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.

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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: North State to Bear Brunt of Blackouts

LCG, May 2, 2001Northern Californians will bear the brunt of summer electricity blackouts because of state power purchasers have favored Southern California plants and getting power from the south to the northern part of the state faces transmission constraints.

But Southern California won't be spared entirely, because it turns out that the California Department of Water Resources, which has been announcing scads of long-term power purchase contracts, has been embellishing its achievements.

So far, the water agency has signed contracts with power producers for less than 2,400 megawatts this year, and says it hopes to have 5,600 megawatts lined up before it's needed.

Now, before we go on, it is important to understand that we are not going to be talking about the total state electricity demand or production. We will be talking about the part that's giving the state fits that served by the state's three investor-owned utilities, Pacific Gas & Electric Co., Southern California Edison Co. and San Diego Gas & Electric Co.

This portion of California's electric industry, the part within the control area of the California Independent System Operator, excludes service provided by municipal utilities and other public power agencies.

Peak demand for power this summer, if the summer is mild, is forecast by the California Energy Commission to be 47,266 megawatts. If it heats up, demand could go as high as 50,068 megawatts in the ISO control area, the commission says.

There is, in the ISO control area, 45,025 megawatts of installed capacity, and that's nameplate capacity. Some of the plants are pretty old and haven't put on a maximum performance for years. Even so, the control area is going to come up 2,241 megawatts short under the best of circumstances, so there will be blackouts everywhere. And, not all of the power plants will be able to run 24 hours a day for the entire summer.

Note that we have not included the 5,000 megawatts of new generation promised by California Gov. Gray Davis because we are not privy to the same fantasies.

Wherever the power comes from, someone has to buy it wholesale so the utilities can deliver it retail. That's where the water agency comes in. California's deregulation scheme forced the utilities to pay high wholesale prices and sell the power at a fraction of its cost, which they did, subsidizing their customers until they ran out of money.

About three-quarters of the contracts the water agency has signed so far are with power producers in Southern California. Standing between that power and the north is the weak link in the state's transmission system, a couple of 500-kilovolt lines in the San Joaquin Valley, called Path 15.

Armando Perez, director of grid planning for the ISO, said "If (the water agency) locked up a lot of contracts on the southern part and we needed to push it to the northern part, it may look just like January again." There were several days of rolling blackouts in Northern California in January.

If the summer is benign and the ISO control area needs only 47,266 megawatts, the utilities will be able to provide about 8,000 megawatts from power plants they still own, including around 4,000 megawatts from two nuclear power plants. Another 12,000 megawatts could be expected from so-called "qualifying facilities," the privately-owned plants developed under the Public Utility Regulatory Policies Act of 1978, but a lot of those plants are off line and all are seeking to be freed from their contracts to provide power to the utilities.

That still leaves 27,000 megawatts the state needs to provide by signing contracts with the companies that bought most of the utilities' gas-fired power plants and, as we have seen, the water agency has signed up less than 10 percent of that.

Gov. Davis believes Californians can somehow cut back on electricity use to the tune of 7,000 megawatts, but that's another one of those dreams we weren't let in on.

Not all the news is bad and not all of Northern California will go dark.

  • Up in Redding, a onetime logging town grown to a small metropolis, the municipal utility is taking steps to make sure its citizens don't face the blackouts that will surely beset their neighbors in Yreka and Dunsmuir. The Redding Electric Department will likely get the go-ahead from the City Council today to proceed with development of a second 43 megawatt generator to go with one they are already building.
    Jim Feider, director of the electric department, said in his report to the council that the city won't need the power for five or ten years and would not consider building the second unit without first arranging for sale of the power. Shasta Lake, which also has a municipal utility, is a likely candidate for such an alliance. The fact that the two munis are both hooked up to the same Western Area Power Administration substation makes it even easier.
    The first 43 megawatt addition is scheduled to begin commercial operation in June of next year, but Feider is considering asking that it be sped up by a little more than a month. The extra work would cost $1.4 million, but by coming on line earlier it would save the city $2.1 million in fuel costs.

  • It came to light yesterday that Duke Energy Corp., one of the out-of-state power producers accused by California's governor of price-gouging, piracy and worse, has sent a feeler to Davis about working a deal that would relieve it of all state lawsuits and investigations. The feeler was in the form of a secret 17-page letter from the company to Barry Goode, the governor's lawyer. As soon as Goode had signed a confidentiality agreement, he made a copy of the letter and sent it to state Attorney General Bill Lockyer, who is investigating Duke and other power producers.
    Tom Williams, spokesman for Duke Energy North America, admitted the company would like to end all of the investigations and litigation. "We have done nothing wrong, but we want to get things moving," he said. "We have a big stake in this state." Duke bought two big power plants from PG&E, Morro Bay and Moss Beach, for $611 million in 1998 and has been trying to get permission from the California Energy Commission to spend $1.6 billion on the facilities to modernize them and increase their generating capacity.
    Duke, along with a dozen other power producers and marketers, has been accused of overcharging California utilities and state agencies for electricity. Here is just how bad a citizen Duke has been:
    Duke has not made outrageous profits selling power on the volatile spot market, where the ISO goes for electricity to keep the grid from failing and where the water agency goes because it doesn't know any better. Up to 90 percent of Duke's power is sold under contract direct to credit-worthy parties. Last summer, when prices on the spot market were pressed firmly against a cap of $750 per megawatt-hour, Duke offered to sell electricity to the utilities at $50 per megawatt-hour under long-term contracts. The utilities were prevented by the state deregulation law from buying power direct and Davis didn't even dignify the offer with a reply.

  • Edison International inc. said yesterday that its SoCal Ed subsidiary had made $44 million in interest payments on its debt but was still teetering on the edge of involuntary bankruptcy. The governor's plan to "bail out" the utility by purchasing its transmission assets would provide $2.76 billion to partially offset the $4 billion the company spent subsidizing its customers' electric bills, but that plan is bogged down in the state legislature and its future looks doubtful.
    "I would say the risk (of involuntary bankruptcy) remains significant," said Ted Craver, chief financial officer of SoCal Ed in an investor conference call. "If we are not making progress, and perhaps more to the point if enough people to whom we owe money lose faith in any constructive resolution coming from the negotiated approach, the risk is there."

  • The Williams Cos., which markets power for AES Corp.'s Southern California power plants, has agreed to refund $8 million to settle charges by the Federal Energy Regulatory Commission that it overcharged California customers for the electricity. Williams did not admit to any wrongdoing in agreeing to the settlement.
    Williams spokeswoman Paula Hall-Collins said the agreement "provided the best opportunity for Williams to move forward instead of engaging in a lengthy and costly hearing process."

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