Calif. power resources will be 3,752 Mw short in 2001

By David Feliciano, BridgeNews

Scottsdale, Ariz.--Dec. 7--California resources and reserves for
electricity will be 3,752 megawatts short of the anticipated load in 2001,
California Independent System Operator (ISO) President and CEO Terry Winter
said Thursday at the annual Western Systems Coordinating Council meeting.

"I'm concerned about supply," Winter said.

"Without sufficient supply, markets will set socially and politically
unacceptable price levels (for wholesale power)"

Winter said California power resources will total 46,679 Mw in 2001, but
load is expected to reach well over 50,000 Mw. Over 17,000 Mw of new 
generation
is planned for the state, but most new power plants are not expected to begin
service until 2002 and beyond.

Not helping California's cause, Winter said, are reduced imports of power
this year from neighboring states, down from 7,500 Mw in November of 1999 to
3,900 Mw this November.

Winter also pointed to the affect of a soaring natural gas market. "You can
build generation, but in California, natural gas and emissions are the next
problems. Natural gas is running into the same problem electricity has...there
is a shortage."

Due in part to the above California wholesale power prices have skyrocketed
since May, leading to rolling blackouts in San Francisco in June and a series
of conservation emergencies since that time. The state has been under a power
conservation warning much of this week.

As tools to solve California power woes, Winter suggested the ISO file for
an extension of price cap authority for power until markets are demonstrated 
to
be workably competitive. The ISO's authority to set price caps, which 
currently
stands at $250 per Mw/hour expired Nov. 15. The Federal Energy Regulatory
Commission on Nov. 1 proposed caps of $150 Mw/hour, but has yet to officially
rule on the matter.

Winter also called for the California Public Utilities Commission to allow
full peak requirements to be forward contracted and hedged by load.  End

*********************************
California ISO Files Emergency Action With FERC to Deal With Electricity 
Supply Crisis

FOLSOM, Calif.--(BUSINESS WIRE)--Dec. 8, 2000 via NewsEdge Corporation  -
While grappling
with another Stage Two Emergency today, the California Independent
System Operator (California ISO) is taking swift action to deal with a
critical shortage of bids in the ISO market as well as serious
underscheduling of electricity in the forward markets. The proposed
market changes create the incentive to sell power in existing markets
and allow the ISO to compete better for regional energy, which is in
short supply throughout the western United States.

This afternoon, the ISO filed an emergency tariff Amendment 33
filing with the Federal Energy Regulatory Commission (FERC).
Commencing at 3:00 p.m. today Friday, December 8, 2000, the California
ISO will implement a $250 "soft cap" on the ISO's Real-Time Energy
Market similar to that proposed by FERC in its November 1 Order
Proposing Remedies for California Wholesale Electric Markets (93 FERC
61,121).

Analogous to the soft cap proposed by FERC, Energy bids prices in
excess of $250/MWh will no longer be rejected by the ISO's
computerized scheduling system but, instead, will be evaluated in
price merit order. The California ISO has recently been placed in the
position of having to negotiate prices for power in real-time and is
finding it increasingly difficult to manage these negotiations while
at the same time balancing supply and demand; causing significant risk
to the California ISO's ability to maintain reliable control of the
power grid. The ISO will no longer negotiate prices in real-time. To
the extent the ISO issues dispatch instructions to Scheduling
Coordinators (market participants) for energy bid prices in excess of
the $250 soft cap, then settlement will be as-bid, subject to refund,
if the costs cannot be verified. Market participants will be required
to submit cost documentation to the FERC, with informational filings
to the ISO and the state, supporting any Energy payments priced in
excess of the soft cap.

The current $250 price cap in Ancillary Service capacity bids is
unaffected. Also, the market clearing prices for Ancillary Services
and Imbalance Energy will continue to be calculated and posted up to
the $250 soft cap.

Amendment 33 proposes three key elements:

1. Implement a "soft cap" of $250/MWh for Imbalance Energy. This
soft cap would limit market clearing prices to $250/MWh, but would
allow market participants to submit bids over $250 if they submit
verifiable costs.

2. Allocate the costs for energy purchases above the soft cap to
Scheduling Coordinators who rely on the ISO's real-time energy
purchases to meet their loads, rather than buying their own supplies
in the forward markets; and

3. Impose penalties on Participating Generators that fail to
comply with ISO dispatch instructions. Amendment 33 is posted on the
ISO's website at www.caiso.com under FERC FILINGS on the home page.

The ISO has seen a dramatic increase in costs for the power it
buys in real time. For the first five days of December we averaged
approximately $5 million per day. However, on December 5th we paid $36
million, December 7th $81 million. Failure to take action now would
have the local utilities and ultimately their customers continue to
face these extraordinary costs.

The California ISO is charged with managing the flow of
electricity along the long-distance, high-voltage power lines that
make up the bulk of California's transmission system. The
not-for-profit public-benefit corporation assumed the responsibility
in March, 1998, when California opened its energy markets to
competition and the state's investor-owned utilities turned their
private transmission power lines over to the California ISO to manage.
The mission of the California ISO is to safeguard the reliable
delivery of electricity, facilitate markets and ensure equal access to
a 12,500 circuit mile "electron highway."

***********************************
Federal Agencies Gear Up Hydro System to Meet Demand

PORTLAND, Ore., Dec. 8 /PRNewswire/  via NewsEdge Corporation  -
Due to an impending power shortage,
federal agencies will increase generation at nearly all of the federal dams.
This may cause some projects to operate outside the limits of the biological
opinion under the Endangered Species Act as additional water is released for
generation from upstream reservoirs, the Bonneville Power Administration said
today.

The announcement came following a call by the Regional Emergency Response
Team and Northwest governors for conservation of electricity when arctic air
invades the Northwest beginning this weekend. The team comprises Northwest
utilities, the Northwest Power Planning Council and representatives of the
four Northwest states.

BPA officials said that this step must be taken in order to ensure that
heavy demand for electricity can be met in the region through next week.
Forecasters are predicting freezing temperatures on both sides of the
Cascades. BPA supplies about 40 percent of the region's electricity, most of
it generated at dams in the Columbia River Basin.

"Utilities in the region have assessed their generating inventories and
determined that the region is clearly short of energy and in an emergency
status," Delwiche said. "The BPA and other utilities must take extraordinary
steps immediately to avoid potentially severe shortages next week."

Water is stored in reservoirs behind upstream dams and released in the
spring to assist downstream migration of juvenile salmon. BPA manages the
storage to ensure that enough water is available to both meet electrical
generating requirements and flows for salmon. BPA has the authority to exceed
guidelines of the biological opinion under emergency conditions.

"It is very important that everyone - residential and commercial consumers
and industries -- do what they can to cut back on their use of electricity
during this cold snap," said Greg Delwiche, BPA's vice president for
generation supply. "Every kilowatt hour saved now means less need to draw
water from the reservoirs."

SOURCE  Bonneville Power Administration

CONTACT:  Ed Mosey, Bonneville Power Administration, 503-230-5359
Web site:  http://www.bpa.gov

****************************
Calif. Restarts Dirty Power Plants

By JENNIFER COLEMAN
Associated Press Writer
SACRAMENTO, Calif. (AP) via NewsEdge Corporation  -
Hoping to ease the state's electricity
crisis, air-quality regulators Friday allowed the restart of
several power plants in Southern California that had been shut down
because they had reached air pollution limits.

The move came a day after California encountered an
unprecedented power crunch, with electricity supplies for the
state's 34 million people so perilously low that California only
narrowly avoided blackouts.

The power crunch has been blamed on cold weather in the
Northwest, the shutdown of some generating plants for repairs or
other reasons, and the effects of utility deregulation in
California.

On Thursday, during the emergency, power plants capable of
producing 2,400 megawatts were off-line because they had exceeded
their pollution limits. One megawatt is sufficient to power about
1,000 homes.

On Friday, the South Coast Air Quality Management District
agreed to let some of those polluting power plants return to
operation and restore about half of that lost generating capacity.
However, those plants will have to pay daily fines.

Restarting the over-polluting plants should provide a cushion
for state, said Stephanie McCorkle, a spokeswoman for the
California Independent System Operator, which runs the state's
power grid.

In addition, hundreds of companies voluntarily cut consumption
Friday to avoid imposed outages.

``We're still encouraging conservation efforts,'' said Lori
O'Donley, spokeswoman for the ISO. ``We're optimistic that we won't
have to'' impose shutdowns on commercial customers.

Federal energy regulators are working with the state to find
power that can be diverted to California during the crunch, moves
that could include increasing hydroelectric generation out of
state.

The power grid's managers were able to avoid blackouts Thursday
by shutting down the enormous state and federal pumps that push
water from Northern California to central and southern regions.

The phased-in deregulation of California's $20 billion
electrical power industry was supposed to lower prices by creating
greater competition. But demand for electricity has outstripped
supply, in part because of a growing population and a booming
high-tech economy.

Electricity is also in short supply because energy companies
held off building new power plants while deregulation was in the
planning stages. In addition, deregulation has forced utilities to
sell off their power-generating assets, such as dams and plants,
and import electricity from neighboring states, where power demand
is high right now because of a cold snap.