FYI.
---------------------- Forwarded by Paul Kaufman/PDX/ECT on 03/05/2001 11:35 
AM ---------------------------


Jeff Shields
02/26/2001 09:46 AM
To: Christopher F Calger/PDX/ECT@ECT, Laird Dyer/SF/ECT@ECT, Michael 
McDonald/SF/ECT@ECT, Michael Danielson/SF/ECT@ECT, Paul Kaufman/PDX/ECT@ECT
cc:  
Subject: California

I participated in a meeting on Friday afternoon in which staff of the 
California Energy Oversight Board and the Cal Energy Commission briefed 
representatives of the Governor's offices in Washington and Oregon on a 
variety of energy related matter. Prior to the meeting the California folks 
were given a list of topic areas and specific questions relating to the 
respective topics. I have a list of those questions that I will be happy to 
provide if your interested. Following are some notes regarding the discussion 
that took place.

The first topic area was about the projected load/resource balance for this 
summer in California. The Californian's provided a one page listing of the 
various resources and anticipated loads that they expect to exist this 
summer. They expect Peak Demand + 7% Reserves to be 61,125 MW's. They have 
59,209 in total "existing resources."  They expect to have 3,050 MW off the 
existing resources off-line for much of the summer. The net short position is 
4,966 MW. 

Governor Davis expects 5,053 MW of new generation. The Oversight Board and 
CEC believe this is probably going to be 2,500 MW at best. Many of the 
numbers were based on some suspect assumptions, including such things as an 
expectation that BPA will be in a position to make some exports to Cal this 
summer. 

A second topic area is air quality. Governor Davis has asked all of the local 
Air Quality management Districts to relax emission standards for this summer. 
The problem is that California has some rules requiring older plants to 
comply with BACT by 1-1-2002. Many plant owners have ordered the equipment to 
comply and are anticipating being down to install this. There is no single 
coordinator with reliable information on these planned outages. 

NW Power Planning Council staff told the Californian's that they should 
expect the NW Hydro system to be 4000 MW below normal through October, beyond 
that who knows.

It was interesting to listen to the CEC explain how California has gone from 
a system that didn't allow long-term energy contracts to the current effort 
to secure long-term contracts with little capability to manage spot and 
short-term transactions. 

According to the Cal guys, the state expects to be severely energy 
constrained starting in June, even if they manage to have capacity. This is 
largely a function of gas supply.

An economist from the Washington State Energy Office said the between 1997 
and 2004 Washington has seen a 150 % increase in demand for natural gas. He 
said Oregon is up 110% in that same time frame. Apparently much of the supply 
to get through this winter is coming from storage which will have to be 
replenished, creating a conflict with anticipated generation capability this 
summer. 

California is starting to discuss an industrial curtailment program for this 
summer. Like so many of California's efforts, there is no coordinated effort 
around this program. 

The CEC said they are bracing for 20-100 hours of blackouts this summer. 
While this doesn't sound like a lot, I believe the blackouts  at the end of 
the year were only about 5-10 hours ( this is a guess on my part based on 
what I recall from news reports). 

Jeff