ENergy Agencies Expect 2.2% Reserve Shortage

Energy agencies pinned down an expected 2.2 percent shortfall in operating reserves on the hottest days next summer in Southern California, which could grow to a 27 percent shortage by the summer of 2008. In a December 7 meeting on the state's Energy Action Plan, Joe Desmond, deputy secretary of energy, said the shortages could be ameliorated by delaying the retirements of 300 MW worth of aging power plants, accelerating 994 MW of new supplies by bumping up on-line dates for new plants and new transmission projects, tapping into 400 MW of power from public power agencies, and saving 500 MW from the Flex Your Power program. In addition, finalizing the California Public Utilities Commission's proposed long-term procurement decision next week and attendant contracts for 3,000-4,000 MW of new supplies are expected to alleviate system strains. Edison, which pointed out in comments that it expects energy savings of 850 million kWh this year and next year, proposes increasing efficiency measures by 50 percent, and has 1,000 MW of "dependable, emergency demand reduction capability." It also stated it plans to pursue demand-reduction pricing incentives to reduce peak usage by up to 2,000 MW by 2007. San Diego Gas & Electric had no comment on the matter. Bob Therkelsen, California Energy Commission executive director, noted that reliability is no longer looked at on a statewide basis. The southern and northern halves of the state are evaluated separately because of regional differences and transmission bottlenecks. The two region' peaks hit at different times, with the hottest month being July in Northern California and September in the south. Therkelsen predicts that future supply forecasts will be further broken down and assessed on a smaller regional basis. There is less concern about supplies in Northern California for the summers of 2005-2008 because estimated peak demand should be satisfied. However, efforts are under way to increase demand-response programs in all three investor-owned utility territories by reducing ratepayers? bills by 20 percent for a one-fifth cut in their energy demand, known as the 20/20 program, and fully implementing dynamic pricing programs. Together these efforts could increase the current 560 MW of summer savings to 1,025 MW by next summer, said Steve Larson, CPUC executive director. In addition to speeding construction of new power projects, the administration is evaluating new projects for "deliverability"?their ability to get electricity to where it is needed?according to Desmond. Also elevated to the top of the priority list is the security of the state's electrical system, he added. The CPUC's Energy Division director, Paul Clanon, urged regulators to place more emphasis in their energy plan update on greenhouse gas reductions and the impacts of redistribution of water resources caused by global warming and probable impacts on power supplies. Other priorities should include encouraging renewables until they become 33 percent of supplies, expanding efficiency, and ensuring that the energy goals apply to municipal power agencies, community aggregators, and other energy service providers. CEC member Jim Boyd urged more attention to "reclaimed energy," such as capturing wasted exhaust heat and flared gas at refineries. There was considerable support for the joint agencies' plan, but Steven Kelly, policy director for the Independent Energy Producers, raised concerns about the CEC's new data-collection requirements. He said the staff was proposing a "dramatic expansion" of its collection and analysis functions, noting that four years were spent working on the "existing data-collection paradigm." Marcel Hawiger, The Utility Reform Network attorney, asked the energy officials and staff to not just push the plan's preferential loading order, which gives energy efficiency and demand response top billing, followed by renewables, but to factor in the cost. Clanon also recommended that the revised Energy Action Plan: -- Implement the governor's "Million Solar Homes" initiative, with particular focus on the hot inland valley. -- Establish a Western regional renewables trading program. -- Expand gas pipeline capacity by 50 million cubic feet per day by 2010. -- Encourage the development of safe and environmentally responsible LNG development. -- Encourage the development of more gas storage. Edison Proposes 20/20 Rebate Expansion To shave peak demand between July and September 2005, Southern California proposed altering its energy savings program geared for residences and small businesses. The 20/20 Rebate program offers customers who consume one-fifth less power next summer than the amount used in the summer of 2004 a 20 percent credit on their utility bills. However, the upcoming program will be changed from a monthly to seasonal basis, with energy consumption assessed over the four month summer season. The change is intended to keep those who go away on vacation from reaping the benefits of the program at no cost. The utility also plans to spend $4.1 million on education and outreach to expand the program's effectiveness. "In order to get the critical savings, customers must be made acutely aware of the "crisis" and what they can do to help," Edison stated in its filing to the California Public Utilities Commission last week. PG&E proposed a similar change to its conservation/credit program last week to ensure a "behavior change by the customer, as opposed to a serendipitous reductions."

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ENergy Agencies Expect 2.2% Reserve Shortage

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