california update ca power market awaits bailout
california power watchers were hoping for results early this week from the
marathon government - industry negotiations . the principals of last tuesday
night ' s marathon session were expected to meet by video - conference over the
weekend to review solutions developed by staff working groups , which met
through the end of the week . ( see daily gpi , jan . 11 )
on the west coast the week ended with emergency legislation starting its dash
through the state capital , and the governor holding a 90 - minute meeting with
two neighboring western governors to piece together a regional strategy on
joint energy conversation / supply cooperation .
on friday gov . gray davis said if ferc fails to act , he is sure congress will
take up legislation to stabilize power prices throughout the country , " or at
least give governors the option to opt into a stabilized pricing mechanism .
sen . diane feinstein , d - ca , announced she was working on a bill to be offered
later this month , which would allow the energy secretary to impose price
caps .
davis indicated that he and federal officials would be working over the
weekend and he expects to have something to announce early next week , and in
the long term he expects to " solve this problem in the next 90 days and in
six months hopefully this whole episode will be a distant memory . "
also on friday standard & poor ' s assigned an investment grade triple b - plus
corporate credit rating to subsidiary pg & e energy trading holdings , and said
subsidiaries gas transmission northwest and pe & g generating also would
maintain their investment grade rating , based on each entity ' s own
creditworthiness and economic self - sufficiency . these units would be
insulated from any downgrades of the parent pg & e corp . , or the utility
subsidiary , pacific gas & electric . this action came after pg & e suspended its
fourth quarter dividend and announced it was cutting staff and services ( see
daily gpi , jan . 12 ) .
following their meeting in sacramento friday , gov . davis and his counterparts
in oregon , john kitzhaber , and washington , gary locke , announced a feb . 2
western governors ' meeting would be held in portland , or , to push for a
western region wholesale power price cap , and a region - wide push by each
state to conserve energy and finally to share energy supplies on a seasonal
basis . as fellow democrats , washington ' s gov . locke and oregon ' s gov .
kitzhaber expressed strong support for gov . davis ' s efforts and pushed for
solutions from ferc
" it is extraordinarily important that this not be a partisan struggle between
west coast democratic governors and the inland governors who are mostly
republican , " said kitzhaber , noting that not all the solutions have to come
from new generation . conservation can play a major role , too . both visiting
governors said they strongly support the state of california becoming the
purchaser of long - term power and then reselling to the utilities .
they are banking on the fact that the state ' s creditworthiness will gain much
better prices than the cash - strapped , near - bankrupt two major utilities ,
southern california edison co . and pacific gas and electric co .
the lower house ( assembly ) of the state legislature cranked out about a dozen
proposed laws , including one to completely restructure the oversight boards
of the state - chartered grid operator ( cal - iso ) and wholesale spot power
market ( cal - px ) from large stakeholder panels of 26 to 30 industry
representatives to small units of three people each - - - all appointed by the
governor . another proposed law would prevent the state ' s three major
private - sector utilities , including the two near bankruptcy , to sell their
remaining generation units , which are comprised mostly of nuclear ,
hydroelectric and interests in out - of - state coal - fired plants .
gov . davis indicated he expects state lawmakers to pass the bill this
wednesday , establishing three - person boards , and the members of the iso panel
will be the head of the state ' s three principal agencies overseeing
electricity - - - the california public utilities commission , california energy
commission and electricity oversight board , of which two of the three are
headed by davis appointees .
the near - rolling blackouts of thursday , caused by storm - driven wave surges
that curtailed power production at coastal plants , were eliminated over the
weekend through stepped up conservation , restoration of major units at pg & e ' s
diablo canyon nuclear generating plant , and by what the grid operator called
" the biggest single - day " lowering of demand he has ever experienced . this
week cal - iso expects to have 5 , 000 to 6 , 000 mw that were out of service last
week back online , further improving the chance of avoiding power emergencies .
salvaging the state ' s system last week at the critical stage three was
california ' s water resources department , which operates the massive
north - to - south network of aqueducts . it purchased 1 , 200 mw from out of state
using the state ' s creditworthiness to get around the cal - iso financial
problems .
as it has done on a lower - profile basis in the past , the water resources
department acted as a quasi - state power authority , and the cal - iso coo kellan
fluckiger said that other market participants also are providing this sort of
" intermediary financing " in light of the credit concerns surrounding the iso
and utilities . the water department also contributed to the supply crunch - - -
as it does routinely - - - by shutting down its heavy electricity consuming
pumps that move massive quantities of water around the state .
- -
california update
ca power market awaits bailout
california power watchers were hoping for results early this week from the
marathon government - industry negotiations . the principals of last tuesday
night ' s marathon session were expected to meet by video - conference over the
weekend to review solutions developed by staff working groups , which met
through the end of the week . ( see daily gpi , jan . 11 )
on the west coast the week ended with emergency legislation starting its dash
through the state capital , and the governor holding a 90 - minute meeting with
two neighboring western governors to piece together a regional strategy on
joint energy conversation / supply cooperation .
on friday gov . gray davis said if ferc fails to act , he is sure congress will
take up legislation to stabilize power prices throughout the country , " or at
least give governors the option to opt into a stabilized pricing mechanism .
sen . diane feinstein , d - ca , announced she was working on a bill to be offered
later this month , which would allow the energy secretary to impose price
caps .
davis indicated that he and federal officials would be working over the
weekend and he expects to have something to announce early next week , and in
the long term he expects to " solve this problem in the next 90 days and in
six months hopefully this whole episode will be a distant memory . "
also on friday standard & poor ' s assigned an investment grade triple b - plus
corporate credit rating to subsidiary pg & e energy trading holdings , and said
subsidiaries gas transmission northwest and pe & g generating also would
maintain their investment grade rating , based on each entity ' s own
creditworthiness and economic self - sufficiency . these units would be
insulated from any downgrades of the parent pg & e corp . , or the utility
subsidiary , pacific gas & electric . this action came after pg & e suspended its
fourth quarter dividend and announced it was cutting staff and services ( see
daily gpi , jan . 12 ) .
following their meeting in sacramento friday , gov . davis and his counterparts
in oregon , john kitzhaber , and washington , gary locke , announced a feb . 2
western governors ' meeting would be held in portland , or , to push for a
western region wholesale power price cap , and a region - wide push by each
state to conserve energy and finally to share energy supplies on a seasonal
basis . as fellow democrats , washington ' s gov . locke and oregon ' s gov .
kitzhaber expressed strong support for gov . davis ' s efforts and pushed for
solutions from ferc
" it is extraordinarily important that this not be a partisan struggle between
west coast democratic governors and the inland governors who are mostly
republican , " said kitzhaber , noting that not all the solutions have to come
from new generation . conservation can play a major role , too . both visiting
governors said they strongly support the state of california becoming the
purchaser of long - term power and then reselling to the utilities .
they are banking on the fact that the state ' s creditworthiness will gain much
better prices than the cash - strapped , near - bankrupt two major utilities ,
southern california edison co . and pacific gas and electric co .
the lower house ( assembly ) of the state legislature cranked out about a dozen
proposed laws , including one to completely restructure the oversight boards
of the state - chartered grid operator ( cal - iso ) and wholesale spot power
market ( cal - px ) from large stakeholder panels of 26 to 30 industry
representatives to small units of three people each - - - all appointed by the
governor . another proposed law would prevent the state ' s three major
private - sector utilities , including the two near bankruptcy , to sell their
remaining generation units , which are comprised mostly of nuclear ,
hydroelectric and interests in out - of - state coal - fired plants .
gov . davis indicated he expects state lawmakers to pass the bill this
wednesday , establishing three - person boards , and the members of the iso panel
will be the head of the state ' s three principal agencies overseeing
electricity - - - the california public utilities commission , california energy
commission and electricity oversight board , of which two of the three are
headed by davis appointees .
the near - rolling blackouts of thursday , caused by storm - driven wave surges
that curtailed power production at coastal plants , were eliminated over the
weekend through stepped up conservation , restoration of major units at pg & e ' s
diablo canyon nuclear generating plant , and by what the grid operator called
" the biggest single - day " lowering of demand he has ever experienced . this
week cal - iso expects to have 5 , 000 to 6 , 000 mw that were out of service last
week back online , further improving the chance of avoiding power emergencies .
salvaging the state ' s system last week at the critical stage three was
california ' s water resources department , which operates the massive
north - to - south network of aqueducts . it purchased 1 , 200 mw from out of state
using the state ' s creditworthiness to get around the cal - iso financial
problems .
as it has done on a lower - profile basis in the past , the water resources
department acted as a quasi - state power authority , and the cal - iso coo kellan
fluckiger said that other market participants also are providing this sort of
" intermediary financing " in light of the credit concerns surrounding the iso
and utilities . the water department also contributed to the supply crunch - - -
as it does routinely - - - by shutting down its heavy electricity consuming
pumps that move massive quantities of water around the state .
- -