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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 Gov. Davis Tells Electric Woes to Greenspan

LCG, Dec. 27, 2000California Gov. Gray Davis met yesterday afternoon with Federal Reserve Chairman Alan Greenspan and Treasury Secretary Lawrence H. Summers, emerging wiser, perhaps, but no closer to a solution to his state's electricity crisis.

Davis met for two hours with the federal officials seeking opinions on how to resolve the breakdown in California's power predicament which has pushed the state's two largest electric utilities to the point of bankruptcy and has populist activists calling for a bailout of consumers facing large rate increases.

Davis declined reveal details of the meeting, telling reporters only that federal financial help was not discussed. "I didn't ask for that, nor, frankly, do I think that would be forthcoming," he said.

Pacific Gas & Electric Co., which serves 4.5 million customers in a territory with a population of 13 million, and Southern California Edison Co., with 4.2 million customers in an area with a population of 11 million, have since early this year been paying more for the electricity sold to all those people than they have been paid.

Between them, the two utilities have piled up more than $8 billion in those underpayments and are facing insolvency. A week ago, Standard & Poor's said it would slash the companies' credit ratings to junk level if state action were taken within 48 hours to see to it that they were paid. Moody's Investors Service followed suit.

That got California regulators' attention. Such a move by the leading credit rating institutions would render it impossible for the two utilities to continue borrow money to subsidize their customers' power purchases. Lights would go out all over California.

Davis took the warning so seriously his office on Friday warned health care facilities throughout the state that rolling blackouts would begin at 4:00 p.m. that day.

The California Public Utilities Commission last Thursday admitted that retail electricity prices would have to rise and issued an interim order to that effect, saying it would hold hearings this week and decide January 4 how much of a price increase the utilities should be allowed.

That action was sufficient to stay the hand of the executioner, and the credit raters allowed the state to enjoy the weekend bathed in incandescent light. They will likely make no decision as to the credit worthiness of PG&E and SoCal Edison until the PUC issues its rate decision next week.

Davis is scheduled to meet today with President Clinton to discuss California's electricity problems, but he doesn't expect much more than sympathy from the White House. Davis said the problem was California's and the state would have to consume less electricity now and build more power plants to meet demand for the long term.

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