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: Davis wants to Renegotiate Contracts

LCG, July 5, 2001California Gov. Gray Davis, adamant that the state is owed $8.9 billion by power producers who overcharged for wholesale electricity, said yesterday that he would accept a trade-off for part of that sum in the form of lower prices on the long-term contracts already negotiated by the states Department of Water Resources.

The water agency has signed $43 billion worth of wholesale power contracts with 18 energy companies for electricity supply over the next 10 years. The details of those contracts, made public a week ago under a court order, reveal that the state will pay an average of three times the going price for power in 1999.

In Washington, D.C., the Federal Energy Regulatory Commission is overseeing negotiations between California and power producers over the amount of refunds due the state for overcharges, if any.

In San Jose yesterday, Davis said the state would consider accepting some of the refund in the form of lower prices on the long-term contracts. If accepted by the power companies, the move could appease critics who say the governor has committed the state to paying exorbitant power prices for a decade into the future.

The contracts have been assailed as an expensive, long-term fix for a short-term problem.

The Washington talks, begun on June 25 and moderated by FERC's senior administrative law judge, Curtis Wagner, have been held behind closed doors, with few details emerging. Yesterday, Davis said "We've made suggestions, we've offered various ways in which people could get us $8.9 billion.

"We've said it doesn't have to be all cash. You can give it to us in lower contract prices than you otherwise would have given to us. You can renegotiate our existing contracts and save us money. However you want to do it, it's just got to net out to $8.9 billion," Davis said.

Gary Ackerman, executive director of the Western Power Trading Forum, a association of power suppliers, found the governor's suggestion encouraging. "If he wants to talk some trade-off in renegotiating the contracts, that doesn't seem to be totally out of hand. We're not going to turn away any serious offer."

But Ackerman said the governor needs to back off on his demand for $8.9 billion, a figure widely challenged by industry leaders and regarded as too high even by Judge Wagner.

"I don't think it serves the state of California for the state to hold fast to a number, any more than it does for my members to do the same," Ackerman said. "There's got to be some give and take, and we certainly haven't heard that until now from the governor."

Meanwhile, participants in the FERC-monitored negotiations face a looming deadline. If a settlement isn't reached by this coming Monday, a 10-day extension is possible, but agreement must be achieved by July 19, Judge Wagner will recommend a settlement and the five-member commission will vote on it.

"It's very, very difficult," said Davis of the negotiations. "We'll see on Monday whether or not agreements are made. My hope is that a settlement will be reached. It's possible one will be."

Cal-ISO to Consider Interstate Transmission Links
The California Independent System Operator will issue requests for proposals next week to energy consulting firms who would study the feasibility of new transmission links with power plants in the Las Vegas and Phoenix areas.

Armando Perez, Cal-ISO's director of transmission planning, said that about 5,000 megawatts of new generating capacity is planned for the Las Vegas area and another 12,000 megawatts near Phoenix, but there are severe constraints on importing power from those new sources.

"There is a lot of interest about this work," Perez said, adding that the ISO is also considering doubling the capacity of transmission lines connecting California to Baja California in Mexico. "Right now the transmission ties to Mexico are only good for about 400 megawatts and we want to double that," he said.

The ISO's proposal request next week "will ask energy consultants to help us to study methods todetermine if these transmission projects are economic," Perez said.

Energy Novice to Be Paid $480,000
A 30-year-old 1994 graduate of UCLA who worked one year for Mieco, the U.S. division of international trading company Marubeni Inc., will be paid up to $480,000 to oversee California's day-to-day electricity purchases, the Los Angeles Times reported Tuesday.

Susan T. Lee was a power trader and scheduler for Mieco, not a manager, the paper said, and before that she worked as a pensions and benefits supervisor in New York and Los Angeles.

Pete Garris, a contracts manager for the state Department of Water Resources, said the state must compete for employees against an aggressive energy industry and pay good salaries because rules will not permit hiring regular employees to occupy new positions.

"You can consider this situation to be very extraordinary," Garris said. "Unless we can get permanent and full-time positions approved, these are the rules we have to follow to be able to hire (consultants)."

Water agency spokesman Oscar Hidalgo said that about 60 percent of the 95 people working for the energy division were consultants. Many of them are being treated munificently, as these examples reported by the Times indicate.

  • William L. Green, who has almost a quarter of a century of experience working for the Bonneville Power Administration, Pacific Gas & Electric Co. and Cal-ISO can make up to $340.000 over two years supervising workers who reconcile the state's accounting of energy purchases.

  • Richard Ferreira, former assistant general manager of the Sacramento Municipal Utilities District, has a $500,000 contract and is being paid $200 an hour to assist the state in negotiating power purchase contracts. He worked for the Department of Water Resources for 23 years before joining the SMUD in 1987.

  • Hardy Energy Consulting also has a $150,000, six-month contract that calls for Randy Harvey to be paid $300 an hour. Harvey has a quarter of a century of energy experience, particularly at the Bonneville Power Administration, where he was chief executive officer from 1991 to 1997.

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