EIA Publishes Regional Electricity Supply and Pricing Forecasts Using UPLAN Model

LCG, August 13, 2019--The U.S. Energy Information Administration (EIA) announced that it is revising the presentation and modeling of its forecasts for electricity supply and market hub pricing to better reflect current electricity markets and system operations in the U.S. Beginning with the August 2019 Short-Term Energy Outlook (STEO), the new forecasting approach models electricity markets using the UPLAN production cost optimization software developed by LCG Consulting. EIA uses the solution results provided by this proprietary model to develop the STEO forecasts of monthly electricity generation, fuel consumption, and wholesale prices.

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Dominion Energy Virginia Pursues 500 MW of Renewable Projects

LCG, August 8, 2019--Dominion Energy Virginia announced Monday that it is seeking bids for up to 500 MW of renewable capacity in both 2021 and 2022 to increase its clean energy resources. Dominion Energy stated that it is committed to having 3,000 MW of solar and wind in operation or under development in Virginia by 2022. This near-term step is part of an ultimate company commitment to reduce carbon emissions by 80 percent by 2050 across the 18 states it serves.

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Industry News

Wall Street Cautious about California Utilities

LCG, Sept. 20, 2000News of the high price of power on the California spot market has reached Wall Street with the result that two major investment advisors have counseled a cautious approach to the debt securities of the state's three investor-owned electric utilities.

Both Standard & Poor's and Fitch Investors Service have downgraded their ratings outlook for the companies Fitch for Pacific Gas & Electric Co., Southern California Edison Co. and San Diego Gas & Electric Co. and S&P for PG&E and SoCal Ed.

Fitch laid the blame on "high wholesale power costs and uncertain recovery of these expenses under existing regulatory structures." S&P largely concurred, but said SDG&E has "sufficient financial flexibility and credit strength to withstand pressure on its working capital."

As a result of electric industry restructuring in California, the state's three big utilities have sold most of their power plants, and now must purchase power from the California power Exchange for delivery, without markup, to their retail distribution customers.

In San Diego, where the utility had paid off its stranded costs and prices were no longer frozen, SDG&E simply passed along soaring electricity prices to its customers, who saw their electric bills double and almost triple in some cases. The hue and cry that provoked caused California politicians to place an artificial cap on the price SDG&E can charge for power, even if it has to pay more.

The other two utilities are not yet able to pass the cost of power purchases through to their customers and must pay the same prices for power as SDG&E at Cal-PX and resell the power to their retail customers for prices frozen by the restructuring law at 1995 levels.

S&P thinks that the politicians may not be through meddling. The state "is in a desperate search for an immediate fix to the pricing crisis, and a rate freeze of some sort for an indeterminate period of time is likely," the service said.

What California needs is more power plants, and meddling with power prices will deter their being built.

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