Even a mildly hot summer in California this year could bringall-time high power price spikes and could put a severe strain ongenerating capacity, according to energy officials in theCalifornia General Services Department (GSD). Based on state datanow available, GSD officials told a California energy conferencelast Thursday prices could be two to three cents-per-kwh above lastyear’s averages for the three traditionally hottest months,although last year was designated as a “cool” summer.

Based on data from California’s independent system operator(ISO) and power exchange (PX) the average prices are projected toincrease to between 5.4 and 6.2 cents/kwh in July, August andSeptember, compared to averages in the 3.7- to 4.1-cent range lastyear in the same three months, said Doug Grandy, chief of GSD’senergy assessments section which makes bulk energy purchases formajor public sector facilities in California.

Price spikes that reached the $150 MWh (15 cents/kwh) and$200-per-MWh (20 cents/kwh) levels the past two summers could goall the way to the current cap of $750/MWh, Grandy said.

Under the current state electricity restructuring, there is no”demand-responsiveness” for state agencies which have beenaggregating their loads for natural gas in a $45 million buyingprogram for the past 13 years.

“Right now, state agencies are not able to react to those pricefluctuation for electricity (because utility rates are frozen for atransition period still ongoing), Grandy told the meeting offacility managers for large public sector operations. “There is noreal-time electricity opportunity. Obviously this has to change, orthere won’t be a competitive marketplace. There need to be a lotmore things in place to go beyond where restructuring started(March 31, 1998).”

Richard Nemec, Los Angeles

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