California turns attention to boosting generating capacity

Feb 09, 2001 01:00 AM

With a court order requiring power suppliers to keep electricity flowing, California turned its attention to boosting its generating capacity. Gov. Gray Davis unveiled a plan that he said would add enough electricity to power 5 mm more homes by summer.
"We will demonstrate that California can cut red tape, build more power and protect the environment," Davis said in Yuba City, where a new 545-MW plant is expected to be operating by July. In the meantime, a judge's ruling should keep three of the state's biggest power suppliers shipping electricity to California until at least Feb. 16, when the next hearing is held.
State air-quality regulators said they would grant exemptions to ease concerns of two of the suppliers who argued they could be fined for violating pollution standards if they continued meeting California's demand. The third supplier, Houston-based Reliant Energy Services, said it feared the state's two big cash-strapped utilities would never pay for the power it was supplying.
Southern California Edison and Pacific Gas and Electric have said they are nearly $ 13 bn in debt, but State Treasurer Philip Angelides said that he doesn't believe they will have to declare bankruptcy. Lawmakers are discussing enough financial options, including buying a stake in the utilities or taking over their transmission lines, that should enable the companies to pay their bills, Angelides said. "The next step is up to them," he said, adding that even if they did file for bankruptcy, they still could continue operating.

Reliant wants the state to guarantee Edison's and PG&E's power purchases, but Davis has balked at that, saying Reliant could try to drive up the price. Davis signed a law allowing the state to negotiate long-term power contracts that would have it spending some $ 10 bn to provide power to the utilities' nearly 9 mm customers.
The governor's latest plan is designed to add 5,000 MW -- enough to power 5 mm homes - to California's power grid by summer by cutting down on paperworkand streamlining the approval process for small natural gas or renewable-fuel power plants that would run only during peak hours. Plants online by summer would be eligible for $ 30 mm in bonuses.
Davis asked President Bush to direct federal agencies to issue permits for small plants within the same time frame. The White House said it is reviewing the request.
California's energy crisis, which led to rolling blackouts twice, has been blamed on limited hydroelectric supplies, transmission problems, aging power plants, and the state's 1996 deregulation law, which prohibited utilities from passing wholesale costs on to consumers. A federal hearing is scheduled on Edison's request that it be allowed to pass on those costs; PG&E has filed a similar lawsuit.

Source: AP
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