Edison Bids Hydro Despite Low Lakes

By Published On: August 21, 2014

Despite a requirement for Southern California Edison to allocate water from its hydro facilities to farms for the first time in 57 years because of the drought, the utility is still bidding its power to the grid operator. A 1957 contract between the federal government and Edison requires, upon request, that the utility release water from its Big Creek reservoirs to the San Joaquin River Exchange for irrigation purposes. Seeing the writing on the dry wall of drought, the Exchange notified the utility it planned to invoke that right March 6, according to Paul Teensma, Exchange water rights manager. He said physical water releases began May 15. “We couldn’t go through the Delta this year, and normally Shasta-Trinity [water] gets pumped through Tracy” where farmers can access it, Teensma said. But, protecting endangered species like Delta smelt and salmon restricted pumping, he added. What allows Edison to keep constantly bidding despite the Exchange’s demands is that the water allocations are not due until the end of the month, which gives traders leeway. Edison doesn’t have an obligation to farmers on an hour-by-hour or day-to-day basis, said Vibhu Kaushik, Edison principal manager, resource and water optimization. “Say August requires a release of 30,000 acre-feet. Based on my August load and prices, I figure marginal cost and bid into the market,” Kaushik explained. Because the volume to work with is so big, he added, “We have flexibility.” The Exchange is allowed to receive 650,000 acre-feet/year from the hydro system. Teensma expects only one-third of that because the contracted amount of water is far higher than what’s typically delivered or needed. But, the supply is not to flow all at once, and the amount released varies. Teensma said there just has to be a certain amount of water stored in Millerton Lake at the end of the month. “Farmers want to anticipate releases,” to time their irrigation, he added. The water rights to the flow held in Edison’s dams cover 240,000 acres of farmland, according to Teensma. In a normal year, Edison releases more water later in the year when heat rises to meet peak electricity demand. “But this is not a normal year,” said Kaushik. He expects hydroelectricity output at 40 percent of normal. Despite the draw from Edison’s Big Creek system of reservoirs and turbines, the water still flows through them and electricity is available to be bid into the California Independent System Operator’s day-ahead market. He said that the capacity in the system is offered 24 hours/day, but at a price. The marginal price is more expensive this year, so whether the grid operator dispatches the energy at that price is not a certainty. The amount of capacity bid and price remain confidential. The marginal cost of hydroelectricity from the Big Creek facility is higher than last year, “but not orders of magnitude higher,” Kaushik said.

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