California utilities told to speed increase in reserves
The San Diego Union-Tribune --Oct. 29
Oct. 29--State regulators voted yesterday to order utilities to accelerate their buildup of electric generating reserves, saying it was needed to ensure power reliability in the state.
California's other major utilities say SDG&E has avoided its fair share
of the cost burden from expensive contracts signed during the power crisis and
have pressed the PUC to assign more to San Diego power customers. Regional
business, political and labor leaders are pressing for the smallest increase for
San Diego electricity customers.
The PUC's new generating reserve margins, meanwhile, would be more than
double what California had at times last summer, when demand was highest and
electric generating reserves fell to as low as 6.5 percent. But no blackouts
resulted.
A spokesman for the Western Electric Coordinating Council, the industry's
primary reliability organization, said it generally recommends operating
reserves of about 7 percent.
Recent forecasts have called for tightened power supplies next summer and
commission President Michael Peevey said there was a need for action. "We
can't wait any longer," he said.
Peevey deflected criticism that the accelerated demand would be a boon to
power plant builders, saying the potential for developers to inflate new plant
costs would "be much worse the longer we wait." But opponents of the
tightened deadline questioned whether there was any technical reason for it.
Noting that the 2006 deadline had been suggested by Gov. Arnold Schwarzenegger,
Commissioner Carl Wood called the need for an accelerated deadline a matter of
"folklore."
"The governor has announced it's needed, so it must be so," Wood
said sarcastically, before joining Commissioner Loretta Lynch in voting against
the new deadline.
Lynch had authored a proposed order that would have kept the 2008 requirement
in place. Arguing against the accelerated deadline, she said it would almost
certainly result in increased power costs. Ed Van Herik, a spokesman for SDG&E,
said the utility anticipated no problem in meeting the new requirement. Van
Herik said the utility expected to have a new natural gas-fired power plant in
Escondido completed by that time and also was pursuing the acquisition of
additional renewable electric generating resources.
A local consumer advocate, however, said the new requirement would be costly.
"The level of 15 to 17 percent is an overly expensive insurance policy
whose cost will be largely subsidized by small business and residential
customers," said Michael Shames, executive director of San Diego's Utility
Consumers' Action Network.
Shames said reserves as low as 11 percent were considered prudent before
California's deregulation experiment and added that greater reserves would
benefit only the largest electricity users -- who might get cheaper power deals
from the additional capacity -- and plant developers. But Jan Smutny-Jones,
executive director of the Independent Energy Producers Association, which
represents plant developers, said a recent California Energy Commission report
underscored the need for additional plant capacity, particularly in Southern
California.
"We think this is a responsible approach, and we think it can be done in
a manner that will provide reliable power at affordable rates," said Smutny-Jones,
who added that 15 percent generating reserves were not historically high
targets.
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