Edison's Plan: New Local Power Plants

Southern California Edison customers may face blackouts next summer unless new generating plants are quickly built at strategic locations within its service area, according to state documents - and Edison plans to be the developer of at least the first wave of new supplies. The California Independent System Operator and the California Public Utilities Commission have concluded that additional resources must be marshaled into service before the next hot season arrives, according to Nader Mansour, Edison corporate environmental policy manager. To avoid outages, Edison plans to build five new peaking units by next summer, as well as contracting for additional power plants after next year. Edison Mission Energy, which is planning to build new plants, is expected to bid for Southern California Edison contracts. "There isn't new capacity available in the [South Coast] basin," Mansour said. Independent generators, however, insist that the company can contract for additional power from existing plants or for new facilities from nonaffiliate companies under long-term contracts through the existing procurement process. "It's ironic Edison pulled a request for offers last year because they didn't need it," Steven Kelly, Independent Energy Producers policy director, told Circuit. "Now they're talking potential catastrophe." (A request for offers is a public call for companies to submit competing proposals to provide a utility with new energy supplies.) Kelly said consumers will pay higher rates unless the utility considers alternatives to building their own plants, from imports to new supply contracts. "The physics of the grid don't require" that plants be built in a limited area within Edison territory, Kelly asserted. The utility escalated its call for new supplies last week at an air board meeting. "The area will face cascading blackouts," said Mansour, unless new plants are built within Edison's service territory. The anti-smog agency, the South Coast Air Quality Management Board, agreed to some extent with Edison's assessment. "Based on the size of the South Coast area, it seems reasonable to assume that some new power sources would need to be located in this region to meet the power needs in the area," said Sam Atwood, SCAQMD spokesperson. In 2005, the neighboring Los Angeles Department of Water & Power offered to sell Edison up to 250 MW of power during the summer. However, Edison turned down the offer, saying it had plenty of power resources at its command (Circuit, March 25, 2005). With 7,000 MW of capacity, the department typically has had plenty of slack in its system. However, this summer's heat wave tested its capacity. When demand on its system hit 6,165 MW, the department's normal 20 percent reserve capacity fell to 13.5 percent. This July's heat storm appears to have changed the equation when it comes to meeting resource-adequacy and reliability requirements for utilities throughout the state. Fearful that another heat storm could occur next summer, the CPUC called for Edison to install 250 MW of new peaking plants by August 1, 2007. The adopted order from commission president Mike Peevey also calls for the utility to enroll more customers in its air conditioning cycling program to save another 300 MW (Circuit, Aug. 18, 2006). Peevey wrote that recent events "have exposed certain vulnerabilities in the electric generation and transmission infrastructure that require immediate attention to assure reliability in 2007." The commission acted after the grid operator recommended installing "quick start generation" before next summer. The grid operator is examining whether transmission capacity into Southern California can be enhanced any further by next summer, said Gregg Fishman, grid operator spokesperson. CAISO forecasts that Southern California will face power shortages without demand response and interruptible programs next summer. It further says that up to 392 MW of new resources will be needed to maintain a 5 percent reserve margin, below which it issues a Stage Two emergency notice. Mansour said the utility cannot rely on excess capacity from distant generating plants to fill the growing gap between peak demand and supply. He maintains that imported power could not come in fast enough to prevent cascading blackouts if a transmission line failed or a local power plant broke down during peak demand. The time lag involved in importing distant power would cause electrical circuits to trip and shut down across a wide area. The predicament leaves the utility with few choices, according to Mansour. First, the utility plans to place small turbines at strategic points - substations - throughout its local distribution system to maintain voltage and frequency during peak periods, he said. These small turbines will require air pollution control permits but will be exempt from state licensing, because, according to documents filed with the Securities and Exchange Commission, at 45 MW of capacity they will individually fall below the California Energy Commission's 50 MW review threshold. Second, said Mansour, the utility must see that additional plants are built within the heart of its local grid. Edison is issuing a request for offers for up to 1,500 MW of new capacity, and much of that is expected to be within its service territory, Mansour said. Meanwhile, the utility's unregulated affiliate, Edison Mission Energy, is pursuing licenses to construct two 500 MW peaking plants, one in fast-growing and hot Riverside County and the other in eastern Los Angeles County (Circuit, Dec. 6, 2005). The plants' licenses have been held up by a lack of emissions credits, the affiliate told the South Coast air board. Mission Energy is expected to bid on Edison's upcoming request for offers, Mansour said.

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Edison’s Plan: New Local Power Plants

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