Posted on 04/03/2002 10:18:23 PM PST by Ernest_at_the_Beach
California officials yesterday threatened to terminate a controversial $7 billion electricity supply contract with Sempra Energy because the company failed to construct a promised power plant near Bakersfield.
Attorneys for the California Department of Water Resources, which signed the contract with Sempra, told Sempra yesterday it failed to make promised efforts to construct the 300-megawatt plant and thereby missed an April 1 deadline to have it operational.
They cited what they called Sempra's "apparent lack of candor" regarding the project.
The state is demanding Sempra make "commercially reasonable" efforts within 60 days to get the Elk Hills plant online or risk termination of the agreement.
After intense criticism it was being overcharged, California last year began efforts to renegotiate the agreement with Sempra. Those talks ended when the state also filed a protest with the Federal Energy Regulatory Commission earlier this year seeking to have the agreement overturned.
Observers said yesterday the state's latest action could be an escalation of the dispute.
Instead of building the disputed plant, Sempra intends to buy power and resell it to the state. The company is proceeding with what it says is a more energy-efficient project at the Elk Hill site, but that plant won't be operational until next year.
California officials say this subverts the intent of the deal with Sempra, which was to build more generating capacity to boost supplies by this summer. In fact, the state said Sempra's electricity purchases will worsen the state's plight by creating increased competition in spot power markets.
For its part, Sempra said it doesn't believe the agreement with the state requires it to build any new generation. Nonetheless, said Michael Niggli, president of Sempra's power generating subsidiary, the company is proceeding with more than $2.0 billion worth of plant construction, including the more efficient plant at Elk Hills and facilities in Mexico and Arizona.
Niggli said the company decided not to proceed with the 300-megawatt plant at Elk Hills because electricity prices have fallen so dramatically that it's now more economical to buy rather than generate electricity.
"We have a right to do that," said Niggli. "This is a misguided attempt by the state to play political games and abrogate its contract."
He added that the agreement provided power at among the lowest costs obtained by the state during contract negotiations last year. Consumer advocates say the deal's details make it among the most expensive for the state.
State officials, including Gov. Gray Davis, at first applauded the Sempra agreement, which is one of more than 50 contracts, valued at more than $40 billion, signed by the state during 2001 to tame the power crisis.
The agreements tie the state to power purchases averaging about $69 per megawatt hour for up to 20 years. Since the deals were signed, the price of electricity has fallen to less than half that sum.
By late last year, state officials were seeking to renegotiate the agreements. Earlier this year, California filed challenges with FERC, contending that the contracts fail to meet federal laws requiring wholesale electricity prices to be just and reasonable, along with other violations.
This latest dispute between the state and Sempra could put the company in a bind, said one consultant.
Noting the 60-day time limit imposed by the state, William Marcus of JBS Energy, a consulting company, said, "You can't build this thing in two months. So if the state's (position on the contract) is correct, we are headed to a default or renegotiation."
Craig Rose: (619) 293-1814;
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If we have any blackouts this summer, he will be entirely to blame. We need to dump Dufus and get a Governor who can help us.
Are they likely to increase again with the onset of the warmer months?
D
Supply is also up. A good portion of the shortage was due to a drought in the Pacific northwest, and power which was normally available to California simply wasn't being generated. This year the supply from that region is back to normal, so even if California demand was high, there might be adequate power anyway.
The third reason is that natural gas prices are much lower than they were this time last year. Although prices have increased in the past couple of months, they are nowhere near what they were a year ago. Those fuel costs for power plants was another contributing factor to the high electricity prices.
Chances are that power prices won't increase a whole lot this summer, because supply and demand will be largely in balance. There isn't a huge cushion, though, which is what the state needs. Ideally, there should be 15-25% more generating capacity than expected demand, because sometimes things break. California doesn't have that, and while they may get by this year, it doesn't look good in future years at all, given the expectations that the economy will continue to grow and population will increase by 40% within two decades.
California should be building power plants like crazy, but Davis has mucked up the free market so badly out there that none of the market signals which should exist are there.
This story is a good example. Sempra has a high-cost contract with the state, and they can make more money selling someone else's power to the state than by building a new plant themselves. If Davis hadn't tried to lock in all these long-term contracts, Sempra would have built the plant themselves to provide the power.
Everything Davis has done in this matter has made it worse. Everything.
Why is California's population projected to increase that much?
I thought our population was supposedly going to shrink overall since the nation on the whole has been getting older for some time. Do we have that much immigration, or are people just continuing to get sick of cold weather in fantastic numbers?
I'm curious because I always assumed that as people died off, demand for California real estate would go down. This appears to imply that California real estate would continue to be an exceptional investment.
This seems amazing since it's been a long time since the average middle class family could afford the average middle class home. That made me think something would have to change in the RE market.
But if that's not true ... it would certainly push me towards wanting to invest in real estate in the not too distant future, instead of looking from the sidelines and thinking everything will obey Murphy and fall down the moment I put in my downpayment.
D
 |
In 1996 the Census Bureau projected that California's population (starting at 32,521,000 in 2000) would increase by 52 percent between 2000 and 2025 (to 49,285,000). That was the highest projected rate of growth in the country.
The Census Bureau population projection noted above is the "middle" projection, and it assumes national immigration at a net annual increase of 820,000. There are other projections based on different assumptions. In the Census Bureau's "high" immigration projection, assuming annual net immigration of 1,370,000, the population in 2025 is more than six percent higher than in the middle projection, and it is over 11 percent higher by 2050. For California, the high immigration scenario could mean a population in 2050 as high as 72,000,000. If immigration were significantly scaled back, the population increase attributable to immigration and the population spill-over effects from other states could be significantly reduced over time. See Immigration and Population Growth
Other mid-range population projections for California in 2025 include 44,372,000 by the U.S. Bureau of Economic Analysis and 46,917,000 by the Center for Continuing Study of the California Economy (CCSCE) and a projected 48,626,000 by the California Department of Finance (DOF). UCLA, which does not have a 2025 projection, would have the highest projection, inasmuch as its projection for 2020 is 49,149,000.
(Source: How Many Californians? Public Policy Institute of California, Oct. 1999)
Yikes, I have never seen a figure that high!
I thought the Links were not working but I realized my error.
I also found this site which was new to me!:
Californians for Population Stabilization (CAPS)
And found this article from 2001 !
____________________________________________________________________________
Too many people, too little power
People 'longage,' power shortage
By Ric Oberlink
January 17, 2001
There are two components to California's energy crisis -- the high price of energy and an insufficient supply of energy. The former has been dominating the recent news, but it is the latter that led to brownouts last summer and threats of more to come. Moreover, inadequate supplies are a cause of higher prices.
You may have read that California's power shortage is due to the increased demand of its booming economy and what one news article called "Silicon Valley's voracious appetite for electrical power." That is wrong. You may believe that Californians -- with all their new computers, big-screen televisions, and gourmet appliances -- are using more electricity. That, too, is wrong.
Per capita consumption of electricity in California has been flat for 25 years. In 1979, per capita consumption of electricity in the state was 7,292 kilowatt-hours. In 1999, it was down to 6,952 kilowatt-hours. Twenty years of more gadgets, new toys, and bigger appliances yielded a 5 percent decrease in per capita consumption of electricity.
So California should be in Fat City regarding energy supplies. We shouldn't need any new power plants. We should be able to shut down the dirtiest of the old plants because we're using less electricity. However, during that same 20 years the state's population grew from 23 million to 33 million -- a 43 percent increase!
California doesn't have a power shortage. It has a population "longage." The power "shortages" -- like traffic congestion, like sprawl, like the depletion of habitat for wildlife, like virtually every environmental problem in California -- are due primarily to population growth.
Last year California grew by 571,000 people and now has a population in excess of 34 million. Its annual growth rate of 1.7 percent exceeds that of Bangladesh. We think of Europe as the crowded Old World and think of America, especially the West, as the land of wide-open spaces. Yet the population density of California already exceeds that of Europe and in 30 years it will exceed that of present-day China. Clearly, it's time to say enough is enough.
Many people mistakenly think California's population has grown because people move here from other states. In fact, during the last decade more people moved from California to other states than migrated from other states to California.
Most of the population growth in the United Sates is due to immigration. The baby boom of the '50s and '60s has been supplanted by the "immigration boom" of the '80s and '90s that continues today. According to the Census Bureau, two-thirds of future population growth will come from immigration. The proportion for California is higher still. California's immigrant population is almost 9 million -- a number exceeding the combined population of Norway and Costa Rica.
Previously, we worried about energy shortfalls only in summer when air conditioners are humming. Now we have experienced Stage 3 power alerts -- the highest level of energy emergency -- in December and January, most recently yesterday. Yet politicians and media have failed to identify the cause. People are not using more electricity. There are simply more people.
After brownouts in July, Pacific Gas and Electric proposed placing a floating power plant on San Francisco Bay. Environmentalists threatened to board and disrupt the floating power plant should it sail through the Golden Gate. The idea was scrapped.
Given the obvious connection between population growth and the demand for new power plants, you might think that environmental groups would emphasize stopping the state's population growth. They don't. Oppose new power plant construction? Sure. Oppose the population growth that causes it? Too controversial.
Fortunately, not all environmentalists are so timid. The late David Brower resigned last year as a director of the Sierra Club, in large part, because of its failure to take a responsible position on population growth and immigration. "Overpopulation is perhaps the biggest problem facing us, and immigration is part of that problem," Brower said. "It has to be addressed."
In his State of the State address, Gov. Gray Davis offered bold rhetoric, but nothing of substance to address California's energy problems -- long-term or short-term. He certainly didn't mention population growth in California. Let us hope that other leaders have more courage.
Oberlink is an environmental consultant for Californians for Population Stabilization.
Last year California grew by 571,000 people and now has a population in excess of 34 million. Its annual growth rate of 1.7 percent exceeds that of Bangladesh. We think of Europe as the crowded Old World and think of America, especially the West, as the land of wide-open spaces. Yet the population density of California already exceeds that of Europe and in 30 years it will exceed that of present-day China.
For its part, Sempra said it doesn't believe the agreement with the state requires it to build any new generation. Nonetheless, said Michael Niggli, president of Sempra's power generating subsidiary, the company is proceeding with more than $2.0 billion worth of plant construction, including the more efficient plant at Elk Hills and facilities in Mexico and Arizona.
I think Davis is just playing politics to take some attension away from what the voters are thinking.
However in some areas, the value of a 3 bedroom home in Feb shot up with double digit % increases.
Property value in the Sillycon Valley continue to drop and in some metro areas as tax and spend Rat politicians drive people out of the bigger cities.
There is another phenom. happening. People are bailing out of the mutual fund market/stock market after two + years of poor performance. They are buying a new home for the first time or trading up. The lower interest rates and the value of a Cali home is appealing to a lot of people.
The other thing that is happening is the buyers don't want to be in big cities with crime and phoney diversity stuff. They are moving to the country areas of E. Contra Costa and the smaller cities in the Wine Country and other areas. This is driving the property value up in those areas.
I know of a young couple, who bought a home in E. Contra Costa county two years ago this coming Halloween. They paid $255 k for their home. In 7 months it had increased $70k in value, and they refied their mortgage. Last week two of the same homes in the same development sold for $360 k after being on the market for 1 day. Each home had several backup offers.
Yet the population density of California already exceeds that of Europe and in 30 years it will exceed that of present-day China.
The only reason why we have dense propulations in certain areas is due to the land grabs of the fed/state Nazis and the envirals controlled growth policies.
I believe that over 70% of Kali's land is owned by either the federal or state Kommisars!
Then the New Nazis, the Enviralists, want to cram everyone into a metro area. So they have all types of control growth schemes in desirable areas of Kali. These schemes keep people from buying land and building homes to live or to sell.
Believe me there is plenty of property to put 60 million people on and still have a lot of open space. In a 5 to 10 minute drive north, nw or ne, I can be in areas where deer out number the people.
There ain't many people from the Wine Country north to the Oregon border, and still the enviral nazis don't want anyone in this Druid Paradise of theirs.
The plan is to get people out of their cars, living in high-density blue zones, and worshipping at the altar of Gaia, political correctness, and the Democrat feed trough. Lovely.
These enviral Nazis don't care if there never has been a Red Legged Frog on your property. If it looks like a place that the RLF might like to live on, you are in big trouble!
No cars, everyone herded into a Goron city, and recycled food for all is the ultimate goal of the enviral Nazis.
The figure is arrived at by taking the total amount of electricity consumed in the state by households and industry, and dividing it by the estimated number of people.
The ONLY reason that this figure is low (and falling) in California is that the state has driven off all heavy industry.
Another error in this article concerns the blackouts in the winter. The reason for that is well known: That's normally the "slow" time of year when power plants schedule their major maintenance.
I especially liked the part about reliability. Folks don't seem to understand that the grid is like a military operation - there must be some reserves held back just in case.
I was on the Freeways yesterday and I do really believe the population density figures!
LOL!
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