Acknowledging that a combination of unexpected generator outagesand sustained hot weather could create the threat of power outagesthis summer, the California Independent System Operator (Cal-ISO)launched a new alert system for gaining enough voluntaryconservation by businesses and mass consumers to ride out thepeak-demand periods. Calling it “Power Watch 2000,” Cal-ISOPresident/CEO Terry Winter said he anticipates that both short- andlong-term the state can use market-based programs to addresspotential shortfalls.

During an emergency drill and press briefing at the Cal-ISOnorthern California headquarters, Winter said the state’snonprofit, state-chartered electric grid operator is assumingnatural gas supplies will be adequate to take care of any peakdemands on the state’s electrical system that relies heavily onnatural gas-fired generation for the major part of the up to 38,000megawatts of peak power generated within the state. In peakperiods, another 8,000 to 10,000 megawatts are imported, comingmostly from hydro, coal and nuclear sources.

“Natural gas availability in the summer has not been a problemin California and we don’t anticipate any problem, so it has notbeen factored into our calculations,” Winter said. “We don’t thinkit will be an issue.”

The Cal-ISO basically is sticking with its same forecasts forweather and generation loads. Winter said he hopes the planning andpreparation the state does for the summer peaks turns out to be a”nonevent” much like its work on potential Y2K problems, notingthat the same widespread “team approach” is being applied.

According to current Cal-ISO calculations, if a shortfall doesarise, it could be in the magnitude of 1,000 MW. In response, thestate’s voluntary pilot auction program already turned up 500 MWthat large users would voluntarily curtail, and Winter said theywould try to gain the other 500 MW from additional voluntaryconservation. In addition, state investor-owned electric utilitieshave been authorized by the California Public Utilities Commissionto offer to pay large customers to curtail several hundredmegawatts if needed.

This summer and longer term, Winter said the Cal-ISO hopes themarket-based solutions can do the job. He said the market has to beallowed “to send the right price signals so adequate new generatingcapacity is built,” and their needs to be incentives for loads tobe curtailed voluntarily. At this point, Winter thinks the 12,000MW of new generation that have been proposed in California areadequate, although all of that capacity is unlikely to get built.

Winter attributes the threat of shortfalls to general economicand population growth throughout the western U.S. and not toderegulation or an inability of California to get sufficient newgeneration on line. He cited growth in Nevada over the past 10years of 51% in the overall electrical demand, and in the PacificNorthwest, 31% over the same period. That affects how muchpotential power California can import, he said.

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