WESTERN GOVERNORS

WESTERN GOVERNORS' ASSOCIATION
POWER WATCH CLEARINGHOUSE

NEWS UPDATE

last update: 02/28/01 01:19 PM

February 27
Constellation Energy Group of Baltimore will begin construction in April of the 750-megawatt High Desert natural gas-fired power plant near Victorville in southern California. The $350 million High Desert project, is expected to begin producing power in June 2003.

February 26
The Los Angeles Times reports that much of the West is as short of power as
California as population increased with neither new electric power plants nor conservation to meet the resulting demand. Now, western states want to keep the power that was built to supply California's needs at home.

The Supreme Court has agreed to hear lawsuits challenging FERC's open access transmission rule issued in 1996. The Court will hear arguments by nine state power commissions (including Idaho, Washington and Wyoming) that say the rules go too far, as well as Enron Power Marketing Inc.'s argument that they do not go far enough.

Data from the Department of Energy and the California Energy Commission show that California ranks 47th in per-capita energy use and 49th in electricity use. The state's per-capita electricity use is only 60 percent of the national average. While the mild climate and less heavy industry than other states are part of the reason, California has also led the nation in adopting energy efficiency measures.

Black Hills Energy Capital has announced plans to build a 500 MW coal-fired power plant near Gillett, Wyoming. The plant would be an independent power facility and power would be sold on the wholesale market. The project, which could be operational in 2005, is contingent upon three primary factors: an expedited regulatory approval timetable, the availability of adequate electric transmission access to multiple markets, and the securing of long-term power contracts for the energy produced by the project. Black Hills is also constructing Wygen I, an independent 90 MW coal-fired plant, which is expected to be operational in mid-2003, and another 40 MW gas-fired unit which is expected to be operational by mid-2001.

A national shortage of natural gas turbines may impact California's plans to have new "peaking" power plants to be up and running by July 31.

Senator Frank Murkowski (R-AK) has introduced his National Energy Security Act of 2001. A few of the many measures in the bill include: new tax and regulatory incentives for oil and natural gas production, including opening the Arctic wildlife refuge in Alaska to drilling; funding for clean coal technology research and development and a tax credit of $0.0034 cents per kWh for electricity produced from clean coal technology; funding for nuclear energy research; increasing the authorization for the Low Income Home Energy Assistance Program; requiring reduction of federal buildings energy use; establishing a 10 percent investment tax credit for purchase of distributed generation; establishing tax credits for alternative fuel vehicles; establishing a tax credit for energy efficient homes; and extending the tax credit for electricity produced from renewable resources to 2011.

February 23
The Bonneville Power Administration has issued a request for proposals for
1000 megawatts of wind power. The RFP sets a minimum of 15 average megawatts (about 40 to 60 megawatts of nameplate capacity) for a project, but BPA is especially interested in large projects. BPA noted: "Wind projects are particularly attractive because they can come online in a relatively short time (24 to 30 months), offer power that is competitively priced with other sources such as combustion turbines, are relatively easy to site and expand, have low environmental impacts (including no carbon emissions) and are highly desirable to buyers of "green" power."

Yesterday, for the first day in nearly six weeks, California lifted all
power emergency alerts. California had been under a power alert of one
level or another since January 13. The state was at Stage 3 for a 32-day
stretch that ended over the weekend. Stage 3 is the highest level of alert,
when reserves are so low that blackouts are possible.

February 22
A report from the Union of Concerned Scientists claims that "supplying 10
percent of Nebraska's electricity with wind power by 2012 would create 360
more jobs, $8 million more in income, and $35 million more in gross state
product than producing the same amount of electricity from coal and natural
gas generation."

February 16
President Bush has directed all federal agencies to expedite federal permit reviews in California. These actions must be "consistent with statute and ensure continued protection of public health and the environment..." the President said.

The Bonneville Power Administration has announced a new $200-million energy conservation and renewable resource development program. Regional utilities that buy power from BPA and choose to participate will get a discount on their wholesale power bill if they agree to invest in conservation measures or renewable resources. There are also other BPA conservation programs adding up to $465 million funding, including conservation augmentation, demand exchange, and funding for the Northwest Energy Efficiency Alliance and other utilities to implement a region-wide compact fluorescent lamp rebate programs this spring.

February 15
The Federal Energy Regulatory Commission has agreed to accept part of a request by the California Independent Systems Operator to waive credit requirements for the state's two troubled utilities. The ISO, citing the companies' sinking credit ratings, said the action was needed for the utilities to continue scheduling power deliveries through the ISO and, in turn, to keep electricity flowing to the 24 million Californians they serve. FERC ruled that it accepted the amendments "to the extent they allow PG&E and SoCal Edison to continue to schedule transactions from generation and over transmission they own to serve their own load. We deny the amendments to the extent they allow PG&E and SoCal Edison to continue to schedule transactions from third-party suppliers without adequate assurance of payment. We clarify that PG&E and SoCal Edison may continue to schedule third-party transactions if they obtain financial backing from creditworthy counterparties."

February 7
A federal judge in Sacramento ordered a major electricity supplier to keep
selling power to California, in spite of the scheduled February 7 expiration
of a federal order requiring suppliers to do so. The Independent System
Operator sought a temporary restraining order in federal district court to
force Reliant Energy Services Inc. to keep selling power into California.

Inevitably, the court suits continue to mount in California. On February 6,
Western Gas Resources filed suit against PG&E in federal district court to
compel the utility to pay Western Gas $2.2 million it is owed for natural
gas. The gas was delivered to PG&E under a federal government emergency
order that is expiring. This is believed to be the first such suit filed by
gas producers. PG&E stopped prepaying for gas deliveries on January 8.

With the expiration of the federal order, PG&E faces a ten percent cut in
natural gas deliveries.