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: Rate Hike Hits Business, Big Residential Users

LCG, May 16, 2001The California Public utilities Commission, voting the straight party ticket yesterday, approved 3-2 for a $5.7 billion electric rate increase that will cost millions of residential customers anywhere from $4 to $85 per month but will hit business harder.

The increase, which is retroactive to March 27, will start showing up on June bills.

"Every consumer in California is justified in feeling outrage at the rates we approve today and the bills they will have to pay tomorrow," the CPUC said in a statement. "We share the sense of outrage."

The rate plan voted by the commission yesterday affects about 9 million customers of Pacific Gas & Electric Co. and Southern California Edison Co. Average rates for customers who use more than 130 percent of the amount of power deemed necessary to meet the needs of a typical household will increase 55 percent for PG&E customers and 47 percent for those of SoCal Ed.

The heaviest users heavy television viewers with lots of electronic games, for example would see their rates rise 80 percent in PG&E's case and 71 percent in SoCal Ed's. The two utilities figure there are about 750,000 of those heavy users.

Customers who keep their electricity use under 130 percent of their baseline will see no increase. According to the Foundation for Taxpayer and Consumer Rights, the average householder will pay PG&E an extra $39 a month and SoCal Ed $36 more.

Industrial customers will see an average rate increase of 49 percent, with a rate cap set at 12.3 cents per kilowatt-hour for PG&E customers and 12.9 cents for those of SoCal Ed. It was unclear how the caps would be applied.

Agricultural power users, facing an energy-intensive summer because of low water levels in the state's reservoirs, will see a maximum increase of 20 percent. This year's irrigation will be done with electric pumps.

CPUC President Loretta Lynch said this might not be the end of the price increases. "We can't guarantee anybody this will be it," she said gloomily.

Summer Blackouts Will be Worse than Expected

Yesterday, we reported that the North American Electric Reliability Council expects firm demand to be curtailed for about 260 hours over the course of this summer, with an average firm demand curtailment of about 2,150 megawatts. That, it turns out, was NERC's view through rose-colored glasses. In a Webcast press conference yesterday afternoon, NERC said there could be as many as 700 hours of blackouts if demand is not reduced by higher electric rates, and curtailment could be as high as 5,000 megawatts.

Now we are looking at around 10 hours a day of outages affecting at any one time about half the customers of the state's three investor-owned utilities.

NERC was far more pessimistic that state officials about the amount of hydroelectric power that will be available this summer and also discounted the amount of power the state will be able to import from its neighbors. The council does not believe that any power will be available from the Pacific Northwest, which may have difficulty meeting its own needs because of a long-running drought.

Moody's Cuts State's Credit Rating

Moody's Investors Service yesterday lowered the ratings on all but the most credit-worthy California bonds from Aa2 to Aa3, citing the state's power crisis and the expected impact on state revenues of the slowdown in the high-tech industry.

Moody's noted that state power purchases which have reached about $7 billion have significantly depleted state reserves and questioned the political feasibility of additional rate increases should they be needed to fully reimburse the state treasury.

Moody's action prompted California Go. Gray Davis to blame the downgrade on "Republican obstructionism" that blocked passage of a $13.4 billion bond issue by a two thirds majority which would have made it effective immediately. Republican Assembly leader Dave Cox replied that Davis had "looted the reserve" in his proposed budget.

Power Outages Could Affect Water Supply

The California Department of Health Services, in a notice going out this week to all 8,700 public water systems in the state, is warning of the possible effects of power outages on drinking water. It is also asking the agencies to make sure that fire hydrants have plenty of water.

The agency stresses prevention of loss of system water pressure, which can introduce bacterial contamination into the drinking water supply. All systems leak, the notice says, and when pressure drops, contaminants can get sucked back into the system through leaks.

Pressure loss can be fought by clamping down on use of water for outdoor use, like watering lawns and washing cars, during power outages. The agency suggests the water systems alert their customers to discontinue non-essential water usage during electric emergencies.

Although the CPUC has exempted from power outages those services "necessary to protect public health and safety," the exemption does not apply to water supply or sewage treatment systems.

Environmentalists Have Their Price

Duke Energy Corp., which is upgrading and expanding the output of the Moss Landing power plant it purchased from PG&E, committed more that $12 million to a number of environmental groups in exchange for their agreement not to participate in lawsuits or regulatory challenges to the company's plans.

That is not, as some say, blackmail, according to Duke. "Our whole effort wasn't to try to buy anybody off. It was designed to help increase people's comfort level where there wasn't a comfort level."

So far, Duke has made the following commitments regarding Moss Landing:

  • $7 million to the Elkhorn Sough Foundation to "mitigate" the environmental impact of the plant on the clough and the surrounding wetlands.
  • $3.4 million to the Moss Landing Chamber of Commerce over 20 years for "infrastructure" improvements in the community.
  • $1 million to the Monterey Bay Sanctuary Foundation over five years to monitor water quality. The water quality will be monitored by groups such as Friends of the Sea Otter, Save Our Shores and the Center for Marine Conservation.
  • $425,000 more to the Monterey Bay Sanctuary Foundation to monitor the discharge of heated seawater into the ocean.
  • $100,000 to build a boardwalk so more people can get to the beach more easily.
  • $60,000 for an environmental study of the proposed Elkhorn Slough Circle Trail. If approved, Duke will provide an endowment of $250,000 to maintain the trail.
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