By Hillel Aron
By Joseph Tsidulko
By Patrick Range McDonald
By David Futch
By Hillel Aron
By Dennis Romero
By Jill Stewart
By Dennis Romero
Meanwhile, the crisis deepens, rate hikes or no. State government has had to take on responsibility for providing about a third of the state’s electric power, buying it on the exorbitant spot market. (The other two-thirds is accounted for by retained generation from private utilities, municipal power and renewable power generators.) And the state government portion is creeping upward, with the accident and sustained outage at the San Onofre nuclear plant, a brewing crisis in hydroelectric power, and the loss of stable utility contracts with renewable power generators, which tend to be much smaller firms and which have received little if any money since November. (PG&E is making partial payment; Edison has simply stiffed them.) California Power Exchange board member Rich Ferguson says that the costs to the state for San Onofre replacement power will be substantially higher than the Weeklyhas reported, approaching $1 billion for the five months the reactor is projected to be out of service.
Energy economist William Marcus highlights how vulnerable Southern California Edison leaders have left the utility’s power portfolio. After selling plants in the wake of deregulation, only 34 percent of SCE’s electric power comes from its own plants; 28 percent comes from the renewable generators and other sources, whom Edison has stiffed. The other 38 percent comes from the power companies. Of SCE’s retained generation, about 50 percent is nuclear; most of the rest is coal. Thus the failure of one of San Onofre’s two reactors has knocked out a quarter of SCE’s generating capacity, leaving it, and us, very exposed on the spot market.
As we finally begin to pierce the veil of secrecy, we see that the much ballyhooed long-term power contracts have proved to be anything but a panacea. They are coming in much higher, and are far less nailed-down, than has been advertised by the Davis administration. Which shouldn’t be surprising, given that the power companies view Davis as weak and have a great friend in the White House. No fear equals no leverage. Worse still, the contracts will cover only a third of the shortfall the state has taken on through the coming summer peak-load period. The rest will have to be found on the exorbitant spot market.
The state’s short-term spot-market power buys have gotten completely out of hand. More than $4 billion has already been spent from the state’s general fund. In January, Davis set aside $1 billion to be spent on an emergency basis. The state’s surplus could disappear in a few months, leaving core programs at risk. Moves are under way in the Legislature to take away the governor’s checkbook.
The problems of long-term contracting and the hemorrhaging of the general fund into the spot market are already damaging the state’s efforts to finance power purchases. PG&E threatened to go to court to block an order from PUC member Richard Bilas — a Republican appointee — that directed the utilities to at last begin passing on to the state, as partial reimbursement for power purchases, some of the money they continue to collect from ratepayers. “They have some gall to go to the PUC and say they’re going to go to court to keep our money — to keep our money to pay off their creditors,” said John Burton.
As if these problems weren’t enough, the mostly small renewable-power generators who supply some 20 percent of the state’s electric power through contracts with utilities are in trouble. Most don’t have the deep pockets to sustain them through months of non-payment, a nearly unbroken pattern since November. They are owed $1.5 billion by the utilities, mostly Edison, and have threatened to drag the utilities into involuntary bankruptcy if the Legislature fails to help them out. Many have shut down because of nonpayment by Edison and PG&E.
The Davis plan to resolve this part of the crisis fell apart last Friday in the Assembly while the governor was at a Palm Springs golf-club fundraiser, sponsored by the hospitals trade association, for his political committee.
Aren’t waterfalls exhilarating?