WESTERN GOVERNORS' ASSOCIATION
POWER WATCH CLEARINGHOUSE

last update: 12/13/00 11:29 AM

FRIDAY 12/08

Western Governors Hold Call on Electric Emergency

Western Governors (or their representatives) from Arizona, California, Colorado, Idaho, New Mexico, Oregon, Utah, Washington and Wyoming held a conference call on December 8 to discuss the electric energy shortage that could spread into their states as the temperature dips early next week. 

During the call each of the participating states offered an assessment of conditions within their state. While much of the concern has focused on California, other states are faced with tight supplies and high prices for both electricity and natural gas. Typically, this is the time of year when generation plants are down for repair but combined with cold temperatures, limited precipitation and a natural gas shortage this year, the outages threaten to create localized blackouts.  Following are state status reports as of Friday morning.

• Arizona has a major plant down for maintenance.  A cold snap is expected next week.  Arizona Public service is expecting an increase in demand of 30% for next week.  Utilities are not publicly emphasizing potential problems.
• In California 11,000 megawatts of generation, one-fourth of the California generation, are off-line, including 4,000 megawatts for scheduled maintenance, 2,400 megawatts for air quality reasons, and 4,500 megawatts for unscheduled outages.  Negotiations are underway to bring 2,400 megawatts of generation that are off-line for air quality reasons back on-line this weekend.  The state PUC and California Independent System Operator are doing inspections of plants that are offline.  Two such plants will come back on-line this weekend.   Natural gas prices are a big problem with prices hitting $50/Mcf at the California border.  California utility San Diego Gas & Electric has filed a complaint with FERC regarding high gas prices.  California is asking that other states join them.

• On Friday, the governors of Montana, Oregon and Washington declared a Stage 2 alert and urged conservation of electricity.  Click here for the press release from Governor Locke (WY) http://access.wa.gov/news/article.asp?name=n0012032.htm and here for the press release from Governor Kitzhaber (OR) http://www.governor.state.or.us/governor/press/p001208.htm.

• The major problem in Colorado is rising costs.
• Idaho is viewing the current supply condition as a cause of concern but not an emergency.
• The electricity supply situation in New Mexico is under analysis, particularly in light of the coming cold weather.  The state is hearing from producers that gas prices are $35/million Btu at the California border.
• Oregon is participating in a Northwest emergency coordination group that is meeting today and may declare a Stage 2 emergency.  Gas prices have soared.  There is concern that gas-fired generating capacity could be lost as gas is diverted to home heating in the cold wave.   PacifiCorp is notifying interruptible customers and is having to pay high prices for fuel.  Reports are that electricity prices have hit $3,000/megawatthour.
• A major generation station in Utah is down for repairs and awaiting a new generator from Texas.  There is discussion but no decision on issuing an executive order.  The state is making calls to large consumers asking for their help in reducing demand.
• Washington is working with Oregon in considering an emergency alert declaration.  A shortage of 4,000 megawatts is possible.  Conservation, renewed generation by plants that are off-line, and working with EPA to ease any constraints on generation are priority issues.
• In Wyoming, PacifiCorp has contacted the governor with concerns about the adequacy of supply and soaring natural gas prices.

Background Information

A Stage 3 electrical emergency was declared in California on Thursday evening because the transmission grid serving three-quarters of the state was projected to dip into the last 1.5 percent of reserves. The state narrowly averted rolling blackouts and the California Independent System Operator was able to lift the emergency order about two hours later. The Stage 3 alert allowed CA ISO to bring back some power that was being exported and allowed two government controlled power entities to free up some electricity. The California Department of Water Resources was ordered by Governor Davis to free 1,000 MW of power by shutting down the massive pumps that send water through the state aqueduct system and the Western Area Power Administration, which markets power from 56 federal dams in the West, was able to send 500 MW to California. On Friday, California remained under a Stage  2 alert for the fifth day in a row but with the agreements still holding with the pumping agency and WAPA, there was hope that they would not have to go to Stage 3.

There are also supply constraints in the northwestern states, however, and if the frigid weather predicted for Monday and Tuesday sticks around then the northwest region could also face supply shortages. "The supply will be exceedingly tight," said Rich Nassief, director of the Northwest Power Pool, a regional agency that coordinates power operations and planning. The supply factors in the northwest include: lack of rain and a snowpack below normal which means less water to generate hydroelectric power; none of the normal imports from California at this time of year; and lack of construction of new power plants to keep pace with the growth in electric demand. In the Northwest, prices for power are ranging up to several thousand dollars a megawatt hour compared to the normal $30 to $40.

Many of the newer powerplants in the West run on natural gas and supplies there are also tight. According to DOE’s Energy Information Administration (http://www.eia.doe.gov/oil_gas/natural_gas/special/natural_gas_update/natgas_update.html), the western region’s gas-in-storage is 31 percent below the five-year average. Natural gas prices in Southern California hit a record $53 per million Btu this week, which are 21 times higher than a year ago. About one-third of the power plants in California are natural gas-fired. San Diego Gas and Electric has asked federal regulators to cap pipelines transmission rates to the state. In a filing with the Federal Energy Regulatory Commission, SDG&E asked for a price cap of 150 percent of a national average.

Other news this week:

• On December 8, FERC approved a price cap change requested by the California Independent System Operator (ISO).  The ISO’s purchase price cap of $250/Mwh will be lifted.  Bids above that amount will be allowed but will not set the clearing price paid to all sellers, as does the current purchase price cap.  Those bidding above $250 will be required to report their bids to FERC and provide certain cost information.  FERC also authorized the ISO to penalize participating generators that refuse to operate in response to an ISO request in an emergency.  They will be charged an amount equal to twice the highest bid the ISO paid for energy in an hour in which the participating generator failed to respond.  Finally, FERC authorized Qualifying Facilities (QF) to generate at full capacity, which in the past would have caused them to lose their QF status.  See www.ferc.fed.us under “What’s New.”
• In a letter to California Governor Davis, Sempra Energy called for emergency relief from air-quality restrictions, including the temporary lifting of emission limits for generation required reliability of the grid.
• On December 7, AEC Corp., an independent power producer, said it has restarted some units at two gas-fired power plants in the Los Angeles region, adding 600 MW of power, after the South Coast Air Quality Management District withdrew its restrictions on the plants’ output.
• The Georgia-Pacific paper mill in Bellingham, Washington temporarily closed down laying off 800 workers due to high electric prices. The plant is among about 20 large industrial customers relying on "spot market" energy bought through Puget Sound Energy.