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: 40 Percent Electric Rate Hike Approved

LCG, March 28, 2001The California Public Utilities Commission, marching resolutely where Gov. Gray Davis fears to tread, yesterday approved unanimously the largest electricity rate increase in the state's history.

We maintain the responsibility to keep the lights on," said Loretta Lynch, appointed by Davis as president of the PUC.

The PUC action was "premature because we do not have all the appropriate finance numbers necessary to make a decision," said Davis. "Until we do, I cannot support any rate increase."

California legislators, regulators, utility officials, business groups, consumer advocates, trade unions, cops, firemen, butchers, bakers, candlestick makers and even little children may interpret the finance numbers differently, but all agree there is no shortage of financial data.

PUC member Geoffrey Brown, a recent appointee of Davis, said "Loretta Lynch has taken a lot of bad hits, but it was she who stepped up to the role of leader in California."

Yesterday's PUC action will increase rates for some customers of Pacific Gas & Electric Co. by as much as 46 percent and up to 42 percent for some served by Southern California Edison Co. The rate hike, which will cost electricity users about $5 billion a year, will take effect immediately but will not show up on customers' electric bills until May.

Because the cost of the electric power commodity is just one of several items on an electric bill, the overall impact of the rate increase will be much less than 40 percent. The typical residential customer using 500 kilowatt-hours of power per month will see an increase of $15 a month as a result of yesterday's action, though it comes on top of a $5 increase approved by the commission in January. Still, twenty bucks won't make much of a dent in a householder's lifestyle.

Under Lynch's proposal for tiered rates rates that would penalize profligate consumers of electricity close to half of all residential customers may see no increase at all.

The governor's statement that there was insufficient data to support an increase bewildered lawmakers and his inaction has begun to cost him friends in his own party.

  • State Senate Energy Committee Chairwoman Debra Bowen, a Southern California Democrat, took issue with Davis calling the state's energy problems a challenge instead of something more critical. "It's an energy crisis, not an energy challenge," she huffed.

  • "This is a major crisis," said state Sen. Don Perata, a Democrat from Alameda, "and it would appear he is overwhelmed by it."

  • "If you don't face reality you can't possibly improve it," lectured state Sen. John Vasconcellos, a Democrat from Silicon Valley. "His posture has been baffling."

  • Harry Snyder of Consumers Union, who was firmly in Davis' corner two months ago, now says "Something is wrong. Either he is in over his depth, or it is hubris, or it is denial."

And that's not all from California, where it's sunny and getting warmer.

  • In addition to raising electric rates yesterday, the PUC ordered PG&E and SoCal Ed to pay the California Department of Water Resources for the wholesale power the agency has been paying too much for on the spot market. The two utilities are already in the hole $13 billion because state law required they use that market instead of entering into more rational long-term contracts to cover their native loads, but that didn't stop the regulators. Moreover, they said the utilities had to pay the water agency all the money they got for the power when they sold it to their retail customers. The companies were also told to set up separate bank accounts for the transaction, to immediately pay past due amounts, set money aside for future payments and to pay the water folks every week.

  • The commission also ordered the utilities to pay "qualifying facilities," the non-utility power plants developed in response to the federal Public Utility Regulatory Policies Act of 1978, for future energy deliveries. About 680 of those QFs produce more than 3,000 badly needed megawatts of generation in California and many have been idled because of non-payment by cash-strapped PG&E and SoCal Ed. Lynch said the order "allows us to get more power supplies back on line."

  • The heads of two companies described by Davis as "pirates" because they own power plants in California and have charged market prices for their output, were in New Orleans for the annual Howard Weil Energy Conference when they heard the news about the California rate hike. Keith Bailey, chief executive of The Williams Cos., said "I think the decision is certainly a rational one. It's something the industry has been suggesting." David Peterson, chief executive of NRG Energy Inc., told reporters "This, to us, is the beginning of a breakthrough to get California's power generation and the selling of electricity to retail customers back on track."

  • Power supply in California became tight yesterday afternoon following the sudden loss of about 1,000 megawatts of imported power from the Pacific Northwest, the California Independent System Operator said. The agency declared a Stage 2 power emergency shortly before 2:00 p.m. and instructed investor-owned utilities to cut back electricity deliveries to customers with interruptible contracts.

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