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ERCOT 2019 Summer Quarter Outlook

LCG, May 29, 2019-- LCG released a new summer (June – September 2019) report that looks at how the ERCOT grid copes with strained network conditions. Resource adequacy analysis for the region is especially important during extreme summer loading conditions. This summer the network is under particular scrutiny as the reserves have tightened because of recent retirements.

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South Field Energy Breaks Ground for 1,182-MW Power Plant

LCG, May 16, 2019--South Field Energy LLC announced yesterday its groundbreaking for an 1,182-MW, combined-cycle electric generating facility in Columbiana County, Ohio. The natural gas-fired facility is scheduled to commence operations in mid-2021 and represents a $1.3 billion investment.

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Industry News

California Capsule: State May Get No Refunds, Judge Says

LCG, July 10, 2001Curtis L. Wagner, the chief administrative law judge for the Federal Energy Regulatory Commission, said yesterday that power producers overcharged California by only a fraction of the $8.9 billion demanded by Gov. Gray Davis, and the state may come away empty-handed.

After two weeks of closed door hearings, Wagner said he has concluded that refunds of perhaps $1 billion were justified, but added that the amount of money owed the power producers exceeds the amount of refunds he thinks might be due.

"Can a refund be required when overcharges are less than the outstanding bill? The case judge thinks not," Wagner said.

The judge will now have seven days to draft a recommended decision for FERC's commissioners, who could take months to vote on the matter.

Power producers, though pleased by the judge's comments, stopped short of calling it a victory. "I don't know if giving a billion is ever a victory," said Brent Bailey, general counsel for Duke Energy. "But certainly, to the extent it helps refute California's claims, it's a victory."

Michael Kahn, a San Francisco lawyer who represented the state in the talks, predicted that the final figure would be in the billions of dollars when FERC applied its own formulae to calculate refunds.

But Wagner took a different view. "There are refunds due that total hundreds of millions of dollars, and maybe a billion," he said. "At the same time, there are (unpaid bills) due that are probably higher than the overcharges."

While Davis has not budged an inch or a dime from his demands for $8.9 billion, Wagner said that generators had offered a total of $716 million in refunds. Of that, $510 was offered by the five power producers that have been the target of most of the governor's invective.

Whatever Wagner's conclusions, and whether FERC adopts, rejects or modifies them, the case is unlikely to come to an end for a long time. Among the 200 or so lawyers involved in the talks, many say the commission's final ruling will lead to years of litigation.

Gov. Davis has already said he will sue if California doesn't get its full $8.9 billion.

Texans Don't Have the Highest Power Prices
The California Department of Water Resources report of its power purchases, 1,770 pages of documents about the agency's spending on electricity since it took over power purchases on January 17, contains details on last-minute, spot market purchases, and it turns out that Davis' "biggest snakes on the planet earth" haven't been getting the most money.

The most money the water agency spent for power in a single day was $102.4 million on May 10. The second-highest daily expenditure was $101.8 million on May 23 and third was $100 million on May 22.

As of May 31, the state had paid Mirant Corp. of Atlanta $1.24 billion for spot market power purchases, but Powerex, the marketing unit of British Columbia's province-owned utility, was second at $1.05 billion. Third was Sempra Energy Corp. of San Diego, parent company for San Diego Gas & Electric Co., at $429 million.

In fourth place was the Los Angeles Department of Water and Power, which charged the state $331 million for power. The LADWP was headed at the time by S. David Freeman, who is now one of Gov. Davis' energy czars.

Rounding out the top eight were Dynegy Inc. of Texas, TransAlta Energy of Canada, the federal Bonneville Power Administration of Oregon and Duke Energy Corp. of North Carolina.

One Texan in the whole bunch.

Davis Basks in Power Plant Opening
Calpine Corp. commissioned its 560 megawatt Los Medanos power plant in Pittsburg, Calif. yesterday and Gov. Davis was there to take full credit. The project began working its way through the California Energy Commission three years ago, while Pete Wilson was still governor.

Nevertheless, Davis was able to say "We still have a long way to go, but with each new plant opening, we continue to make real progress." The governor pointed out that Los Medanos was the third new power plant he opened in the past two weeks.

For its first three months of production, Los Medanos will be charging the state $232 per megawatt-hour for 300 megawatts of power, 24 hours a day, under a contract signed with Calpine in March. At the time the contract was negotiated, there was some doubt whether it would be on-line in time, and Calpine had to buy backup power to cover its obligations.

Calpine officials said the company will make no profit on that power.

The governor didn't mention the $232 power in his remarks, but he continued to have harsh words for the independent power producers, not including Calpine whose chief executive Peter Cartwright was with him on the podium.

"We're in a war with generators, mostly out of state, that are trying to bleed us dry," he said."Clearly, they don't have the best interests of Californians at heart, and they're trying to ship everydime out of our state and back to Houston, Texas."

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