In the immediate aftermath of the California Public UtilitiesCommission’s sweeping moves to stabilize the state’s electricityoperations, the regulators and the governor’s staff are sloggingthrough endless details that will have to be worked out ifcash-strapped investor-owned utilities are going to be able to paythe state and generators and still have enough left over to covertheir own costs.
The governor, whose staff claims the CPUC acted independently inunanimously granting the largest electric rate increase (about $5billion annually) in state history Tuesday, is still waiting fordata from the state water resources department (DWR) that willallow him in the next week to 10 days to determine if he cansupport the rate hike. And one of the major utilities is skepticalabout all the unanswered questions left in the wake of theregulators’ uncharacteristically swift actions.
While the regulators have provided a “welcome dose of realism,”Pacific Gas and Electric Co. CEO Gordon R. Smith said the decisionsleave key issues unresolved. They also “do not offer acomprehensive solution, fail to resolve the uncertainty of thecrisis, and may even create more instability,” he said.
PG&E listed seven questions that still need to be answered:
Similar types of detail are being sought by Gov. Gray Davis’skey advisers on the energy crisis, headed by his deputy chief ofstaff and key cabinet member, Susan Kennedy, who led a trio inputting together a media briefing and two-paragraph preparedstatement for the governor late Tuesday. The briefing hinted thatthe state’s chief executive may be softening his opposition to ratehikes, but it also concluded the CPUC’s action was nevertheless”premature.”
“This problem is bigger than one man,” one of the governor’s topaides said. “It is impossible for the governor to control all themoving parts. The problem is huge, and he is doing his best.Second, the CPUC is independent. They waited until the last minute.At that moment in time, what actions did the governor take or nottake? It would have been imprudent for him to act prematurely. Wedidn’t even know all of the ramifications of the items on the CPUCagenda.”
He added that Davis still has time to weigh in on the rateincrease, the QF problem and the DWR issues. The depletedhydro-electric supply situation in the Pacific Northwest also needsto be addressed, he noted.
The reality of greatly reduced hydro resources from out of stateis beginning to sink in among state policymakers as summer nears.Cal-ISO, for the second consecutive day yesterday declared a StageTwo power alert because 11,000 MW of power was not available. TheISO blamed the shortage on continuing below-normal supplies fromthe drought-shrouded Pacific Northwest, the loss of another 1,000MW from the southern region and the loss of in-state plants forplanned and unplanned maintenance.
A soon-to-be published economic analysis by two independentenergy consultants places the real crux of the California powercrisis on a combination of “sharply higher-than-expected demandgrowth and the savage downturn in hydroelectricity supplies.”Samuel Van Vactor and Frederick Pickel did the analysis in aupcoming paper, “(De) Regulation Follies,” in which they citeColumbia River flows being projected at only 54% of normal thisyear.
The availability of hydro power, along with how fast all of thestate’s QFs can be brought back online will have a “huge impact” onthe DWR’s power bill for the rest of the year, the governor’senergy advisers emphasized in briefing news media late Tuesday viaa conference call.
Van Vactor and Pickel cited hydroelectric supplies from thePacific Northwest last summer as being down on average by 6,267MW/hour.
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