A cynic tracking the development of the California Energy Commission's summer forecast may see the projections as "lies, damned lies, and statistics." Summer supply predictions, like statistics, are more art than science. The numbers are far from exact. Everyone agrees that the bottom line is avoiding a supply shortfall this summer. But there remains disagreement about how conservative the forecast should be. Stakeholders can argue about how exacting the numbers should be until the cows come home, but the end result could, in fact, be more about who gets blamed if there are blackouts this summer. The commission's forecasts were put to the test during a March 21 workshop. The numbers are from the latest update of its draft 2005 summer forecast of a 1-in-10-year weather scenario. The CEC continues to predict that Southern California faces tight supplies this summer, needing an additional 1,800 MW to meet a 7 percent operating reserve. That number could change, however, if the commission agrees to include power available from voluntary demand-response programs as urged by the three investor-owned utilities. Factoring in demand response would lower the amount of power needed to ensure reliability in Southern California on very hot summer days, as well as in other utility territories. The dilemma is that many of the demand-response programs do not guarantee a set amount of electricity savings. Thus, the issue becomes how much to count as reliable and when to use it-before or after supply emergencies. "If it is not dispatchable, it is hard to count because there is no actual number associated with the load reduction," said Gregg Fishman, California Independent System Operator spokesperson. As to the dispatchable demand reductions that produce a reliable amount of energy savings, the grid operator can call on them only during Stage 2 emergencies-when reserves fall below 5 percent. "The idea is that we try not to get there," Fishman noted. Utility underscheduling during the energy crisis led to extreme pressures on the spot market, which caused power prices to soar during 2000 and 2001. This summer-even if utilities depend more on capricious amounts of savings from demand-side management-they do not have the same incentive to underschedule, according to Fishman. If utilities come up short and there's a sudden major increase in CAISO's spot market, prices are not supposed to rise above $250/MWh-at least not without justification. Currently, CAISO has a soft cap in place. Anything over $250/MWh has to be justified on the basis of the supplier's costs. Still, utilities, such as Southern California Edison, assume that there will be fewer shortages than projected by official forecasts. Arthur Canning, Edison manager of energy supply and management, took issue with the CEC's forecast because it was based on temperature instead of load. He claimed that projecting need according to load instead of the thermometer would reduce needed reserves by "several hundred megawatts" because power usage drops on weekends even if temperatures are high. Both the CEC and CAISO disagreed, noting that the load closely follows temperature. Adding to the unwieldy forecasts is the effect of energy savings from official, paid demand-response programs, and through voluntary conservation. Up to 1,170 MW of power could be available from a handful of demand-response programs in Edison and San Diego Gas & Electric territories run by the California Public Utilities Commission. That would include energy savings from interruptible programs, demand bidding, load reduction, critical peak pricing programs, backup generators, and a couple of non-CPUC curtailment programs. On top of that, Edison expects to be able to get 475 megawatts when demand soars. "[W]e do believe we need to be able to count on demand-response programs since we are paying good money for them and it is at the top of the [Energy Action Plan] loading order," said John Fielder, Edison senior vice-president. Gary Schoonyan, Edison director of regulatory affairs, said the utility hoped to squeeze 300 MW from other demand-side programs, including the 20/20 efficiency program, plus another 175 MW from rekindling mothballed plants. The impact that Edison's rate increase, which takes effect next month, will have on demand is unclear. Last week, the CPUC approved a rate hike, with large residential consumers taking the biggest hit-a 7 to 8 percent increase-to account for higher gas costs and the state's reserve requirements. David Ashuckian, CEC manager of energy supplies, noted that if demand-response programs were factored into the summer forecast, the amount would be less than the 1,170 MW to reflect how much juice actually materializes when the temperature soars. Previously, the CEC factored in "negawatts" from demand-response programs, but it's now more aligned with CAISO, assessing projected load and supplies under adverse conditions, according to Ashuckian. Although the CEC is focused on the upcoming summer scenario, Ron Calvert, CAISO's manager of loads and resources, said he is anxious to move on to the 2006 summer projection, which is expected to be more constrained. Only a couple of power projects in Southern California are on the books, "not much is happening on the transmission front, and big retirements are on the horizon," he stated. The grid operator expects to release its 2005 summer forecast, which is close to the CEC's, next week. Much of the concern about summer reliability focuses on the southern half of Path 26, which moves power in Edison and SDG&E territories. The summer load in the region peaks at about 30,000 MW. Each 1-degree rise in temperature is estimated to increase the load by about 300 MW-about 1 percent of the peak demand. In CAISO territory, each 1-degree increase in temperature above 95 degrees is roughly 550 MW. Supply outlooks, with or without demand response factored in, still are only predictions. CAISO's Calvert warned that forecasts are far from exact because "real-world realities can consume hundreds of megawatts." In addition, daily temperatures are not uniform in the region or across the state, with coastal regions usually being cooler. Calvert added, however, "people take the numbers far too seriously." The CEC expects to finalize its 2005 summer forecast next month.
