Bulk electricity supplies should be adequate to meet peak-demand this summer in California, but the situation is fraught with “what ifs” that caused the California Energy Commission (CEC) Friday to recommend “close monitoring and prudent use of electricity resources” in its updated supply/demand outlook.

Two changes have occurred since the CEC’s forecast in January: (a) demand growth has run higher than previously forecast, and (b) spot market import capabilities are reduced.

“While supplies are expected to be adequate under normal (one-in-two-year) weather, on very hot days (one-in-ten-year temperatures) statewide projected operating reserves may drop as low as 4.8%, which could prompt calling on voluntary conservation programs, interruptible-load programs and other emergency response programs,” the 12-page CEC report concluded.

The hydroelectric situation, while below normal, is not supposed to present any major problems, according to the energy commission’s updated analysis. “Since the peak demand occurs during relatively few hours in the summer, storage levels in reservoirs are expected to be sufficient during these hours,” said the report, specifying that state reservoirs were 102% of normal the end of April and 95% of normal the end of May, meaning in the summer hydro production should be around 85% of average.

Reserve margins are at the 12% level on average, at 8.2% if it is assumed no spot market supplies are available, and under 5% when an “extremely hot (one-in-ten-year)” assumption is used, the report said.

Two assumptions not made in the beginning of the year were the level of robustness in the state’s economic turnaround and the now-prolonged planned maintenance outage of the Pacific Northwest DC transmission line. Average demand growth was 3.5% the past three months, the CEC report said, compared to an estimate in January of 2.6%. The difference represents an additional 369 MW of peak demand for the California Independent System Operator’s (CAISO’s) territory and 565 MW for the state’s entire grid. Similarly, the Northwest DC outage cuts 750 MW of potential import potential during peak-demand times.

Other major assumptions are: “dry” hydro conditions with a “one-in-five-year” probability; the aging thermal power plants are derated to reflect their reduced dependability; no catastrophic natural gas supply or electric transmission events or failures happen; and no “significant gaming (manipulation) of the CAISO decrement market occurs.

“Summer supplies are expected to exceed summer demand under normal conditions both statewide and for CAISO,” the CEC report concluded. “While rotating outages or actual blackouts are unlikely in California in 2004, it does not mean that cannot happen. Extreme weather conditions, equipment failure, human error in forecasting, or scheduling of daily resources may result in localized supply shortages.”

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