Somebody's got some 'splaining to do.  It appears the CAISO has asked a low-cost coal-fired plant to back down its generation to accommodate DWR's excess energy.


Calif ISO Tells Edison To Ramp Down Low-Cost Power Plant
By Jason Leopold

08/29/2001 
Dow Jones Energy Service 
(Copyright (c) 2001, Dow Jones & Company, Inc.) 
LOS ANGELES -(Dow Jones)- California's power grid operator has periodically ordered Southern California Edison to reduce output at a low-cost power plant designed to run at all hours, a practice some said is intended to reduce the state's politically embarrassing need to sell surplus power at a loss. 
The California Independent System Operator concedes that it has ordered the Edison International (EIX) unit to reduce output at its 1,500-megawatt Mohave coal-fired plant in Nevada several times over the past three months. What's not entirely clear is why. 
Greg Fishman, spokesman for the ISO, said the ISO is investigating the market circumstances that led to the orders. 
"We're looking into a lot of different things," Fishman said. "I don't know specifically if the ramping is to allow the DWR to keep its surplus. We're looking at it, but it may be one of several different reasons. It is safe to say there are some market-structure issues we're dealing with." 
The DWR, responsible for buying power in place of California's ailing utilities, has spent $43 billion on power under long-term contracts. When the power it has locked in exceeds demand, the DWR dumps it at a loss. To date, the department puts its losses at nearly $115 million. 
A desire to keep that number from growing has led to the orders to ramp down Mohave, one ISO executive said. 
"As far as I'm concerned, we're being asked to order this unit to ramp down because the DWR bought too much power and doesn't want to sell it," the executive said. "I think it's pretty political." 
The ISO wouldn't detail how often the plant had been ramped down, but that political move would carry a cost. The Mohave unit is capable of producing electricity for as little as 2 cents a kilowatt-hour, compared with the 7 cents to 10 cents a kilowatt-hour the DWR has paid for power secured via long-term and short-term contracts. 
When forced to resell surplus power into the spot market, the DWR said it gets about 3 cents a kilowatt-hour. Even with the loss, then, it's cheaper to use the less-expensive power. 
Pete Garris, chief of the DWR's power-buying arm, said Mohave isn't being ramped down for political reasons. Instead, he pointed to disagreements on issues related to the operations of the wholesale electricity market that have created situations of oversupply. 
 
     Mohave Designed To Always Run 
   
It's the ISO's job to balance supply and demand on the grid, which it does by ordering plants to ramp output up and down. But while some plants are designed to be ramped up and down quickly, Mohave is designed to provide baseload - or round-the-clock - power. 
"Mohave is a plant that should be running all the time," said Southern California Edison spokesman Steve Conroy. 
The reason for the odd orders is a lack of flexibility by other generators that at times has forced the grid-operator to ramp down big plants, Fishman said. 
"What we're seeing is a lack of flexibility on the generation side," Fishman said. "We're looking at what it's costing and what we could do and what role the market is playing in causing that inflexibility." 
Garris also pointed to market difficulties. The DWR is being asked to buy and sell power to resolve imbalances in the ISO market, he said. But those purchases have to be coordinated with generators, and a lack of cooperation is producing more mismatches, he said. 
"You know how complicated the ISO market can be," Garris said. "What we do every day on a forward basis is balance supply with the load we're supposed to fill in. But we're seeing a number of generators not following the operating schedule and shutting down." 
It's those shorter-term purchases, combined with the long-term contracts, that are producing the surpluses, he said. 
"This is new to everyone," Garris said. "Nobody has 25 years of experience. One of the most frustrating things is the lack of ability to control the generation. We are being asked to do something that nobody anticipated." 
-By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com