I just got an update from Mary Schoen, who covers Calif. air quality rules at 
Enron (Environmental Strategies Group)

As of today there has been very little movement to relax the restriction on 
the number of hours a plant can run.  The Governor encouraged, back in Feb, 
AQMDs to relax standards and created an emission offset bank for new 
resources.  However, the EPA must be involved in any relaxation of run-time 
restrictions and they are doing so only in return for increased control 
technology (e.g. SCR).  Deals are in the works but none have been announced.

In terms of peakers, we are not aware of any  projects have resulted from the 
Governor's initiative because the projects hit local siting restrictions.

There appears to be no contingency plan in place to suspend restrictions once 
blackouts occur more frequently.   No one ones to be blamed for violating the 
clean air act.

Mary and other folks from Environmental Strategies will be in Portland on 
4/16.  I plan on setting up a meeting with traders.  Please tell me of your 
interest in attending.

Alan Comnes

---------------------- Forwarded by Alan Comnes/PDX/ECT on 03/21/2001 09:13 
AM ---------------------------
From: Mary Schoen@ENRON on 02/22/2001 02:55 PM CST
To: Neil Bresnan/HOU/EES@EES, Alan Comnes/PDX/ECT@ECT, Jubran 
Whalan/HOU/EES@EES, Kristin Walsh/HOU/ECT@ECT, Clayton Seigle/HOU/ECT@ECT, 
Jeffrey Keeler/Corp/Enron@ENRON, James D Steffes/NA/Enron@Enron, Harry 
Kingerski/NA/Enron@Enron, Richard Shapiro/NA/Enron@Enron, Janel 
Guerrero/Corp/Enron@Enron, Jeff Dasovich/NA/Enron@Enron, Sandra 
McCubbin/NA/Enron@Enron, Susan J Mara/NA/Enron@ENRON, Paul Kaufman/PDX/ECT@ECT
cc:  

Subject: CA Supply Realities

Attached is a memo comparing the CEC's forecasted supply and a more realistic 
look at what additional resources might be available this summer.

The bottom line is that:

1.  The CEC significantly underestimates the outages that may occur this 
summer.  They estimate in their 5,000 MW supply deficit for the summer that 
expected outages will be around 3,000MW.  However, November and December saw 
significantly higher outage levels.  (7,265 MWs) The FERC has investigated 
these outages and found no improprieties- just that the plants are overtaxed 
from running at higher than normal capacities.

2.  There are a lot of uncertainties surrounding the 1,244 MWs of projected 
supply from rerating/restarting existing thermal and renewable projects.  It 
is very unclear how much of this will be able to come on line by this summer, 
if at all.  As evidenced by the e-mail I sent out this morning, local 
communities may be very opposed to restarting shut down units.  In addition, 
these units are likely to be uneconomical.

3.  In the existing resource pool, there are roughly 1,430 MWs of peaking or 
other generation units that are running up against their operating hour 
limitations from air quality regulations.  The Governor has ordered the local 
air quality districts to address these restrictions,  We are beginning to 
seem some movement; however, the US EPA has yet to weigh in on these relaxed 
standards.

4.  The distributed generation/back-up generation capacity to make up some of 
the shortfall is still an unknown.  While there has been some relaxing of the 
limitations on run hours for back-up generation at "essential public 
services" the increase in DG is expected from "clean" sources, not diesel 
emergency generators.

5.  The CEC is doing everything it can to get 50+ MW peaking units on-line by 
this summer.  They are promising a 21-day permit application approval process 
and are offering to pay half of the cost of offsets, for "clean" sources of 
generation in critical areas.

Please let me know if you have any questions or need additional information.



CEC's Summer Forecasted Peak Demand - Resource Balance:


 
List of Peakers running into their operating hour limitations:



Also available in hard copy format only:
(please e-mail me your fax number if you'd like a copy)

Table 1:  Fully Executed CA ISO Summer Reliability Agreements (the ISO 
Peaking Facilities)
Table 2:  Summer 2001 Supply Options - Renewables Construction Status Summary
Table 3:  Summer 2001 Supply Options - Rerate of Non-CEC Projects
Table 4:  Summer 2001 Supply Options - CEC Rerate Status Summary
Table 5:  Idle Biomass Plants Potentially Capable of Restart
Mary Schoen
Environmental Strategies
Enron Corp
713-345-7422