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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: State's Bond Rating Drops to the Bottom

LCG, April 25, 2001Only Louisiana has a lower bond rating than California, following action yesterday by Standard & Poor's Corp. to cut the Golden State's credit by two notches, from AA to A+, because of "the mounting and uncertain cost" of the state's power crisis.

Moody's Investor Service, which earlier this month changed its outlook on California bonds from "stable" to "negative," may soon follow suit.

A reduction in the state's credit rating will make it more expensive for California to borrow money for future projects, but it also hits bondholders in their pocketbooks immediately. Prices of outstanding state bonds, for everything from schools to bridges to traffic signals, have been under recent pressure because of the power mess.

"All California bondholders are going to lose value in their bonds because the state's credit has been downgraded," said a municipal debt underwriter.

"It's just unfair, premature and inappropriate for them (S&P) to do that," complained state Assemblyman Gil Cedillo, a Los Angeles Democrat. "We do have reserves, we do have good revenue projections, we do have a plan to get us out of this."

But Zane Mann, publisher of the California Municipal Bond Advisor, put it in a perhaps clearer light: "S&P is saying, 'We don't have any faith that what you say you're going to do, you're going to do."

The downgrade will make the proposed $10 billion (or was it $12.4 billion?) bond issue for power purchases cost state taxpayers more.

It's warming up in sunny California.

  • After a month of cool weather that gave the California Independent System Operator some much-needed breathing space to plan for a long, hot summer, the state began warming up yesterday, and the ISO issued its first Stage 2 power emergency in well, we can't remember when. The heat began in Southern California yesterday and the ISO was faced with the need for an addition 2,000 megawatts of power. At about that time, 1,080 megawatts of generation tripped off line for as yet unknown reasons. At 10:00 a.m. PDT, the ISO had not yet issued a power alert for today.

  • Two West Coast senators formally introduced legislation in the U.S. Congress yesterday to temporarily cap wholesale electricity prices in 11 Western states. Sen. Dianne Feinstein, a California Democrat, and Republican Sen. Gordon Smith of Oregon, unveiled the details of their bill at a news conference and took the opportunity to criticize the Bush administration and federal regulators for failing to take the lead in putting a lid on power prices.
    Feinstein and Smith both sit on the Senate Energy and natural Resources Committee, which is evenly split with 11 members from each party, giving Smith the swing vote. "I think we are very close to having the votes in committee," Feinstein said.
    Committee Chairman Frank Murkowski, an Alaska Republican, said "I have concerns about the proposal and the impact it may have in distorting the market. It is time to address the underlying causes, not just the symptoms."

  • California Gov. Gray Davis appointed his second energy "czar" in a week yesterday, when he named Richard Sklar to head a team working to get new power plants on line. Last week, Davis named S. David Freeman, head of the Los Angeles Department of Water and Power, to head the state's energy conservation efforts and possibly run a state power authority, if one materializes.

    In announcing the appointment to the State Chamber of Commerce, Davis said "Mr. Sklar is with us for the long haul." In an interview from New York, Sklar told the San Francisco Chronicle "We're going to be getting these projects under way and follow them from the 'let's do it' state to the day we cut the ribbon."

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