Regulatory Updates by Region

Summer Outlook for the CAISO Grid is Complicated by Potential Extended Outage of SONGS Nuclear Power Plant

According to the California Independent System Operator (CAISO), in a press release published March 22, statewide operating reserves are fine however Southern California could face reliability issues if the San Onofre Nuclear Generating Station (SONGS) stays offline through the summer months. The CAISO issued a summer grid forecast at the ISO Board of Governors meeting, adding an important and urgent update to its annual 2012 Summer Loads and Resources Assessment cautioning that if both SONGS units remain offline this summer, San Diego and portions of the Los Angeles Basin may face local reliability challenges. 

Contingency Plans
Because the testing and inspections of the SONGS units cannot be fast-tracked due to safety issues around nuclear plant maintenance, the ISO has instead begun contingency planning in the event that the SONGS must remain offline this summer. This contingency planning potentially includes:

  • Calling back into service Huntington Beach Power Plant units that were previously slated for retirement. (This plan would not only add 452 megawatts (MW) of capacity in the L.A. Basin, but it also enables 350 MW of additional imported power to transfer into San Diego).
  • Accelerating the completion of Barre-Ellis & Sunrise Powerlink transmission projects.
  • Re-activating the 20/20 demand reduction program and Flex Alert TV and radio conservation campaign.
  • Coordinating military and public agency conservation in key areas of Southern California to further soften peak demand.

In addition to conservation and demand response developed for specific local areas to mitigate the SONGS outage, the ISO also has the option to tap about 2,296 MW of demand response and interruptible load programs to provide operational flexibility during periods of stress on the grid. The ISO projects that 50,341 MW of in-state power plant generation will be available for summer 2012, but only if both SONGS units (2,250 MW total) are online. By the end of summer, a total of 926 MW of new generation will have connected to the grid (that was not available last summer)—half of which is renewable generation.


Other Factors that Could Impact Generation Capacity in the State

  • Statewide water runoff forecasts are well below-average for all the basins, which impacts hydroelectricity capacity. Hydroelectricity generation could run 1,137 MW less than during normal snowpack years however key reservoir levels are currently not of concern because of above-average precipitation in previous winter seasons.
  • The level of imported power under high peak demand conditions is projected to vary from 8,600 MW to 11,400 MW for the ISO and comprises about a quarter of the electricity needed to meet consumer demand.

Impact to and Considerations for Your Buying Strategy
One of the biggest up-front concerns to your business is the price risk associated with decreased generator capacity and increased demand during the summer months—which could be reflected in energy prices, congestion, resource adequacy and/or ancillary services. To mitigate the risk of summer price spikes, you may want to consider hedging your summer and early fall load at the load node. Currently, Q3 2012 on-peak pricing is favorable and waiting for the SONGS units to come back online may not provide enough savings to justify exposing your business to the risks associated with summer weather and the SONGS units remaining offline.


Third Round of Direct Access Re-Opening Reported to be Over-subscribed in Minutes; Businesses Blocked from Access to Alternative Energy Products
The Retail Energy Supply Association (RESA) and the Alliance for Retail Energy Markets (AReM), announced today that it appears, for the third time in the last nine months, the direct access load cap in California was once again over-subscribed nearly instantly. As a result, many customers will be disappointed because they will not be able to be served by an electric service provider (ESP).
Click here for full story


Direct Access Re-opening: Round 2 July 2010 Update (July 2010)
Click here for a list of questions and answers about Round 2 of Direct Access Re-opening, including what you need to do to submit, how to submit a6-month notice and the timing around Round 2 opening and acceptance.


Direct Access Re-opening Update (April 2010)
Click here for the latest information on Direct Access Re-opening, including information on the Year 1 and Year 2 enrollment process.



 

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