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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 Capsule: Taxpayers Won't be Stuck, Davis Says

Just in case there is some opinion in this article, you should know it was written by EnergyOnline Daily News Editor Ric Teague, and does not necessarily reflect the sentiments of publisher LCG Consulting.

LCG, April 16, 2001California Gov. Gray Davis pledged on Friday that state taxpayers will wind up paying "not one penny" for the billions of dollars worth of electric power the state has been purchasing at the rate of $50 million a day, and that the California treasury will be fully repaid by June 30.

Circle June 30 on your calendar. Note the governor's promise in your personal information manager. In 75 days, take another look at the governor's pledge.

"We will not only be paid off for all our expenses to date, we'll have enough to continue buying power through this year and hopefully through 2002," Davis said in a meeting with Los Angeles Times editors and reporters.

Davis believes that the taxpayers will be taken off the hook by an as-yet-to-occur $12.4 billion bond issue. That bond issue would not only pay off what has been spent so far, it would fund future power purchases and help Pacific Gas & Electric Co. and Southern California Edison Co. pay off their debts.

Look at it this way: I spend twenty dollars of your money without asking and you complain, so I borrow twenty bucks from George and hand you the sawbuck. Are you happy? Not when you realize that it's you who has to pay George back and he wants to apply a little vigorish on top.

No matter what numbers the governor tosses about, it is impossible to know what he's talking about. All of the negotiations with power producers for long-term contracts have been conducted in secret and none of Davis' people is talking. Even state Treasurer Phil Angelides has been kept in the dark, and he's the one who has to make the bond issue work.

Shortly after the bond issue was announced (it was $10 billion then), Angelides said he had arranged so-called "bridge financing" of about $4 billion to tide the state over until the bond proceeds rolled in. But unless the governor is more forthcoming with financial data, neither the bridge loan nor the bond issue will fly.

There is the danger that if the numbers were known nothing would work anyway.

And California continued to stumble through its self-created wilderness.

  • Remember Davis' announcement that he was moving at "warp speed" to have lots of new power production on-line for this summer? He promised that he would personally have 5,000 megawatts of new generation ready by July 1. It won't happen.
    Under a 21-day licensing program put into effect by the governor, the California Energy Commission has approved two small peaking plants to be built by Wildflower Energy LP in San Diego and Palm Springs. Those two plants have a combined capacity of 225 megawatts and are expected to begin producing power sometime in July.
    No one seriously believes that even a 50 megawatt gas turbine generator could be conceived today and put into operation 76 days from today.

  • Statesmen in Sacramento are betraying their roots in the face of the state's energy crisis. Long focused on "out-of-state" power producers as the cause of California's electricity woes, they are now talking tough, even though none of them is Rocky Marciano. "Step one is to seize a few power plants," said John Burton, the San Francisco Democrat who is president pro tem of the state Senate. "That would let them know we mean business."
    Phil Angelides says "We ought to levy an excess profits tax, and if they don't take their foot off our throat, seize a plant or two to sober them up."
    Such talk! If the state used its power of eminent domain to seize power plants, it would pay top dollar for worn out assets, and no one in Sacramento even knows where the starter button is.

  • PG&E and SoCal Ed are scheduled to start making some payments to so-called "qualifying facility" generators this week, but it may not get all of them back on line. The payments will be for power on a going-forward basis and will not cut into the millions of dollars the QFs are owed by the utilities for past purchases.
    In addition, a new rate structure approved by the California Public Utilities Commission has driven some gas-fired QFs to seek ways out of their contracts to sell their power to the utilities. "We are not going to run our plants if we can't run them profitably," said Marty Quinn, an official of Ridgewood Power LLC, which owns three small gas-fired plants. Also, selling power on the volatile spot market is where the money is.

  • Efforts by subsidiaries of The Williams Cos. and Questar Corp. to increase deliveries of natural gas into California have run into a snag. In 1995, California regulators established a rule to protect Southern California Gas Co. from competition. The rule requires power plant owners to pay a special tax if they take gas off pipelines not controlled by SoCal Gas.
    Now that additional gas is needed to fuel power plants in California, Williams wants to extend its Kern River line to the Pacific Coast and increase its capacity. Questar wants to convert an oil pipeline running from New Mexico to Long Beach to carry natural gas. Both companies have been trying to line up customers for the new gas, but have been running into the problem of those new customers having to pay the special tax.
    Watson Cogeneration Co., which operates a 400 megawatt plant near Long Beach, would like to sign up with Questar, but doesn't want to pay the tax. Pat King, Watson's executive director, was stymied: "With the state building all these new gas-fired plants, the question I have is, where are they going to get the gas?"

  • They might try shipping in liquefied political gas from Sacramento.

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