Energy Action Plan II Plays Down 2006 Supply Shortage, Rolls Out Solar California Energy Commission staff revealed during an interagency meeting on the state's Energy Action Plan that the grid will reach a Stage 2 alert only under "adverse conditions" or transmission outages in summer 2006. "Statewide, resources are adequate at this level," said Dave Ashuckian, CEC electricity office manager. North of Path 26, there is plenty of energy available, he said, although in the south in August, the grid's reserve margin could drop to 13.2 percent even with a demand-response program and interruptible users' shutdown. This is a far more sanguine picture of summer 2006 electricity reserves than presented at the end of last year. The bigger issue, said Ashuckian, will be load growth in 2007 that could throw areas south of Path 26 into a Stage 3 alert, even with all transmission lines functioning. California Independent System Operator vice-president Armando Perez, using different figures, basically agreed with the assessment. He said the statewide reserve margin under "adverse conditions" will be 7.3 percent - an improvement from the 4.4 percent in 2005. South of Path 26, the reserve will improve from the extremely low 0.7 percent to a still uncomfortable 2.3 percent. Ashuckian and Perez spoke at the December 12 quarterly meeting on the Energy Action Plan II. Commissioners of the two state energy bodies as well as Sunne McPeak, state secretary of housing and community development, met to try to coordinate their energy planning efforts. The meeting was dominated by the agencies' multiple efforts to reduce energy demand, especially on hot days. The challenge of coordination was highlighted by continued discrepancies between the two commissions and the grid operator concerning how much of a generation increase can be expected statewide by summer 2006. One challenge to such planning is that, as California Public Utilities Commission member Dian Grueneich pointed out, the CEC, CAISO, and the CPUC have quite different numbers for new and retiring power plants. The CPUC expects an increase of 40 MW by summer, while the CEC predicts more than 400 new megawatts. CAISO split the difference, estimating that the state will see an additional 205 MW. There was general agreement that the numbers should be closer. Also at the meeting, the California Solar Initiative, which aims to bring 2,600 MW worth of 1 kW to 1 MW net-metered photovoltaic systems on line statewide by 2016, was introduced. The CPUC proposal gives the CEC authority over new residential development. The CPUC will work with existing residences as well as new commercial, industrial, and agricultural facilities (see story at page 4). As proposed, the program will gradually phase out solar energy subsidies as the installed capacity approaches the 2,600 MW goal. It will also integrate energy audits to ensure that solar-powered buildings aren't energy hogs. In a separate effort to reduce peak demand, the agencies have been pushing demand-response programs for investor-owned utilities. Staff reported that Southern California Edison is ahead of the game, while San Diego Gas & Electric and Pacific Gas & Electric are below their goals. Displeased by the presence of just 30 MW of demand-response capacity at the Los Angeles Department of Water & Power, CPUC chair Mike Peevey suggested that he would like to work with the Legislature to force municipal utilities to take part in demand-response programs. Energy commissioner John Geesman argued that munis generally have more reserves, so they need less demand response. Aside from energy reliability, the cost of energy did come up briefly at the meeting. CEC chair Joe Desmond said that Calpine's bankruptcy filing could have "a cost implication" - read higher prices - though it is unlikely to cause power outages. Agency officials heard an update about efforts to reduce the impact of higher natural gas prices, which included statements that gas prices are no longer expected to rise 50 percent this winter, thanks to mild weather to date.