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: FERC Steps in With Electricity Price Caps

LCG, April 26, 2001The Federal Energy Regulatory Commission voted 2-1 last night to impose broad price controls on wholesale electricity sales in California, reversing a stance that had seemed obdurate.

Wholesale power prices will be capped whenever state electricity reserves fall to within 7.5 percent of demand, which means most of the time. The California Independent System Operator has declared a staged power emergency on 60 days so far this year, and it hasn't warmed up as yet.

The caps will go into effect on May 1 and last for a year. "California consumers can rest assured that the commission has been attentive to their problems, and has worked tirelessly to ensure that they receive necessary relief," said Curt L. Hbert Jr., FERC chairman.

Though the price controls announced last night are far broader than an earlier plan under consideration, California officials had sought caps that would remain in effect even when power reserves were ample.

Under the new plan, California possibly through Cal-ISO will impose price caps when power reserves fall to within 7.5 percent of demand, the point at which the ISO ordinarily declares a Stage 1 power emergency. At that point, the allowable maximum cost for power would be based on the highest costs of generation by the least efficient power plants on line at the time.

FERC's staff had earlier proposed price caps that would kick in only when a Stage 3 power emergency was declared, or when reserves fell to within 1.5 percent of demand.

If that was good news for California consumers, there was bad news for the governor.

  • Failure by California Gov. Gray Davis to provide state legislators with a breakdown of his spending for emergency power purchases could block legislation aimed and quickly repaying the state treasury for the $5.2 billion taken from the general fund so far. Last week, the governor pledged that the purchases would cost the taxpayers "not one penny" and the state's coffers would be repaid by June 30.
    Yesterday, lawmakers said that unless the governor is forthcoming with the information, they would block legislation that would permit the state to issue a record $12.4 billion in bonds, the proceeds of which would be used to repay the treasury and provide for additional long-term power purchases. Such action could mean deep cuts in California's state budget for 2001-02.
    "Does that mean that some of the governor's programs that he proposed in his budget may not be financed?" asked Assemblyman George Runner, a Republican from Lancaster. "Maybe" he answered himself.
    Assemblywoman Carole Migden, a San Francisco Democrat, held out hope for a compromise. "All incumbents are going to have to account for their actions in the power crisis," she said. "Obstructing the governor's proposals might be very costly for incumbents if the have no alternative (to offer)."

  • Davis' plan to buy the transmission assets of Southern California Edison Co. for $2.76 billion continued to meet bipartisan opposition in both houses of the state legislature. Most Republicans are against the deal, and so are a lot of Assembly Democrats. "Buying as is on the blind is not a good way to do business," observed Hannah-Beth Jackson, a Santa Barbara Democrat.
    Southern California Democrat state Sen. Steve Peace the chief architect of the state's failed electric deregulation law and the man who guided the measure through joint sessions of the legislature said he doubts the state would be able to sell bonds unless the SoCal Edison deal is approved, or something like it.

  • Pacific Gas & Electric Co. filed a motion yesterday with the U.S. Bankruptcy Court asking authorization to pay past-due amounts for low-cost hydroelectric power it gets under contract from several California irrigation and water districts. Prior to filing for bankruptcy, the utility had been making the payments but has since been prevented from doing so and now owes $1.6 million due since April 6.
    The long-term contracts account for 1,036 megawatts of generation at an average cost of 1.15 cents per kilowatt-hour some of the lowest cost power available in the state. PG&E said it passes the costs through to customers without markup.

  • Cal-ISO issued a Stage 2 power emergency yesterday at 3:18 p.m. PDT, but may be able to skate by today with no alarums, as yesterday was a one-day warm-wave.

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