Making himself a domestic energy diplomat moving betweenmeetings in Washington, DC, and the West, Energy Secretary BillRichardson last week supported the need for a western regionalwholesale power price cap as he extended for another week hisearlier emergency order requiring generators and marketers to makepower available to the continuing tight California market to avoidthe threat of rolling blackouts. The order, which was first issuedon Dec. 14, expired Tuesday at midnight. The new order will remainin effect until Dec. 27, unless modified.

“We continue to carefully monitor the situation in California.Electricity supplies are tight and the reliability of the grid maybe endangered,” Richardson said. “We don’t take emergency orderslightly, but we must be in a position to react quickly andresponsibly.” However, “we cannot continue this [practice]indefinitely — it is not the true long-term solution as marketforces should dictate price.”

The emergency order requires that, if the California IndependentSystem Operator (Cal-ISO) certifies there is an inadequate supplyof electricity, certain power suppliers would be required to makepower available to the ISO if they have power in excess of theamount needed to satisfy service to firm customers. Those supplierswho provided power to the California Power Exchange (Cal-PX) andthe Cal-ISO between Nov.14 and Dec. 14 that have available firmcapacity would be subject to the order.

The Cal-ISO is required to notify each supplier subject to theorder of the amount and type of service requested by 9 p.m. EST onthe day before the requested service. The ISO must allocate therequests in proportion to the amount of each supplier’s availablepower. The price for the power will be set by an agreement betweenthe Cal-ISO and the supplier. If no agreement is reached, FERC willset a just and reasonable rate at a later date.

Twice last week the Cal-ISO invoked Richardson’s emergency orderwith reserves dropping due mostly to in-state transmission problemscausing potential shortfalls centered in the northern half of thestate. California already faced the prospect of rolling blackoutsbecause its reserves dipped below 1.5% at one point earlier thismonth.

Lack of sufficient generation in northern California, along withinability to get more supplies from the Pacific Northwest”necessitated the action,” the Cal-ISO said in a prepared newsannouncement. In addition, for almost a week, a major transmissionline carrying power from the south to the north has been overloadedand unable to carry additional supplies, although they are nowavailable from generators that have come back on line after plannedand unplanned maintenance.

While conceding he was disappointed that FERC a week earlier hadnot imposed a regional wholesale cap, Richardson said that the”only way to bring sanity to the electricity markets in theshort-term” is through a regional ceiling on bulk power prices.

“This continues to be a dynamic situation that has beenworsening over the last three weeks, and that is particularly trueof hydro-electric resources,” said Cal-ISO’s COO, Kellan Fluckiger,who noted that Pacific Northwest sources are already using nextFebruary’s water to supply power to California. Some plants arethreatened with running out of water.

Richard Nemec, Los Angeles

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