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 Capsule: Bonneville a Power 'Price Gouger'

LCG, April 5, 2001When California Gov. Gray Davis pillories out-of-state power producers as "piratical price gougers," there is little doubt he means companies such as Reliant Energy Inc., Duke Energy Corp., Dynegy Inc., AES Corp. and The Williams Cos. Add the U.S. government to the list.

The Bonneville Power Administration, an agency of the federal government and operator of hydroelectric facilities paid for in part by California taxpayers, shipped about 489,000 megawatt-hours of electricity to California last summer, and that power didn't come cheap.

When the California price cap was $750 per megawatt-hour, that's what Bonneville charged, and the average price was around $75 per megawatt-hour three times what it charges utilities in the Pacific Northwest.

Power sales to California swelled Bonneville's net by $400 million and enabled the agency to sell power at lower rates to its customers in Washington and Oregon.

California's two largest electric utilities were driven about $13 billion in the hole buying wholesale power at market rates and selling it to their customers at fixed retail rates that were only a fraction of the cost. Now, it seems, Pacific Gas & Electric Co. and Southern California Edison Co. were not only subsidizing their own customers, they were subsidizing customers in Portland and Seattle.

David Luken of the Edison Electric Institute, a national trade organization for utilities, said "It would be as if California took all the revenues from its offshore oil and used it to hold down gasoline prices in Los Angeles."

And the good news doesn't stop there.

  • California Treasurer Phil Angelides warned yesterday that unless the governor opens up the books he won't be able to sell the $10 billion (or whatever figure state planners are thinking of today) worth of bonds to pay for long-term power purchase contracts being negotiated by the California Department of Water Resources. So far, Davis has refused to reveal what the state is paying for power.
    "You can't go to the marketplace to sell $10 billion in bonds and say 'We don't have a public plan'," Angelides said.
    Angelides is also concerned about the $50 million a day the state is spending on power for immediate needs. "I think there is no doubt that if we continue to chunk out general fund money without end, what's going to happen is that we're going to deplete our treasury, we're going to harm the very programs that we care most about, and our credit rating will come down," he said.

  • In Washington, Congressional Republicans are drafting legislation to help California and the West get though a summer of electricity shortages. "We can't just say 'Let California take care of California'," said Rep. Joe Barton, chairman of the House Commerce energy and air subcommittee. Some of the ideas make more sense than others, including possible measures to beef up the "Path 15" transmission bottleneck near Los Banos in the state's San Joaquin Valley.
    But some are pretty far-fetched. Referring to a proposal that the U.S. Navy berth nuclear powered ships in West Coast ports and connect them to the transmission system, Barton asked "Do you really want a nuclear aircraft carrier that might need to be dispatched to the South China Sea tied up to the grid in San Diego?"

  • Constellation Energy Group, the holding company for Baltimore Gas & Electric Co., began construction yesterday on a 750 megawatt power plant near Victorville in Southern California. The High Desert Power Project will be the first new power plant built in the region since the 1980s and will cost about $450 million. The Energy Commission began the permitting process for High Desert in June, 1997.

  • The California Energy Commission voted 4-0 yesterday to begin a formal review process for construction of a 250 megawatt expansion of the 750 megawatt Pastoria Energy Facility it licensed in December. The vote begins what the commission says in a 12-month process, meaning it's not part of the governor's "fast track" for summer power.

  • Davis' plan to have 5,000 megawatts of new generation on line by July 1, a goal he now admits is unrealistic, got a boost yesterday when the energy commission licensed two small peaking plants. Both plants will be built by Wildflower Energy LP, a subsidiary of InterGen North America. The 90 megawatt Larkspur Energy Facility will be built in the Otay Mesa section of San Diego and the 135 megawatt Indigo Energy Facility will be built in Palm Springs. Both will be producing power by July 5, the commission said.
    The governor took full credit for the new plants. "Under my emergency executive orders, the Energy Commission was able to accelerate the licensing process, approving these simple-cycle plants in just 19 days," Davis crowed. "We continue to move at warp speed to meet California's summertime electricity demand, without jeopardizing California's environmental protections."
    You bet, governor.

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