SHORTAGE: LOW SUPPLIES ARE PREDICTED FOR THE WEEK. WALL STREET DOWNGRADES UTILITIES UNABLE TO PASS ALONG RECORD PRICES FOR ELECTRICITY TO CONSUMERS
Los Angeles Times
With scant power supplies forecast for the entire week, California’s electricity emergency dragged into an eighth day Monday as record electricity prices darkened the outlook for the state’s biggest utilities.
An expected decline in power demand just before Christmas could bring California a break from the daily threat of electricity blackouts, state power managers said.
But no relief is in sight for Southern California Edison and Pacific Gas & Electric, both of which are paying millions of dollars more for electricity each week than they can charge customers under the current rate freeze. Fitch Ratings, a Wall Street debt rating agency, on Monday downgraded the debt of SCE and its parent, Edison International, as well as PG&E, because of concerns about the utilities’ ability to pay their bills.
For the 29th time this year, a Stage 2 power emergency was declared because reserves were expected to fall below 5% on the electricity grid for about 75% of the state, which is operated by the California Independent System Operator in Folsom.
Electricity demand Monday peaked at nearly 34,000 megawatts, and power plants capable of generating about 8,700 megawatts of electricity were unavailable because of planned maintenance or operational problems. That’s better than last week, when at times 11,000 megawatts were unavailable, enough to supply 11 million typical homes, but imports from the Pacific Northwest remained sharply reduced.
Temperatures were below normal there, but the Arctic cold that was supposed to hit the region Sunday night was delayed by a day, said Ed Mosey, a spokesman for the Bonneville Power Administration, an agency of the U.S. Energy Department that markets electricity from federal dams in the Pacific Northwest.
But freezing weather the rest of the week will sharply limit the ability of Bonneville and other electricity sellers to ship power to help California, Mosey said. In fact, the Northwest is threatened by its own power shortfalls.
“The whole West Coast is on the same ground, and it’s thin ice indeed,” he said.
Cal-ISO and the utilities issued urgent calls for conservation again Monday, and power was interrupted to some of the big electricity users that agree, in return for lower rates, to cut consumption when supplies are tight. If reserves are projected to fall below 1.5%, as happened for the first time Thursday, a Stage 3 emergency is declared and rotating blackouts become a possibility to keep the grid from collapsing.
“I know there are probably people out there thinking we’re crying wolf, but when the issue becomes regional and other areas are talking about rotating outages, I can assure you we are not,” said Cal-ISO spokesman Patrick Dorinson.
Electricity prices set a record for the second straight day on the California Power Exchange, the state’s primary electricity market. The average price paid for electricity to be delivered Tuesday hit $ 904.43 per megawatt-hour, up from $ 611.80 the day before.
Because Southern California Edison and PG&E are unable to pass the full cost of electricity on to customers, they are accumulating huge debts that could soon affect their ability to pay their bills and buy power, said Lori Woodland, an analyst with Fitch. Separately, Moody’s Investors Service put Edison International, Southern California Edison and Edison Funding Co. under review for possible downgrades.
“There is liquidity pressure, and that’s because power prices are now significantly higher,” Woodland said. Prices have risen in California in the last few days because Cal-ISO on Friday softened its price cap of $ 250 per megawatt-hour so that the state could attract some of the electricity that was being exported to other states in search of better prices.
SCE and PG&E said the rating downgrades underscore the financial pressure they are under, and they urged state and federal regulators to act on their proposals for higher rates to consumers and businesses and for lower, regionwide caps on the price of electricity.
“I share these concerns of having sufficient liquidity to make all of these payments,” said Jim Scilacci, SCE’s chief financial officer. “We have to manage our cash very carefully.”
But Harvey Rosenfield, president of the Foundation for Taxpayer and Consumer Rights, called the utilities’ claims “hyperbole” intended to put pressure on regulators, the Legislature and Gov. Gray Davis to allow them to charge high electricity rates.
“They have lots of money coming in from their generating and trading subsidiaries,” which are sister companies to the utilities, and from the “competition transition” charge on ratepayer bills, Rosenfield said. “They are not by any stretch of the imagination facing bankruptcy.”