RE: Bill Richardson and California Electricity Problems.

["Sewell, Linda" <LMS1@pge.com>]

Hi All,

I realize we are getting a bit off topic, but I thought I'd put my two cents
worth in here.  I work for Pacific Gas and Electric at Diablo Canyon Power
Plant.  The magnitude of the problem, for PG&E at least, isn't really
spelled out in Richardson's remarks.  PG&E has borrowed over 4 BILLION
dollars in the past few months to enable us to provide power to our
customers.  We are borrowing at the rate of approximately 1 MILLION dollars
per day right now.  As part of deregulation, both SCE and PG&E were required
to sell at least 50% of our generating capacity.  For PG&E, we sold
everything except Diablo Canyon....there are some hydro exceptions there,
but that gets complicated.  Therefore, we must buy electricity for our
customers.  As part of the settlements to deal with stranded costs (I don't
want to get into that argument) we have a fixed price reimbursement rate
that extends through 2001.  We are getting paid about 4 cents/KWhr, but we
are buying power at rates as high at 60 - 70 cents/KWhr.  The math doesn't
work here at all, at least not for PG&E.  Based on information we are
receiving, our biggest immediate concern is that we are getting close to our
credit limit, so to speak.  When and if we can't borrow any more money to
buy power, I assume there will be sort of state or federal intervention.
There are already ballot propositions being proposed by various consumer
groups to essentially dismantle the deregulation process, so I'm sure we'll
be debating this stuff in the courts and legislatures for years to come.

One thing of concern to me regarding this great experiment (in addition to
the health of my employer, PG&E) is if we were truly in a deregulated market
as forecast for 2002, 60 cents/KWhr is an awful lot of money for the
consumer to pay for electricity.  With my very limited understanding of all
this, one key part of fixing this "broken" system and still transitioning to
a fully deregulated market, is more generation...and that won't happen in
two years.  It's sad during times like this to think about Rancho Seco with
it's 800 MWatts of fully functional electricity in a partially dismantled
condition.  We sure like our power here in California, we just don't want it
generated in our backyards.

I am now stepping off my soapbox and returning to Dosimetry duties.  

Needless to say, my employer hasn't reviewed any of this stuff....and all
the usual disclaimers apply.   

Happy Holidays everyone!!

Linda

Linda M. Sewell, CHP
Diablo Canyon Power Plant
MS 119/1/122
PO Box 56
Avila Beach,  CA  93424
805.545.4315 (voice)
805.545.2618 (fax)
mailto:lms1@pge.com

  

-----Original Message-----
From: glen.vickers@exeloncorp.com [mailto:glen.vickers@exeloncorp.com]
Sent: Thursday, December 14, 2000 6:46 AM
To: Multiple recipients of list
Subject: Bill Richardson and California Electriciy Problems.


[Vickers, Glen]  Read the article behind my shallow comments...

 
> Energy Secretary Richardson is causing others to subsidize energy prices
> in 
> California, when the rest of the country must pay their fair share.  The 
> utilities in the region got the short end of the deal when they were
> limited 
> to what they could charge the customer, but were denied the ability to 
> recover costs due to increases in wholesale prices.  
> 
> Is California the only state in which such ridiculous utility legislation
> be 
> passed?  
> 
> Should state legislated stupidity on such a grand scale be a good case for
> 
> the federal courts?
> 
> Will they meltdown the Northwest transmission lines like they did before?
> 
> Where was the guiding wisdom of the Clinton administration during the
> dereg 
> process?
> 
> There are enough problems in the world, it's just really disappointing
> when 
> the state of California thought long and hard and made a concious decision
> to 
> create a new one.  How many of us spend time at work fixing problems
> created 
> by others?
> 
> I really feel for those who work for the struggling utilities in
> California.  
> Hopefully they'll survive and I'm not just talking about their 4th qtr 
> earnings projections.  
> 
> Glen Vickers
> Nuclear Power HP
> 
> 
> 
[Vickers, Glen]  

> California Warns of Power Outages
> 
> By STEVE LAWRENCE
> .c The Associated Press
>   
> SACRAMENTO, Calif. (AP) - Energy Secretary Bill Richardson ordered
> Northwest 
> power suppliers to sell electricity to power-strapped California utilities
> 
> Wednesday, a move that appeared to avert the immediate threat of rolling 
> blackouts. 
> 
> The announcement came as state regulators warned rolling blackouts were 
> imminent due to power shortages within the state and an inability to buy
> more 
> electricity from the Northwest. 
> 
> The warning came from the Independent System Operator, keeper of
> California's 
> power grid. It said that electricity supplies were so perilously low that
> it 
> might declare a Stage 3 power emergency for only the second time ever. At 
> Stage 3, the grid can impose blackouts. 
> 
> Richardson said at a Washington, D.C., news conference he was using
> emergency 
> powers to force wholesalers to sell power to California at a price he
> deemed 
> fair. He said he would also request that two large Pacific Northwest power
> 
> generating associations send more power to California. 
> 
> ``Our objective is to keep the lights on in California through this
> emergency 
> situation,'' he said. ``We're dealing with a potentially very serious 
> situation here.'' 
> 
> California has been caught in a power crunch over the past several days,
> in 
> part because of cold weather in the Northwest - where California buys much
> of 
> its power - and the shutdown of some generating plants for maintenance. 
> 
> Stephanie McCorkle, an ISO spokeswoman, said the threat of blackouts was 
> delayed at least two hours Wednesday afternoon after the Bonneville Power 
> Administration diverted 1,500 megawatts to California. 
> 
> But she said there was no guarantee that flow of electricity would
> continue 
> past mid-afternoon ``because the power is needed up there in the
> Northwest.'' 
> 
> ``We are literally on the phone hunting for megawatts,'' she said. 
> 
> California's two largest utilities, Pacific Gas and Electric and Southern 
> California Edison, are near bankruptcy due to skyrocketing wholesale power
> 
> costs, Gov. Gray Davis and Sen. Dianne Feinstein, D-Calif., said at a 
> Washington, D.C., news conference with Richardson. 
> 
> Davis and Feinstein asked federal regulators to set a regional price cap
> on 
> wholesale electricity to prevent the high prices that have plagued 
> California. On Friday, the Federal Energy Regulatory Commission lifted
> price 
> caps in California. 
> 
> Record wholesale power prices followed, and PG&E warned it was in
> financial 
> danger. 
> 
> The problem became especially acute when about a dozen suppliers began 
> demanding cash before selling power to California, Kellan Fluckiger, the 
> ISO's chief operating officer, said Wednesday. 
> 
> ``The credit limits of utilities and what markets are willing to sell us
> have 
> been reached and surpassed in many cases,'' Fluckiger said. ``There are 
> questions about utility solvency. That has come to a head today.'' 
> 
> He said officials may have to interrupt power to as many as 4 million 
> customers Wednesday afternoon and early evening, when people come home
> from 
> work and power demand hits a peak. 
> 
> An unprecedented Stage 3 emergency was issued last Thursday, meaning
> reserves 
> had fallen below 1.5 percent. But the state fended off rolling outages by 
> turning off two power-sucking water pumps. 
> 
> This time, Fluckiger said any blackouts would probably last about an hour
> to 
> 90 minutes and occur mostly in Northern California. 
> 
> ``It's a fairly bleak picture,'' he said. ``This thing will not change
> unless 
> something is done to alleviate the credit situation.'' 
> 
> A Stage 2 alert was declared Wednesday afternoon, meaning power reserves
> fell 
> below 5 percent and large commercial customers could be asked to reduce
> power 
> consumption. A Stage 1 alert was declared Wednesday morning, meaning power
> 
> reserves were below 7 percent and all power users are asked to conserve. 
> 
> Stage 1 and Stage 2 emergencies have become routine this month, but last 
> Thursday's Stage 3 was the only time the threat of blackouts loomed. 
> 
> Contributing to the problem is a shortage of water to power hydroelectric 
> generators in the Northwest and California, Fluckiger said. 
> 
> ``We have reservoirs so low that we have people standing by them watching
> the 
> situation to make sure it does not go below safe limits,'' he said. 
> 
> The power crunch over the past few months has been blamed in part on 
> electricity deregulation. California approved a phased-in deregulation of
> the 
> electricity market in 1996 to try to lower prices for consumers through 
> competition, but so far it has led to higher energy prices. 
> 
> At the same time, wholesale power costs have been soaring, in large part 
> because of skyrocketing prices for natural gas. Wall Street is worried
> about 
> utilities' financial health, and on Tuesday, a consumer group urged the
> state 
> to seize and run the strapped $20 billion electricity system. 
> 
> AP-NY-12-13-00 1906EST
> 
> Copyright 2000 The Associated Press. The information contained in the AP
> news 
> report may not be published, broadcast, rewritten or otherwise distributed
> 
> without the prior written authority of The Associated Press.  All active 
> hyperlinks have been inserted by AOL. 


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