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

California Stays Lit Through Weekend

LCG, Dec. 26, 2000Two big Wall Street credit rating firms said late Friday that an interim decision by the California Public Utilities Commission to consider raising retail electricity rates showed enough promise to keep them from reducing the ratings of the state's two biggest utilities to junk.

Standard & Poor's and Moody's Investors Service said they would wait until January 4 when the PUC said it would decide how much consumers would have to pay of the more than $8 billion they owe Pacific Gas & Electric Co. and Southern California Edison Co.

The two companies are victims of the imbalance between supply and demand in the California electric market. Demand for electricity has outstripped supply in the state, fueled by a roaring high-tech economy that uses more power than "old economy" industries, a growing population, and widespread use of electric gadgets such as computers and air-conditioners.

While the retail rates of PG&E and SoCal Edison are frozen by the California electric restructuring law at levels 10 percent below what was charged in 1997, prices for wholesale power have surged in some cases to 30 or more times what they were when the law was passed. PG&E said the imbalance was costing it a million dollars a day.

Last Wednesday, S&P gave the state 48 hours to see to it the utilities recovered their money from customers. If the state didn't take action, S&P said, it would chop the utilities' credit ratings down to a level lower than that of junk bonds. Such a move would make it impossible for the companies to continue to borrow money to subsidize electricity purchases of their customers.

California Gov. Gray Davis may have thought the credit rating companies had a switch in Madison Square Garden that could be thrown to plunge the state into darkness. On Friday, according to an official of a Northern California power plant who asked not to be named, the governor's office had the California Department of Health Services call every hospital and nursing home in the state and warn them that there would be rolling blackouts beginning that day at 4:00 p.m.

In a message to EnergyOnline Daily News at 4:09 p.m. on Friday, our informant said he had received "about six calls from hospitals wanting to know what to do." He also asked what the governor was doing, a question we were unable to answer.

Edison Electric Inc., parent company of SoCal Edison, said it was nice of the PUC to consider raising rates, but it was out of money right now. The company announced that it would eliminate its dividend, at least for the fourth quarter, and also eliminate $100 million in electric systems operations and maintenance in the coming year.

The utilities can continue to borrow money for the time being, but if the PUC fails to follow through next week with a real rate increase, they will likely see their credit ratings drop out of sight. Shawn Cooper, director of corporate communications for PG&E, said "The issue at hand is what is going to happen to our credit rating."

Cooper said PG&E and SoCal Edison will continue to try to buy power, but whether anyone will sell it to them is another matter. "We will apply for power to make sure our customers receive, but it is not our call," he said.

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