This article has the angle I spoke of on yesterday's call ...


 State reviews draft plan to prohibit energy exports 
Published Sunday, March 11, 2001, in the San Jose Mercury News 
BY STEVE JOHNSON 

Mercury News 


To the concern of some of its neighbors, California appears to be getting 
more serious about the idea of banning its electricity generators from 
selling to other states on days when power supplies here are critically short.

A draft proposal to prohibit such exports was circulated late last week by 
the California Independent System Operator, which oversees most of the 
state's power grid. Although officials there could not be reached for 
comment, the proposal said the agency plans to seek approval for the ban from 
the Federal Energy Regulatory Commission, which supervises power wholesalers.

The proposal would require California generators ``to make full capacity 
available'' to this state when electricity reserves dip below 7 percent, a 
condition that results in a Stage 1 emergency. Rolling blackouts can result 
after a Stage 3 emergency, when reserves fall below 1.5 percent.

Gov. Gray Davis and other California officials have been mulling over the 
idea of such a ban for months. They are concerned about California's power 
being shipped elsewhere, particularly when the state is scrambling to find 
enough electricity to keep the lights on.

A Mercury News analysis in December found that thousands of 
California-generated megawatts -- enough to supply several million homes -- 
were routinely being sold to other states during hours when power here was 
critically short.

In addition, the draft proposal said banning exports could help prevent 
generators from engaging in ``megawatt laundering,'' in which they 
artificially inflate the price of their power by selling it out of state to 
an affiliate or an associate and then back into California just before it is 
needed. While in-state power suppliers are somewhat limited in what they can 
charge, no such constraints apply to power sold into California during 
electrical emergencies.

But because California is highly dependent on electricity imports, some 
experts fear that banning energy exports could backfire. They said other 
states that periodically rely on power from California might retaliate by 
barring their generators from selling power to the state.

``Steps that would essentially Balkanize the intertie could be 
counterproductive,'' said David Danner, energy policy adviser to Washington 
Gov. Gary Locke, in reference to the major high-voltage line known as the 
intertie that links California to the Pacific Northwest.

Danner praised Davis' recent efforts to solve California's energy problems. 
Even so, he said, any restriction on the flow of electricity could provoke 
anger in Washington state, where record-low rainfall has hurt the ability of 
the region's hydroelectric dams to make power and where some residents have 
seen their utility bills soar.

``I get calls every day from people . . . who say, `Why should I sit in the 
dark when all the power gets shipped to California?' '' said Danner, noting 
that Washington residents have been asked to drastically cut back on their 
electricity this year. ``There is some resentment.''

Roy Hemmingway, an energy specialist in the office of Oregon Gov. John 
Kitzhaber, expressed concern that the proposed ban would hinder what he 
called ``the mutually advantageous exchange of power between the Pacific 
Northwest and California.

``We in Oregon are pretty sympathetic to the extremely difficult situation 
that California is facing,'' he said. Even so, he added, ``I am hoping this 
proposal would have some flexibility in it.''






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Contact Steve Johnson at sjohnson@sjmercury.com or (408) 920-5043.




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