FERC: Southern California Not Ready for Hot Summer

Southern California has inadequate electricity reserves for the peak air conditioning month of August, but ?severe problems are unlikely unless hot weather is severe,? the Federal Energy Regulatory Commission was told by staff analysts May 4. ?Under projected hot summer conditions, it appears that reserve margins are inadequate in Southern California in August, and very tight in September,? Steven Harvey, deputy director of market oversight and assessment, said. He added that the most recent summer forecast from the National Oceanic and Atmospheric Administration calls for above-normal temperatures in the West this summer. According to a report assessing 2005 summer supply and demand presented to FERC commissioners, most of the U.S. is expected to have adequate electricity supplies this summer, though supplies in the West are limited by a lack of water available for hydro generation, which will result in higher prices. With a hot summer, said Harvey, Southern California could have negative reserves in August and a margin of less than 5 percent in September. He said that this could result in price spikes and service interruptions in ?periods?probably short periods?of extreme heat.? FERC?s desired reserve margin is about 6 percent. Harvey noted that the Southern California reserve-margin forecast ?assumes very high levels of [power] imports into California?including imports from the Pacific Northwest. ?We have been told that on a peaking basis, capacity of Northwestern hydroelectric generation should be available for California.? Overall, however, he said, ?the outlook from hydroelectric generation is not good for this summer.? With the exception of California, where available water exceeds the average, ?the West broadly has much less water available for hydro generation than in an average year.? This leaves natural gas as ?clearly the most significant potential contributor to capacity and energy needs in the West this summer,? Harvey told the commission. ?Consequently, we expect electricity prices in the West this summer to be higher on average than over the past few years, driven solely by the use of gas-fired generation to make up for hydroelectric generation.? Pointing out that gas-fired generation will be competing with storage fill for available supplies, he said, ?The Western pipeline system appears adequate to handle the load.?

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FERC: Southern California Not Ready for Hot Summer

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