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: SoCal Ed – Wires Deal or Bankruptcy

LCG, April 23, 2001If its deal to sell electric transmission facilities to the state of California comes unraveled, Southern California Edison Co. will be in bankruptcy court, either voluntarily or forced there by creditors, an official of the utility told a news conference Friday.

"It's the agreement of bankruptcy. Legislators need to understand the consequences of having no agreement," said Bob Foster, SoCal Ed's senior vice president for external affairs. "We've had almost a year of instability and chaos, and having two or three more years of uncertainty isn't the way to handle public policy."

Under a scheme worked out between the utility and California Gov. Gray Davis, the state would pay SoCal Ed $2.76 billion for its 12,000 miles of transmission lines, about a third of the state's grid. That money would jack up the company's credit rating sufficiently for it to borrow more money through a bond issue to pay off some $5.5 billion in unrecovered power costs.

It won't be easy sledding. In attempting to sell the package to lawmakers last week, Davis found the legislature unwilling to "take it or leave it." The wanted the details, which are known only to the governor and other negotiators. Davis softened and said that he would consider amendments from the lawmakers and asked that a special committee be appointed to work out the details with his office.

Foster wasn't so sure. "I'd be foolish to say you can't change a word, but the fact is that the essence of the agreement must stay the same. It's an integrated, balanced agreement, and it must stay the way," he said.

Complicating matters, some legislators have become comfortable with the fact that the lights in Northern California are still on even though Pacific Gas & Electric Co. is in bankruptcy court. "I still don't see how ratepayers could be any worse off with (SoCal Ed) in bankruptcy that they would with the governor's plan," said state Sen. Debra Bowen, a Southern California Democrat.

And the energy shortage extends to the statehouse.

  • California legislators have spent so much of their energy dealing with the state's power crisis they have little remaining energy to devote to other legislative activities. On top of 197 energy bills introduced so far this year, the lawmakers face another 3,000 measures which have received scant attention. And any of those bills that involve money almost all of them must be voted out of their committees by April 27, which is this coming Friday.
    Can the legislature debate 3,000 bills in a week? If it can't, the state's taxpayers could save a lot of money. Surely the state could stumble by for another year without doing anything new. Because of the money the state is spending for power, there will be precious little left for anything else, anyway. State Sen. Dede Alpert, a Coronado Democrat who heads the Senate Appropriations Committee, said "It's better to just step back and say, for anything with money, we're going to have to hear it next year."

  • The California Department of Water Resources asked for another $500 million on Friday so it could go on buying electricity. That request, if approved, will put the water agency $5.7 billion in the hole since January.

  • According to the agenda for its meeting the day after tomorrow, the Federal Energy Regulatory Commission will take up a staff proposal for dealing with the summer power crunch expected to hit California this year. Under the staff plan, certain producers would be required to sell into the California grid during Stage 3 power emergencies declared by the state Independent System Operator. The plan would also limit what the power producers could charge.
    Though the proposal doesn't go far enough for critics, who want full-time price caps, it would mark a shift in federal policy if it is adopted. The Bush administration and FERC Chairman Curt Hebert are unalterably opposed to price caps, but a member of Hebert's staff said the chairman is open to some sort of "price mitigation" under certain conditions.
    In fact, "price mitigation" is as close as the staff recommendation gets to the word "cap." The staff plan would last no more than a year.

  • Mirant Corp., one of "the biggest snakes on the planet," in the governor's parlance, has been taking abuse from state politicians for almost a year, being called a pirate, profiteer, price-gouger and worse. The company, which owns three power plants in the San Francisco Bay Area, is buying newspaper space and broadcast time to say it ain't so. The ads tell listeners and readers that Mirant employees "live and shop and send our kids to schools in the same communities we serve."
    Tom Allen, Mirant's vice president for external affairs, said that workers and their families have "picked up" on hostility from some Californians, mainly political leaders. The ads are a way to give the workers a "pat on the back," he said.

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