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

S&P Gives California 48 Hours to Grant Rate Hikes

LCG, Dec. 21, 2000--The big credit rating agency Standard & Poor's yesterday gave California until tomorrow to figure out a way for Pacific Gas & Electric Co. and Southern California Edison Co. to get paid for the electricity they have purchased and delivered almost gratis to their retail customers.

S&P analyst Richard Cortright said his firm would cut the credit ratings of the companies to below investment grade "Absent meaningful and sustainable actions by the decision makers in the next 24 to 48 hours."

Such a downgrade would make it impossible for the utilities to borrow money in order to continue purchasing wholesale power for their customers. It would also make it impossible for PG&E and SoCal Ed to issue bonds to make needed improvements in their transmission and distribution systems.

PG&E chief executive Gordon R. Smith said that since the California power crisis began in late spring his company "has virtually exhausted its financial resources, borrowing an average of $1 million per hour to pay for the power we deliver to Californians. No company can continue to operateindefinitely under such conditions."

The other day, PG&E said it was in the hole about $4.6 billion for power it purchased for delivery at rates frozen at 10 percent below 1996 rates. SoCal Ed was $3.5 billion out of pocket. Both numbers are higher today.

California Gov. Gray Davis has been meeting with utilities in an attempt to come up with a compromise under which the companies' shareholder would pay for most of the uncollected charges. His press secretary said Tuesday that the governor was attempting to see how much of a loss the companies could sustain.

Self-appointed consumer advocates in California have been strident in their demands that the utilities be forced to bear the entire burden. Smith found it "astounding that only hours after Standard & Poor's warnings, (activists) are still questioning the severity of this crisis and advocating steps that will make the problem worse, including one proposal that S&P called 'devastating.' "

S&P said a rate increase on the order of 20 percent over three to five years would help preserve the utilities' "A" to "AA" credit ratings. "These companies, as big and strong as they once were, are on the brink now," Cortright said.

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