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CA Power Authority Releases Draft Plan for Future Energy Projects
Citing the growing uncertainty surrounding future development of energy projects in the wake of Sept. 11 and the Enron debacle, California’s neophyte state power authority released the latest draft of its emerging plan to use a wave of new joint venture renewable energy projects over the next five years to build a power generation reserve margin in the 15-20% range. The new agency’s working draft identifies a number of “gaps” in the state’s electricity market that it suggests the new authority can attempt to help fill.
Part of the draft report’s intent would be to have the state legislature expand the power authority’s purview more clearly to include transmission infrastructure upgrades and use of eminent domain if necessary to get new infrastructure built.
Using its state legislative-mandated $5 billion in borrowing authority, the California Consumer Power and Conservation Financing Authority should add 8,000 MW of new electric generating capacity by 2006, according to the latest draft released for public comment of the power authority’s plan, “Clean Growth: Clean Energy for California’s Economic Future.” The report is due Feb. 15 to the state legislature under the original legislation that created the new power authority last year.
To add to its political appeal, the current draft promises extraordinary economic benefits if California pursues its “clean growth” initiatives over the next 20 years. The alleged benefits include: $10-30 billion of new economic development within California, 5,000-10,000 new jobs, lowering overall electricity costs by $20-40 billion and lowering natural gas purchases over the period by $10-15 billion.
Faced with the nation’s and the energy industry’s current economic uncertainties, it is “even more imperative” that the new power authority ensure adequate reserves in 2002-03, the current draft stated. “(The power authority’s) ability to accelerate the use of clean resources to enhance reserves provides good insurance for the state’s electricity reliability,” an executive summary in the current 39-page draft stated.
Overall, the current draft would recommend that the six-month-old state entity take aggressive steps, supporting conventional, renewable and distributed generation projects, along with conservation and demand-side management as broadly mandated in the legislation establishing the state authority. But it also goes further, suggesting that the state authority should seek expansion of its mandate from the legislature this year to allow it to finance new electric transmission facilities and clarification of its eminent domain authority, as identified by a joint legislative audit committee report completed last November while the state lawmakers were in recess.
Among the problems needing attention are five listed in the opening of the draft report:
The power authority draft says that “aggressive investment in energy efficiency and renewable energy resources” forms the “heart of a cost-effective energy resource investment strategy,” which is the intent of the agency’s ultimate report to both the governor and state lawmakers.
Using demand growth estimates of 7,000 MW through 2006 from the California Energy Commission, the staff draft notes that the new agency should plan to add 8,000 MW as a means of building a 22% reserve margin for California’s electricity generating capacity over the next five years. The draft says the added megawatts can be produced through what it calls a “business-as-usual” approach or a “clean growth” strategy. The latter is clearly what the draft plan recommends.
The draft suggests that the alternative strategy could use increased efficiency, load management, distributed generation and renewable sources of power to provide nearly all of the added generation capacity. Otherwise, the report says an additional 10 to 14 new natural gas-fired power plants will be required.
An appendix to the current draft report lists 53 letters of intent that the state power authority under its alternative energy-focused chairman, S. David Freeman, has already signed covering 2,438 MW of power, most of which (1,845 MW) is covered in 21 potential wind deals with 11 different operators, including two potential deals with Enron Wind Development (333 MW). The 31 other letters of intent are for biofuel (250 MW), landfill/biogas (29 MW), and geothermal (315 MW).
In citing its initial future action steps, the power authority draft plan notes that overall the investment strategy must be “implemented in phases, and it will involve actions by other public and private-sector entities.”
In the first few months of this year, the power authority will push specific reliability projects in what it calls “transmission constrained areas,” will specifically address the well-known Path 15 bottleneck on the California transmission grid and will work with other state energy agencies to pursue various conservation, energy efficiency programs and distributed generation on public sector buildings and facilities.
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