As state and federal officials last week were assessing the potential for the drought to impact hydroelectric power this summer, California Independent System Operator (CAISO) on Thursday issued a conservation alert because of a shortage of natural gas supplies that underpin much of the state’s power generation.

The state’s power grid operator said there were constraints on natural gas supplies coming from the Southwest, the Rockies and Canada. Statewide conservation would free up both natural gas-fired power along with hydropower (see related story).

The constraints on gas deliveries were part of the heavy pull on natural gas and gas storage caused by extended extreme cold across much of the northern part of the United States and Canada. California depends on natural gas for the vast majority of its electricity generation and more than 90% of its supplies come from out of state.

Hydropower has been another big electric power contributor since the closing of the San Onofre Nuclear Generating Station (Songs) last year and various state restrictions on oil and coal burning in favor of renewable wind and solar power.

With 14% of the nation’s hydroelectric supplies coming from California, the state’s worsening drought conditions drew the attention of the U.S. Energy Information Administration (EIA) on Thursday following dire reports a day earlier from most of the state’s major water measurement locations.

“Forecasts for the water supply at nearly every major water gauge in the states of California and Nevada were less than half of average seasonal norms [on Wednesday],” the EIA said in its “Today in Energy” report. “The water supply situation has not materially improved since [California Gov. Jerry Brown] declared a state of emergency [see Daily GPI, Jan. 8].”

EIA also said the driest December ever recorded left nearly 60% of California in extreme drought conditions.

Despite the dire predictions for the state’s enormous agriculture industry and for various water districts, energy officials and utilities are relatively sanguine about their prospects for supplying energy, particularly electricity, this summer.

“This year, both renewable and natural gas-fired generation resources should not be affected by the drought,” said a recent California Energy Commission analysis (see Daily GPI, Jan. 31). The report was issued at about the same time that late January and early February storms were causing analysts to revise downward their forecasts for the amount of natural gas that would be left in storage at the end of the winter (see Daily GPI, Jan. 24).

It’s not time yet to count out hydropower, however. On Thursday, snow and rain hit the Pacific Northwest and most of California, and forecasters said the storm system may provide up to six inches of rain and three feet of snow in the higher elevations of the Sierra Nevadas before it ends over the weekend. This was described by forecasters as easily the heaviest period of precipitation so far this winter in Northern California. It’s the snowpack that counts.

Noting that half of the rainy season that normally runs through April still lies ahead, a spokesperson for San Francisco-based Pacific Gas and Electric Co. (PG&E) told NGI Thursday that the San Francisco-based combination utility is working to generate less power now so “we can have more power in the summer during peak demand periods.”

Southern California Edison Co. (SCE) officials said it is “too early to accurately predict” the total snow pack available for hydro generation. SCE continues to monitor water levels as they affect its hydroelectric operations, which are about 5% of the utility’s generation portfolio. It is working with state/federal agencies “to maximize available water to generate hydropower,” a spokesperson told NGI.

A note from Credit Suisse analysts Thursday also emphasized that it is too early to declare a dire hydroelectric situation as the region is only halfway into the “snow pack cycle.” Snow pack generally contributes 15-20% of West Coast hydro supplies, according to Credit Suisse.

Most of PG&E’s large reservoirs, which are part of the largest private-sector hydroelectric system (4,000 MW) in the nation, are at near normal for this time, the spokesperson said. “That is because we have been managing our water supplies in a way that we’re not generating as much hydropower now so we’ll have more to call on in the summer.

“We’re fortunate in having a fairly diverse portfolio of power to draw upon, including natural gas impact, and wind and solar, the spokesperson said.

“In essence, by voluntarily conserving power, we are going to reduce the cost of replacement power later when we enter the peak-demand period in the summer.

“The replacement power generally will be purchased in nonpeak times when market power is less expensive,” said the spokesperson, noting that in a typical year the large hydro system generates about 10-15% of the power serving the overall utility load. In addition, about half of the power mix is coming from power purchased on the spot market. Overall, about half of the state’s electricity is generated by natural gas.

At the other end of the state, San Diego-based Sempra Energy’s San Diego Gas and Electric (SDG&E) utility gets less than 1% of its power supplies from hydro sources. Consequently, the combination utility is not concerned about the worsening drought conditions.

An SDG&E spokesperson said the utility has an additional 500 MW of renewables coming online this summer from two solar and one wind project in Imperial County. And a similar 500 MW chunk of renewables is scheduled to come online in 2015.

“Absent output from in-state hydroelectric resources, [the California grid operator] has tended to import more power from neighboring regions as well as increase output from thermal [gas-fueled] sources of generation,” EIA said. “Most of the imported power comes from hydroelectric dams located in the Pacific Northwest.”

Barclay’s Capital estimates that weak hydropower output could boost California’s natural gas demand by about 300 MMcf/d compared with last year. With lower water levels in Washington and Oregon, the total impact of low water supply on natural gas use in the Pacific Northwest and California could come to about 400 MMcf/d in 2014 versus 2013 on an annual average basis.