California may have to get in the natural gas business to fuelall of the added 5,000 MW of generation capacity Gov. Gray Davis is promising by this summer, the team of industry and state officialsleading the effort said Tuesday in a conference call with newsmedia. It was acknowledged that most of the added 5,000 MW expectedis gas-fired, and in many cases getting the added capacity onsitewill take more air emission changes and greater plans for fuelsupplies.

“We recognize there are going to be additional demands placed onthe state’s gas supplies, plus knowing we have run into problemswith gas deliveries to existing plants, clearly means that we aregoing to have to do something to make sure we understand what theproblems are with gas. But I can’t rule out the state gettinginvolved in natural gas purchases until we have completed theplanning for this additional generation,” said Larry Hamlin, aSouthern California Edison generation executive on loan to thestate to head up bringing new generation plants online. “We knowthat the gas situation is one of the areas on which we are going tohave to give high priority. The California Energy Commission, withwhich I am working on this assignment, has indicated that therehave to be ways to increase storage or do something to try tofacilitate the delivery of gas for peaking requirements.

“We know it is a problem and are going to try to designsomething to address those issues.”

Hamlin noted that some 1,300 MW of new peaking capacity isincluded in the total, which is made up of 37 separate units spreadaround the transmission grid, most of which have not been built asyet. Another 600 MW involves units now offline that are old andwill be re-started, such as units at AES Corp.’s Huntington Beachpower plant.

The governor’s generation team admitted that as many as 4,000 MWof the goal, or about 80%, was in the pipeline or in existing butidle plants, before the governor announced his latest push foradded generation. For example, 1,300 MW will come from three newplants that have been under construction for the past 18 months,with a targeted start some time in the mid part of the year.

Making the added capacity even more critical, Hamlin confirmed,is the expectation that there will be less power to import from thePacific Northwest this summer. It was supplies from that regionlast summer dropping considerably from 1999 that caused the supplycrunch that helped create the wholesale price spike throughout theWest.

While plans were being outlined by the governor’s generationrepresentatives, which also include his environmental secretaryWinston Hickox, who has been asked to cut through environmentalpermitting processes; and Gary Heath, executive director of the stateElectricity Oversight Board; another part of the state energyapparatus, the grid operator, Cal-ISO, was straining to avoid rollingblackouts in the face of losing a major generation plant from itsportfolio (see separate report, thisissue).

Most of the added new generation will be under contract to thestate water resources department, which at this point thegovernor’s team thinks will eliminate any concerns about futurepayment for the power. About 1,100 MW of the peaking generationalready under contract to Cal-ISO has been signed up and is beingtransferred to the state water agency, according to Gary Heath.These are three-year contracts for the peaking power.

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