Posted on 03/20/2002 1:04:13 AM PST by snopercod
LOS ANGELES -- Western U.S. states may be in for dramatic power price swings during the next few summers -- and even blackouts during 2003 -- as a result of the weather pattern El Nino now developing in the Pacific Ocean.
El Nino could produce very mild weather during the summer of 2002, forcing wholesale electricity prices to drop to their lowest level since 1999 in California, Nevada and other states, according to energy officials. The pattern may reverse itself by 2003, bringing blistering heat that could send prices through the roof and cause electricity shortages.
Officials in California and the Northwest are urging energy companies to rethink recent plans to scrap new power plant projects because they're worried about possible shortages during 2003.
Some companies in recent months have dropped the projects because of a sharp decline in power prices, lower demand due to an economic downturn, and regulatory uncertainty in California.
"Right now we are estimating what implications that will have on the system," said Claudia Chandler, a spokeswoman for the California Energy Commission, the state agency that forecasts electricity demand and consumption. "We are looking at four of nine plants that might defer, but none have formalized it yet."
Chandler said her agency expects California will have adequate supply to meet demand this summer. Demand in the state is expected to increase by about 1,200 megawatts by the summer of 2003, however, and the CEC said the state should add an additional 5,400 MWs of generating capacity to meet it.
The El Nino weather pattern occurs when water temperatures have warmed sufficiently to alter the normal patterns of cloudiness and rainfall in the tropical Pacific basin, according to the National Oceanic and Atmospheric Administration. The pattern persists for about a year at a time, and can significantly affect weather globally. An El Nino that occurred during 1997 and 1998 is estimated by NOAA to have had "a total U.S. economic impact" of around $25 billion.
"It's still too early to determine the potential strength of this El Nino or exactly what weather conditions it will bring to the United States, but it is likely these warming conditions in the tropical Pacific will continue until 2003," said Conrad Lautenbacher, NOAA's under secretary of commerce for oceans.
Lautenbacher said California will be on the front-end of an El Nino this summer, which means cool weather conditions, and an extremely hot summer in 2003, as the state moves onto the back of ElNino.
Western power prices weren't affected strongly by the last El Nino , which occurred four years ago, before California's power markets were fully deregulated. Demand surged, but consumers were insulated from price shocks by a fixed price for electricity.
After deregulation kicked in, prices became more volatile. They spiked during the summer of 2000 due to hot weather, at times reaching as high as $750 per megawatthour. High prices persisted until April 2002, when they fell sharply, to as low as $25-$35/MWh. They've remained in that range since then.
Electricity traders are hoping the weather predictions pan out so they can make up for the losses many of their companies experienced last summer. The average so-called forward price for power for 2003 is rising steadily, some traders said, because an El Nino is forecast.
"A lot of the savvy traders have thought of it," said one trader. "Plus, there's an anticipation the economy is on the upswing and load growth outpaces economic growth. The rise began about two months ago. Everything trades on perception. So you have the economy, plus the return of aluminum plants in the Northwest, plus curtailed building of plants, plus El Nino , plus a gas rally."
Energy officials, however, are quick to point out that forecasts, particularly this early in the game, do not always hold up.
"A lot of this is still pretty theoretical," said Gregg Fishman, a spokesman for the California Independent System Operator, the agency that manages electricity supply and demand in the state. "The further out you go, the less reliable forecasts are. Summer temperatures are a big factor but what we look at even more is hydro projections and what kind of precipitation we are having."
California is highly dependent on hydropower produced in the Pacific Northwest. Imports from that region helped the state escape a number of potential blackouts last year, according to the ISO. During weak El Ninos, hydropower can become scarce.
"In a good strong El Nino , you get early runoff and wet weather," said Ed Mosey, a spokesman for the Bonneville Power Administration, a federal utility headquartered in Portland, Ore. "But if it's not a strong one, you can get below normal precipitation and warm weather. It's not good to have an early runoff from a generating standpoint if we want to sell to California in June. So, we get enough for storage but not surplus sales. For us it would have more of a revenue impact."
-By Jason Leopold, Dow Jones Newswires; 323-658-3874; jason.leopold@dowjones.com; Jessica Berthold, Dow Jones Newswires; 323-658-3872; jessica.berthold@dowjones.com
The very week of this announcement, there was a severe unforecast snowstorm over much of E and C North Carolina. Over one foot of snow, and the forcast was calling for nothing unusual.
Been rather busy, with school and medical things, so missing out on much of the action here!
The supercomputers of today as powerful as they are are still a long ways from being powerful enough to handle the data required for more accurate weather forecasting.
It is one of the Grand Challenge problems!
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That's La Nina his sister. She is cold just like Hitlery.
TroutStalker pointed out the obvious problem re poor weather prediction. We have had so many big errors in weather predicting the last 2 months it is a joke. When it comes to rain predictions more that 36 hours out, their predictions here have been a disaster this past fall and winter months.
This past week, water flows are high in the normal range on the Lower Sac.. Some of the other creeks/rivers below some of the dams have been very low for this time of year and with the amounts of rain we have this season. Of course the weather geniusi predicted a drought for this fall/winter/spring for the past four months and the next 3 months. We have had way above average rains since the last week in October!
I will be monitoring and reporting the flows as May gets into its final countdowns re rains and flows.
SMUD rates expected to melt starting in May
Due to the good snowpack!
They are dropping one surcharge and still keeping the second surcharge. This is inspite of the high snow packs and cheaper electricity.
The same rational re the federal government having a surplus which means they are charging us too much for taxes.
SMUD is over charging its customers for drought surcharges in a wet year!
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