Federal Government uses UPLAN model to examine price volatility in ERCOT

LCG, October 11, 2022--The U.S. Energy Information Administration, or EIA, released its latest supplement to the Short-Term Energy Outlook (STEO) in the Texas market, assessing various possible scenarios using LCG’s UPLAN NPM model, with a special focus on the effects on wholesale power prices and market conditions.

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Michigan Governor Supports Reopening Palisades Nuclear Facility

LCG, September 16, 2022--The Governor of Michigan last week sent a letter to the U.S. Department of Energy (DOE) in support of Holtec International’s application for a federal grant under the Civil Nuclear Credit (CNC) program to save the Palisades Nuclear Facility in Southwest Michigan. The federal grant could result in restarting the baseload, carbon-free, nuclear power plant.

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Industry News

Energy Chief Orders U.S. Power Sent to California

LCG, Dec. 14, 2000--U.S. Energy Secretary Bill Richardson yesterday ordered federal power producers in the Northwest to sell electricity to California utilities at "a fair price" in order to ease a power shortage that has become chronic and last week threatened the state with rolling blackouts.

Chronic? The California Independent System Operator declared a "Stage 2" power emergency yesterday for the eighth straight day, at a time of the year when demand is customarily low. Cal-ISO said it was only a few megawatts away from calling its second Stage 3 emergency, under which utilities would be ordered to institute rolling blackouts.

At a news conference in Washington, D.C., Richardson said he was using his emergency powers to order power wholesalers to sell power to California at a fair price. His action had immediate results as the Bonneville Power Administration, operators of federal dams in the Northwest, diverted 1,500 megawatts to California.

There is, however, precious little power to spare in the Northwest. Big companies, especially aluminum refining firms, have been shutting down operations because of the scarcity of electricity and the high price of that they can get.

Richardson was joined at his news conference by California Gov. Gray Davis and Sen. Dianne Feinstein. The two Democrats blamed California's high electricity prices on "price gouging" by generators and called for the Federal Energy Regulatory Commission to impose a price cap on wholesale power throughout the West.

"We have implored the FERC to respond to this crisis so that California's terrible dependence on spot prices can end," Feinstein said.

FERC, though, recommended that existing price caps in California be lifted and last Friday Cal-ISO did just that. The move put more power on the state's shaky grid, but at prices that yesterday reached a high of $1,407 per megawatt-hour. That's a buck-forty a kilowatt-hour, and would make the typical householder's monthly bill come to $700.

Those high prices exist for only a moment or two of highest demand, but overall the price of power in California is about five times higher than it should be. The fault is not the absence of price caps or a misguided attempt to deregulate the electric industry.

The cause is an insufficiency of power plants in the state, and the blame for that insufficiency can be laid directly at the feet of California regulators and politicians who are unwilling to allow a power plant to be built within miles of a voter who might be offended by its presence.

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