants. "The economic costs of conventional or advanced simple-cycle gas systems are three to seven times higher than the costs of combined cycles, and emissions also are higher due to lower efficiencies of combustion," the authors said.

"Thus, some of the drought's most direct and costly impacts were to air quality and California electricity ratepayers."

Some of the report's recommendations are to do more to wean the state away from increasing dependence on gas-fired power generation by expanding conservation/efficiency programs, diversifying the state energy portfolio into more renewable energy sources, and expanding transmission line import capability so more renewable-based generation from out of state can be tapped.

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