LCG Publishes 2024 Annual Outlook for Texas Electricity Market (ERCOT)

LCG, October 10, 2023 – LCG Consulting (LCG) has released its annual outlook of the ERCOT wholesale electricity market for 2024, based on the most likely weather, market, transmission, and generator conditions.

Read more

LCG Publishes 2024 Annual Outlook for Texas Electricity Market (ERCOT)

LCG, October 10, 2023 – LCG Consulting (LCG) has released its annual outlook of the ERCOT wholesale electricity market for 2024, based on the most likely weather, market, transmission, and generator conditions.

Read more

Industry News

California Capsule: Davis Admits Need for Rate Hikes

LCG, April 6, 2001California Gov. Gray Davis, speaking about the state's electricity crisis to a statewide television audience yesterday evening, had reassuring words for voters, but offered scant comfort to taxpayers, ratepayers and utility company shareholders.

Speaking from his Capitol office, the governor told viewers, "[N]o matter how we got into this mess, you hired me to solve problems and that's what I'm doing.''

Davis, who has repeatedly said he would get the state out of its electric problems "within the existing rate structure," now admits that won't be possible. Davis' switch comes after the California Public utilities Commission last week approved rate increases of up to 46 percent for the state's two largest electric utilities.

Davis proposed a "restructured" electricity rate increase averaging 26.5 percent for electricity customers. He said under his plan 55 percent of residential customers would see no increase, but those who use power profligately would pay for it.

The governor also called once again for federally-imposed rate caps on wholesale power, something the Bush administration has said will not be forthcoming, and said the state was forced to step up and buy power when the utilities were unable to do so.

"In January, with the feds still refusing to do their job, California stepped in to purchase the power the utilities could no longer afford to buy," Davis said. "We didn't take over to save the utilities. We took over to keep the power on and the economy strong."

The governor's plan for saving Pacific Gas & Electric Co. and Southern California Edison Co. from bankruptcy would likely further impoverish shareholders who have already seen their retirement plans diminished by more than two-thirds. "They must provide low-cost regulated power to the state for 10 years. Agree to sell us their transmission system. And dismiss their lawsuits seeking to double your electricity rates," Davis said. If the companies allow the state to manage their businesses, they could qualify for perhaps 10 cents on the dollar in rate hike revenues.

Davis made no mention of the effect of the energy crisis on the state treasury. The California Department of Water Resources is spending around $50 million a day on power purchases "to keep the power on and the economy strong," and the governor and others have proposed a number of schemes that could result in the state assuming close to $25 billion in bonded debt.

Davis also took full credit for licensing new power plants, most of which have been in the permitting process since long before he took office.

A complete transcript of the governor's talk appears elsewhere in today's EnergyOnline Daily News.

There was reaction, action and the promise of inaction.

  • Soon after company officials flicked off their television sets, PG&E issued a statement in response to the governor's message. The company said it was an old hand at encouraging energy conservation before getting to the point. [T]he state's power crisis has been ongoing for nearly a year now, with little relief in sight," PG&E said. "Unfortunately, the steps the governor announced tonight still do not appear to offer a comprehensive solution to resolve California's energy crisis."

  • While Davis was putting the finishing touches on his speech, the state legislature passed two power conservation measures that could cost $1.1 billion. The bills will now go to the governor, who had urged their passage. Together, the two bills include:
    $50 million for rebates for consumers who buy more energy-efficient refrigerators.
    $60 million to distribute subcompact fluorescent lights and other energy-saving devices through community organizations.
    $50 million for grants or loans to low-income residents or small businesses to makebuildings more energy efficient.
    $50 million for large businesses that install electricity meters higher power charges during peak demand periods.
    $240 million to help low-income Californians weatherize their homes and pay theirnatural gas and electricity bills.

  • The U.S. Ninth Circuit Court of Appeals ruled late yesterday in a stay order that Reliant Energy Inc. no longer has to deliver electricity to the California Independent System Operator without assurance that it will be paid. The order suspends a lower court order by Judge Frank Damrell of the U.S. District Court in Sacramento that required Reliant and other power producers to continue selling power to the penniless ISO. The appeals court said Reliant "has shown a high likelihood of success" in its appeal of Judge Damrell's ruling. The stay order suspends the lower court order until a final appeals court ruling can be issued after hearings scheduled for July.
    Jack Farley, western region president for Reliant, said his company "remains committed to being part of the solution in California." He added "We have made a lot of progress and we hope that we are very close to concluding a long-term contract with the Department of Water Resources to supply power in California."

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