California's coming power imbalance: too much

Blackouts may be today's fare, but an energy surplus is already on the Golden State's menu for 2003.

The year is 2003, and the threat of darkness has lifted from the Golden State. Power plants are plentiful, and electricity is so bountiful the state is actually exporting the precious commodity to other states.

All is peaceful on the Western grid.

California dreamin'?

Not really. According to forecasts, California and the West as a whole are on the verge of a power-supply surge that could make the current situation just a bad memory.

In fact, the road to solving the current supply-demand gap - which has the state legislature, consumer activists, and utilities tied in knots - has already been cleared.

Enough new power plants are being built or are far enough along in the licensing process to dramatically alter the seemingly intractable California energy picture in the next two years. Instead of consuming substantially more electricity than it produces, the state will be generating a large surplus, according to current predictions.

"Our best estimate is that in 2003 we will have a surplus of in-state generation to meet California demand," says Claudia Chandler of the California Energy Commission.

What's more, across the West as a whole, which is interconnected by a regional power grid that is creating more tension than cooperation between states in this period of scarcity, the picture will also improve significantly.

The region's reserve margin of electric generating capacity, which has been declining for the past 15 years, will rise by nearly 50 percent over the next two years, according to data collected by the Western Systems Coordinating Council.

This brightening electricity picture doesn't diminish the current travail of constantly threatened blackouts, nor the need for short-term solutions.

California received a little more room to maneuver with the decision by the Bush administration to continue to require power generators in the West to sell their surplus electricity and natural gas to the state through Feb. 6.

But some analysts say the improvement on the horizon should temper the need for radical supply solutions right now, focusing attention instead on the market mechanisms.

California's botched effort at deregulation has created a financial crunch, with utilities unable to make payments for the energy they buy because frozen retail rates are below the wholesale prices set in an open market.

Governor goes shopping

The optimistic supply forecasts may also explain why California Gov. Gray Davis has stated repeatedly throughout the crisis that he is confident the state can negotiate long-term contracts at lower prices, a process that began this week and produced what the governor called promising results.

With supply rising, locking in a lower but profitable rate could indeed be appealing to some power generators.

While the overall supply and demand equation looks promising, energy analysts are careful to point out that excess capacity can be eroded by unforeseen circumstances. During the current crisis, for instance, dry weather conditions in northern California and the Pacific Northwest have cut sharply into the region's hydropower generating capacity.

Also, the current crisis has been abetted by an unusually large amount of power capacity out of commission for repairs and maintenance. Indeed, that has become such a problem that there have been allegations that plant owners were, in effect, playing possum to drive up the price of power. In his energy plan unveiled earlier this year, Davis has beefed up state inspection of power plants to better verify the causes of plant outages.

But while these factors can combine to significantly diminish generating capacity at any given moment, the expanding margin of power reserve in the West suggests such anomalies will become far less disruptive.

Economic wild card

In addition, as the national economy slows, it could cut the predicted growth in demand in much of the West.

For the Golden State, the changing picture is illustrated in a forecast by the California Independent Systems Operator (ISO). It shows electricity demand in the state now running nearly 7,000 megawatts beyond the state's generating capacity. In 2003, generation of power will exceed demand by a similar magnitude, it forecasts.

That swing in California is the result, largely, of about 20 power plants that have been either approved or are likely to be approved in time to be operational by 2003, according to the California Energy Commission, the state authority that issues the licenses.

Electric output isn't the only issue in making sure customers have the power they need. The transmission system for delivering the power is also crucial, and by most accounts, that system in California is badly in need of upgrading.

(c) Copyright 2001. The Christian Science Publishing Society

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