Targeting the need for action to slash greenhouse gas emissions, Gov. Jerry Brown pointed to the drought in his \u201cState of the State\u201d address. \t\u201cWe do not know how much our current problem derives from the build-up of heat-trapping gasses, but we can take this drought as a stark warning of things to come,\u201d Brown said in his Jan. 22 speech to the California Legislature. \tHigh levels of greenhouse gases not only \u201cmean more droughts and more extreme weather events,\u201d according to Brown, but also \u201cmore forest fires and less snowpack\u201d in California. \t All of these impact the flow of power into and across the electricity grid, raising concerns for state private and public power utilities that rely on hydropower. \tThe record-breaking precipitation shortfalls the last two years and the lack to date this year affect utility electricity supplies to varying degrees. \tIt\u2019s too early to estimate the drought\u2019s impact on electricity prices. But according to Fitch Ratings, prices will be affected. \t\u201cWhile the financial impact is expected to be manageable, utilities with a greater reliance on hydroelectric generation may be forced to use more expensive generation and purchase power to replace the potential shortfall in hydropower output for the third year in a row,\u201d it warned. \t\tHydropower is the cheapest power, said Dennis Pidherny, Fitch managing director. At the same time, there are many variables that affect the price of power, the most significant being the price of natural gas, he added. \tMost utilities though, are not ready to throw in the hydropower towel because it typically rains through April and another \u201cmiracle March\u201d could fill reservoirs. But, they are weighing supply options. \t\tThe Sacramento Municipal Utility District reservoirs are at about half their normal levels. Hydropower from the muni\u2019s projects in the Upper American River Watershed and the Western Area Power Administration represent 25 percent of Sacramento\u2019s power supplies, according to Jennifer Davidson, SMUD manager of budget and enterprise development. \tIf the dry conditions persist, the Sacramento agency is set to tap into other supplies. \t\tBut, filling in possible hydropower gaps with additional power purchases this coming summer is not expected to lead to higher rates for Sacramento. The muni can tap into $27 million from its hydropower ratepayer stabilization fund, which was created as a financial cushion in drought years. In addition, the muni can access another insurance fund to cover the cost of additional supplies. Possible replacement resources\u2014the choice of which is driven by price\u2014includes cogeneration and hydro imported from the Pacific Northwest, said Davidson. \tPacific Gas & Electric likely will increase its imports of hydro from the Pacific Northwest and British Columbia if the drought continues, said Paul Moreno, PG&E spokesperson. The utility has 4,000 MW of hydropower that meets 10-15 percent of its electricity supplies. \tPG&E\u2019s large reservoirs, including Lake Almanor in Plumas County and Lake Britton in Shasta County, are about at \u201c90 percent of normal levels,\u201d said Moreno. PG&E\u2019s smaller reservoirs, including ones in Lake and Tuolumne Counties, however, are at \u201clower levels,\u201d but no percentage was given. \t\u201cWe are holding back as much as we can so we are in a good position at the beginning of summer to meet peak power demands and emergency power situations,\u201d Moreno said. The utility does not expect the drought to impact its 1,200 MW Helms pumped storage project, which sends water uphill when demand is low and releases it at peak times. \tAlthough some California utilities plan to tap into Pacific Northwest hydro imports, that region also is experiencing a drought. \t\u201cTo date, it is the early makings of a low water year,\u201d said Michael Hansen, Bonneville Power Administration spokesperson. He declined to estimate price impacts, saying the agency \u201cdoesn\u2019t forecast what sales may or may not be.\u201d Reservoirs that feed BPA hydro are at 82 percent of capacity, which is considered a low level. Hansen noted, however, "The past few years, we have had slow starts and miracle finishes.\u201d Hydropower supplies make up 5 percent of Southern California Edison\u2019s portfolio. \t\u201cThe company continues to monitor water levels as they affect its hydroelectric operations,\u201d stated Paul Klein, Edison spokesperson. He said the utility was working with state and federal agencies \u201cto maximize available water to generate hydropower.\u201d \t San Diego Gas & Electric electricity supplies won\u2019t be noticeably impacted by the drought because hydropower makes up less than 1 percent of its portfolio. \u201cThe very small amount of small hydro comes from pipeline hydro from water districts, which are not influenced by rain,\u201d said Jennifer Ramp, SDG&E spokesperson, The utility also has a small pumped hydro storage unit in San Diego County but the drought is not expected to impact it, she added.