Low demand led state to give away power, pay utilities to take it

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The Associated Press

Demand for electricity in California has been so low at times that the state has had to give away power and even pay utilities to take it, according to state financial records.

The state lost a total of $26 million in its first three months of trading power on the daily wholesale electricity market as demand and prices declined, documents released this week show.

“They’re selling electricity that taxpayers paid for at 10 cents on the dollar,” said Harvey Rosenfield of the Foundation for Taxpayer and Consumer Rights.

State officials say Gov. Gray Davis‘ power-trading program averted blackouts this summer.

The state began buying power in January but didn’t begin selling it until April when the daily scramble to meet power needs eased.
State traders gave away a total of 1,414 megawatt-hours.

A few times the state had to pay a utility to take the excess power in order to avoid paying penalties that the operator of the state’s power grid charges for dumping surplus electricity, said Oscar Hidalgo, spokesman for the state Department of Power.

DWR is the state department charged with managing the state’s power buys. The state stepped in to purchase power on behalf of three utilities in January, when high wholesale electricity prices led the companies to the brink of bankruptcy.

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