1. CALIFORNIA ENERGY COMMISSION Electricity Supply Adequacy in the West Daniel Nix Deputy Director California Energy Commission April 2000 Committee on Regional Electric Power Cooperation

2. CALIFORNIA ENERGY COMMISSION Is There a Problem? The Summer of 1998 –Record High Temperatures throughout the West –Record High Electricity Demand –Four Stage Two Emergency Alerts in California The Summer of 1999 –Cool Summer… But –Record High Electricity Demand

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4. WASH. +18.3% ORE. +16.7% IDAHO +24.3% NEV. +50.6% UTAH +23.6% COLO. +23.1% ARIZ. +30.4% TEXAS +18.0% FLORIDA +16.8% GEORGIA +20.2% N.D. -0.8% IOWA +3.3% W. VA. +0.7% MAINE +2.0% MASS. +2.6% R.I. -1.3% CONN. -0.2% N.Y. +1.1% PA +0.9% Slowest-growing/shrinking states Fastest-growing states A Country in Transition Percentage changes in population from April 1, 1990 through July 1, 1999

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6. Similar Conclusions Bonneville Power Administration –The White Book, 1999 National Electricity Reliability Council –Summer of 1999 Assessment Report ICF Kaiser –Early 1999 Northwest Power Planning Council –December 1999 US Department of Energy –January 2000

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11. Are New Plants Economic? - New combined cycle need to receive about - $90/kw to cover total costs. - “Generic” new generators would have lost money in 1998. - In 1999, a new efficient combined cycle might have covered its cost in Northern California’s energy market. It would have lost money in Southern California. - Future revenues from ancillary services and reliability must-run contracts may increase revenues, but by enough?

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13. First Year Experience

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18. What Actions Are Needed? Enable electricity users to respond –To prices if they choose to do so –To sell their load for compensation Encourage voluntary load reduction Educate about the value of energy efficiency Search for existing, but underused supplies Work towards a regional solution

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20. Who Might Do What by When

21. CALIFORNIA ENERGY COMMISSION Energy Commission’s Response to Supply Adequacy Commission is: –processing record number of siting cases –proposing streamlined siting process laws and regulations –analyzing situation and informing market participants about options –making recommendations to CPUC and ISO –monitoring situation and identifying contingency plans –working towards a regional solution –encouraging mid-term contributions of energy efficiency, renewables and R & D

22. CALIFORNIA ENERGY COMMISSION A market has two parts: Supply and Demand At peak demand, prices are extremely sensitive Demand reductions can happen in time for 2000, 2001, 2002 Why Focus on the Demand Side?

23. CALIFORNIA ENERGY COMMISSION What Actions Are Needed? In the Long Run –Enable electricity users to respond To prices if they choose to do so To sell their load for compensation –Encourage voluntary load reduction –Educate about the value of energy efficiency

24. CALIFORNIA ENERGY COMMISSION For Summer 2000 Utilities/CPUC –Load curtailment Proposals CA ISO –Load Bidding Ancillary Services Market Supplemental Energy Market –Emergency Reduction

25. CALIFORNIA ENERGY COMMISSION Beyond Summer 2000 CPUC –Incentivize Demand Responsiveness –Keep Utilities Neutral CEC –Power plant licensing –Focus Public Goods Charge Monies –Continue Supply/Demand Assessments