Posted on 12/10/2001 2:06:13 AM PST by snopercod
SACRAMENTO - Politicians have all but proclaimed the energy crisis over. And much of the public seems to believe them. Electricity supplies are up, state officials say, while power prices and demand are down.
But, even so, top officials aren't saying much publicly about the razor-thin margins of power expected this spring and summer, and even less about looming wildcards such as weather, conservation, plant outages because of maintenance or breakdowns and the pace of new plant construction.
One or more of those factors could soon lead once again to shortfalls of electricity in the state, according to government and private experts and new but little-publicized reports.
Though no one is making outright predictions of blackouts, analysts acknowledge the supply crisis isn't really over.
And if supplies become too tight, then wholesale prices could spike - a scenario chillingly similar to conditions that originally triggered the energy crisis earlier this year.
``We're still not out of the woods," said Stephanie McCorkle, a spokeswoman for the California Independent System Operator, which runs California's power grid. ``The supplies will tighten as we get into the later spring months and into summer."
In San Francisco and the Peninsula, somewhat isolated from the rest of the state's power grid, unexpected plant shutdowns, increased demand and transmission line limitations even threaten shortages this winter. Authorities are urging extra conservation efforts in the area.
Principal among other lingering aspects of the energy issue is the essentially unpaid bill for bailing California out of the power crunch earlier this year. The debt threatens to swell the state's multibillion-dollar budget deficit and deepen the cuts in services the state faces due to a cooling economy, unless a reimbursement bond issue is freed from a political logjam.
In a reflection of state officials' optimistic rhetoric and recent horrific events on the East Coast, polls indicate an abrupt shift in the concerns of Californians.
Residents were consumed earlier this year with worries about more rolling blackouts, rate hikes and utility insolvencies due to soaring wholesale electricity rates. But surveys now indicate only about a tenth of the state's residents say power woes are the most important issue facing the state.
``Priorities have changed dramatically since the Sept. 11th attacks on the World Trade Center and the Pentagon," pollster Mark Baldassare says in a recent survey by the Public Policy Institute of California. ``Today, Californians rate the economy as the most important issue facing the state, followed by terrorism and security issues." Analysts say the shift in opinion is hardly a mystery.
Whenever public attention strays from the dominant topics such as terrorism to energy, Gov. Gray Davis and officials in his administration reiterate an array of statistics on construction of new power plants, the signing of long-term supply contracts and the decline of wholesale electricity prices.
More importantly, the lights have stayed on. There hasn't been even a Stage 2 power alert in months. But competing forces may erode the margin for error.
The state Energy Commission expects statewide peak demand to fluctuate due largely to weather, ranging from a low of about 36,000 megawatts this coming winter to a high of more than 54,000 megawatts in summer 2002.
Available supplies, though fluctuating mostly due to plant breakdowns and maintenance shutdowns, are expected to be as much as 10,000 megawatts above winter demands, dropping to less than a 1,000 megawatts over peak needs during the summer.
In July, the most critical month, the state likely will hit a peak demand of about 54,250 megawatts - up a few thousand megawatts over July 2001 due to growth. Supplies are expected to be at less than 55,000 megawatts, a figure that allows for more than 5,000 megawatts being off-line due to expected and typical plant breakdowns.
The available supplies will include about 7,900 megawatts from long-term contracts, about half of it produced by new plants in California.
While trying to foster new plant construction, the governor has signed 55 multi-year supply contracts for $43 billion in power, which he says has helped slash the wholesale spot-market cost to the $30 per megawatt-hour range from a peak that hit a staggering 130 times that amount earlier this year. Generators say the cost of their primary fuel, natural gas, has dropped.
Before the long-term contracts went into effect, the governor notes, the state took over purchasing power for the financially crippled investor-owned utilities and convinced federal regulators to impose a ``must-sell" order that requires generators to bid into the California market.
While taking most of the credit for increased supply, Davis has repeatedly praised the public for the biggest factor in reduced demand - its enthusiastic response to his own call for conservation.
``This summer, the heroic conservation efforts of Californians was the key defense in avoiding rolling blackouts," Davis said in announcing the latest conservation figures.
Electricity use during peak times declined nearly 9 percent in October, compared to last year. This summer, California averaged a 10 percent reduction in power usage.
To some extent the economic slowdown, hastened by the Sept. 11 attacks, also has reduced usage.
But, to each of the major elements of increased supply and reduced demand, there is a dark side that could push California toward power shortfalls and greater fiscal woes.
The state is rushing to pay off generators' bills before their complaints derail the federal order California won requiring generators to supply the state, despite its fiscal woes.
At the same time, Davis is responding to criticism about the high cost of his long-term supply contracts by trying to renegotiate them. Reshaping those deals is essential to clearing the way politically for a bond sale that would reimburse depleted state coffers for emergency power purchases earlier this year.
Though the long-term contracts have led at times to surplus power, which the state has resold at a loss, the pacts may not provide enough power in coming months.
The biggest uncertainties lie in generation, weather and conservation.
In late November, the California Energy Commission issued a forecast that the state would have adequate supplies of electricity to meet demands through next summer ``as long as planned power plants are built and current levels of conservation continue."
Even so, July will be ``the most challenging month for the state's supply and demand balance next summer," the commission concluded.
At that time, the commission projects a surplus of about 340 megawatts - a tiny margin that could be wiped out by one unexpected plant breakdown. One megawatt is roughly enough power for 750 homes.
If state grid operators declared a power emergency, another 1,700 megawatts would be available through ``interruptible" programs. Customers in those programs volunteer to cut back on power when called upon in return for lower electricity rates.
Cal-ISO, the state's grid operator, foresees similar problems but expects them to begin earlier - in May. The agencies' forecasts are based on assumptions about plant outages for maintenance or repairs, but officials acknowledge they are guessing to some degree in a state with a high percentage of generation facilities that are more than three decades old.
Similarly, the predictions are dependent on swift construction of new plants. And there are signs that companies aren't as anxious to build in uncertain economic times.
Continued conservation is another key factor but Cal-ISO concedes that ``the magnitude of conservation may decrease over time."
Weather, another wildcard, could throw off estimates with unseasonably cold or hot spells. At the same time, the West appears to be headed for a regional drought that would decrease hydroelectric power supplies. And the recent bankruptcy of Enron Corp., a major power broker, means the state likely will have to step in to supply up to 1,200 megawatts of electricity the Houston-based company is now providing directly to California customers -
including the University of California and California State University campuses.
Officials acknowledge that some or all of the variables could turn against California. ``Without having a crystal ball," says McCorkle, there are ``no guarantees."
``We're certainly not swimming in megawatts," she says. ``But I don't think we'll be talking blackouts."
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