California: State lags on power plants, GAO says

WASHINGTON – Falling power prices, turmoil in the energy industry and concerns about state involvement in the electricity market have slowed the development of power plants in California, according to a congressional study released yesterday.

But state officials disputed some of the report's assertions, saying dozens of plants had come on line or were in the works.

Fifty-nine proposed power plants, representing 11,500 megawatts of generation, either were canceled or postponed as of December 2001, according to the General Accounting Office, the investigative arm of Congress. A megawatt can power 750 to 1,000 homes.

But Steve Maviglio, a spokesman for Gov. Gray Davis, said developers have indicated to the state that only five power plants – with a total capacity of 3,200 megawatts – will be postponed, for up to two years. The GAO may have been counting projects that never got beyond the discussion phase, he said, citing California Energy Commission data.

Republican lawmakers who have been critical of Davis' handling of California's power crisis asked for the study and said the state is driving away needed power plants. They singled out concerns that developers voiced to the GAO about state intervention in the market.

"The state's deep involvement in electricity markets is creating great uncertainty because power generators have no set of clear rules," said Rep. Steve Horn, R-Long Beach. "That means that money markets have no incentives to finance new power plants for our long-term needs. The result is a steady drift back toward another energy crisis in which Californians once again are vulnerable to power outages and price gouging."

But state energy officials said any plant cancellations and delays were mostly a result of market conditions and the end of a "gold rush" mentality that prevailed during the 2000-01 power crisis, when wholesale electricity prices hit unprecedented levels. Federal regulators capped prices a year ago.

The state was justified in intervening in the market to stop price gouging, the officials said.

Maviglio said 33 new power plants, representing 12,170 megawatts of generation, have been approved since Davis took office in 1999. The state will add more than 2,500 megawatts of generation this summer, 4,050 megawatts next summer and 1,556 megawatts in 2004, according to the California Energy Commission.

"We certainly are building enough capacity at this time to meet our growth," said Claudia Chandler, assistant executive director of the commission.

Neither the commission nor the California Independent System Operator is predicting the sort of severe power shortages and rolling blackouts that rocked the state last year.

But ISO spokesman Gregg Fishman said the plant postponements and cancellations "cause us some concern."

Horn and Rep. Doug Ose, R-Sacramento, asked the GAO to compare the pace of power plant construction in California with that of Pennsylvania and Texas. Those two states are viewed as having more success with power market deregulation than California, though both have experienced some price increases.

Based on state and industry data and interviews with developers and analysts, the GAO report concluded that:

Uncertainty caused by the Sept. 11 terrorist attacks, the slowdown of the economy and the collapse of Enron Corp. has "further limited developers' near-term ability to propose and build new power plants because the international capital markets are less willing to invest in energy projects."

Texas and Pennsylvania also have experienced significant power plant cancellations or delays, but California had the sharpest among the three.

On average, it took 14 months to win regulatory approval for a new power plant in California between 1995 and 2001, the years studied by the GAO. But "the duration of the regulatory review process was less predictable" in California than in Texas and Pennsylvania, with some projects waiting 18 months for approval.

The average approval time in Pennsylvania also was 14 months, while it was eight months in Texas. In California and Pennsylvania, most plants were proposed for areas with air quality that did not meet federal standards, requiring those plants to have more stringent pollution controls.

Chandler said most plants in California are approved in six to 12 months. During the height of the power crisis, the state instituted special 21-day and four-month approvals that have since expired, she said.

Gov. Davis' control of appointments to the ISO's governing board, the creation of a California Power Authority that can finance power plants and the state's desire to revise costly long-term electricity contracts make power plant developers wary of the market.

"Developers remain concerned that the state may receive special treatment from the transmission operator. This concern continues because the state has so much potential influence over the market, which raises the risk of entering the market for independent developers."

This was first reported in the WSJ , but now appears in the California papers. That is good, watch for it to appear in the LALA Times and SF Gayronicle, in the buried pages.

Calpowercrisis:

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The solution to that is simple. Let the consumer buy power from whatever provider is willing to sell it. But that would be, GASP, deregulation!

"The state's deep involvement in electricity markets is creating great uncertainty because power generators have no set of clear rules," said Rep. Steve Horn, R-Long Beach. "That means that money markets have no incentives to finance new power plants for our long-term needs. The result is a steady drift back toward another energy crisis in which Californians once again are vulnerable to power outages and price gouging."

AAAIIEEEEEEE!!!!!!!!
DUMP DAVI$ & the Den of Socialists

GO SIMON

This article is a teste-mint to the laziness of reporters. The information on how many MW were cancelled is available on the 'net with a few mouse clicks , but they're too damn lazy to do it.

California Power Plant Licensing Cases 1976-2002 When you see an "n/a" in the START CONSTRUCTION" column, the project will not be built.

2405 MW Withdrawn in 2002 and 2002

"Fifty-nine proposed power plants, representing 11,500 megawatts"

Or roughly 195 megawatts per plant on average.

These are small plants--many are "topping" or capacity-leveling plants, and also "dedicated" to certain industries, such as aluminum smelting.

REAL load-bearing plants, that put real power on the grid, are ~1,000 megawatts each. And how many of those are planned/on hold/deep-sixed?

--Boris

12,170 megawatts of generation, have been approved since Davis took office in 1999. The state will add more than 2,500 megawatts of generation this summer, 4,050 megawatts next summer and 1,556 megawatts in 2004, according to the California Energy Commission.

Well there we have it, no problem. If it is approved by Davis, maybe we can have that approved, but not built power reserved to serve Davis supporters and Democrats.

Seriously, were are the reductions in existing generation due to changes in hydro license conditions, changes in air pollution rules, etc.

Thank you for pointing this out. I would just like to add that a "list of power plants from 1976 to 2002" would mean that any power plant at the beginning of the list (i.e the ones nearly 30 years old) need to be replaced already.

This means that not only do you have the projects "canceled," but you have to add power plants to replace those that have worn out or become technologically or regulartory-wise obsolete.

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