DJ Cal-ISO Spends $1.1 Mln Tue To Keep Lights On - Sources
Copyright , 2000 Dow Jones & Company, Inc.


LOS ANGELES (Dow Jones)--The California Independent System Operator spent 
about $1.1 million late Tuesday to secure about 1,000 megawatts of power from 
Powerex to keep the state's electricity grid from collapsing, sources 
familiar with the ISO's market operations told Dow Jones Newswires.

Powerex is a subsidiary of BC Hydro, the utility for British Columbia. 
Powerex is responsible for selling excess power to other Canadian and U.S. 
utilities. The company saved California from rolling blackouts last summer by 
selling the state electricity at the last possible minute at high wholesale 
prices, the source said.

ISO spokesman Patrick Dorinson would neither confirm nor deny the claims, 
saying it might be interpreted as market manipulation. Dorinson did say the 
ISO, manager of the state's high-voltage transmission system, purchased "some 
megawatts" late in the day. He wouldn't say how much. The market source said 
the ISO spent about $1,100 a megawatt-hour for about 1,000 MW.

In addition, state irrigation districts, which supply water and power to 
farmers in Northern California, sold excess power - 200 to 400 MW - to the 
Northwest Tuesday, while California was teetering on rolling blackouts. The 
irrigation districts reaped huge profits from Northwest energy companies 
willing to pay a premium for wholesale electricity, a high-ranking market 
source at the ISO said.

Day-ahead prices for power into the California Power Exchange for Wednesday 
missed the $250/MWh price cap by a penny. But the $250/MWh price is for a 
24-hour period. Prices outside of the state are much higher.

The power sold out-of-state by the state-regulated irrigation districts in 
Redding and Modesto, Calif., could have been deals the government-owned 
utilities entered into with energy companies two years ago, Dorinson said, 
but generally California hasn't been in the business of exporting power so 
its highly unlikely, the source said.

The ISO warned Gov. Gray Davis that the state would likely face rolling 
blackouts Tuesday afternoon following a stage-two power emergency declared 
earlier in the day due to the loss of 11,000 megawatts of power due to 
planned and unplanned maintenance and lower than expected imports from the 
Northwest.

In addition, unconfirmed market reports have been circulating that power 
suppliers are shutting down their gas-fired units in order to sell their 
natural gas supply because they can earn more money selling gas than 
electricity because California has a wholesale power price cap of $250/MWh.

A severe cold snap is threatening the Northwest power supply and driving up 
wholesale prices in the western region. California received about 5,600 MW of 
power imports Monday, but that number dwindled to about 2,600 MW Tuesday, 
Dorinson said.

The ISO said about 5:30 p.m. PST Tuesday (0130 GMT Wednesday) that it secured 
additional power supplies between 4:30 p.m. and 5:20 p.m. PST (0030-0120 GMT 
Wednesday) that helped the state narrowly avoid rolling blackouts.

But the ISO said power emergencies will likely be declared throughout the 
month because of limited instate supplies. The grid operator said the state 
will face a shortage nearly every hour of the day for the rest of the year 
due to generation units that are off line because of maintenance and others 
that have used up their pollution credits.

-By Jason Leopold, Dow Jones Newswires; 323-658-3874; 
mailto:jason.leopold@dowjones.com

(END) Dow Jones Newswires 06-12-00

0425GMT