San Diego Business Journal

Does the Golden State have enough electricity to make it through the summer? The California Energy Commission thinks so. The California Independent System Operator doesn't.

It may be a case of seeing the glass half empty or half full.

The CEC announced Nov. 20 that California should have enough power to meet its electricity demand next summer , unless the state experiences extraordinarily hot weather.

That contradicts an earlier report issued by the CalISO, the nonprofit agency which oversees the state's power grid. CalISO believes the state may have difficulty meeting its energy needs next summer.

The CEC's study released Nov. 20 took into account the fact there are new power plants coming online, while conservation measures are helping to reduce demand. That makes the outlook for next summer "better than expected."

The study set out to count how much electricity demand and supply there would be in the summer of 2001, looking at every power plant and source of electricity available to the state. This helps provide a realistic appraisal of where California stands next summer, said Steve Larson, executive director of the Energy Commission.

All In The Numbers

Peak electricity demand was projected using typical and extreme temperature scenarios. Under typical temperature conditions, next year's electricity peak demand will be 47,266 megawatts , 220 megawatts less than last summer because of new energy conservation initiatives, he said.

A warmer than normal summer means the electricity system will require 48,845 megawatts, while under extremely hot temperatures, which has a 1-in-10 year likelihood of occurring, the state would require 50,068 megawatts, Larson said.

Add to that "operating reserve" requirements, under which the state must maintain an additional 2,200 to 3,000 megawatts demand in order to keep a 7 percent margin, and the amount of megawatts California will require rises to 50,303, 51,882 and 53,104 megawatts, respectively. The state will have expected resources of about 52,550 megawatts, he said.

Larson added that an additional 1,888 to 3,087 megawatts of potential generation is currently under development and may be available for part or all of the summer.

California's electricity demand is growing at 2 percent per year. To ensure there are adequate supplies of electricity to meet future demand, the Energy Commission is meeting that demand with additional power plant projects, he said.

Six New Plants Approved

Since restructuring began in March 1998, the commission has approved six major power plant projects with a combined generation capacity of 4,708 megawatts. Also, another 15 electricity generating projects totaling more than 7,000 megawatts are now before the commission, Larson said.

Shames said the report didn't live up to its billing. A report from the California Independent System Operator, released just a few days earlier, had stated that California would have difficulty meeting its targets for electrical capacity.

Both reports came up with similar figures, but interpreted the conclusions differently. The CEC was hoping for a best-case scenario, while the ISO warned that if temperatures climb, or something unexpected occurs, that could lead to problems, he said.

"(The CEC) were saying, 'The glass is half-full.' The ISO's seeing the same picture, saying, 'The glass is half-empty.' But they're both essentially agreeing that the glass is so small, it's not going to sustain California this summer," Shames said.

It could be a close call, he said.

Shames pointed out that the CEC report said nothing about how electricity rates would be affected by availability , or lack thereof. If the Federal Energy Regulatory Commission fails to move to fix the structural problems that led to high prices this summer, the situation may repeat itself next year, he said.

For now, a rate freeze protects San Diego ratepayers from high prices, but they remain on the hook for the full cost of electricity through a "balancing account."

The difference between what customers are now paying for electricity and the actual cost is now building up, with a potential bill of $600 million to $800 million coming due for local ratepayers in 2003, Shames said.