Posted on 05/16/2002 10:55:57 PM PDT by Ernest_at_the_Beach
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The power went out in California because California's power companies stopped buying electricity.
Worth repeating.
California had bunch of amateurs trying to construct and operate an artificial energy market. And a bunch of pros made money off of them.
Where is the news in this?
IMO, this article is some of Lehane and Fabiani's best work. My spin meter went off scale high!
THE SPIN: Two days of rolling blackouts in June 2000 that marked the beginning of California's energy crisis were directly caused by manipulative energy trading,
THE REALITY: Actually, twenty years anti-growth "era of limits/soft path" politics and byzantine utility regulation in California resulted in California failing to build the power plants and transmission infrastructure it needed. The first cracks in this flawed system [California's PG&E Struggles To Survive Electricity Squeeze] appeared in December 1998 and June 1999, not June 2000.. According to California Orders Rolling Blackouts, the first rolling blackouts hit California in January 2001, not June 2000. But I guess an honest reporter can't wail about old people dying of heat stroke in January, can he?
THE REALITY: Businesses? Like the California State University System and the L.A. Unified School District which signed with Enron at extremely low rates. Both now clamoring to keep their direct-access contracts in the face of Davis's plans to abrogate them. CSU and UC Sign Contract With Enron
The California State University (CSU) and the University of California (UC) soon will begin taking advantage of competitive opportunities in the new deregulated electricity market through an agreement that will save the two institutions over $15 million over the next four years. The agreement with Enron Energy Services (EES), a subsidiary of Enron Corp., to provide electricity to all 22 CSU campuses, all nine UC campuses and other affiliate facilities, is the largest direct access electrical energy contract in the country.And Davis himself signed long-term contracts with Enron in early 2001 Davis announces first round of long-term power contracts , although at not-so-advantageous rates. Was he "scared" into doing so?The four-year agreement among the UC, the CSU and Enron, worth an estimated value of $300-500 million in electricity sales, takes effect March 31 and will result in estimated savings of $1.5 million per year for CSU and $2.4 million per year for UC, for a total of $15.7 million. Enron will also work with the university systems to realize even greater savings by reducing the 31 campuses' consumption of electricity through an extensive package of energy services.
There is so much spin in this article, that I just don't have time for any more right now. Gotta' go to work.
The only reason why this was possible is because California had a $250 MW cap for power produced in the state, but no cap on imported electricity.
Their own stupid rules cost them FAR more in the long run. They caused their own shortage by not allowing a free and open market.
"In February 2000, Enron acquired the 1,000 megawatts of the 1,600 megawatts of available transmission capacity on Path 26 from north to south in an ISO-run auction," Stern said. "SCE and my group had argued for position limitations so that no party could acquire so much" capacity as to be able to manipulate the market. The ISO board refused, however.It would appear that the ISO itself made the price manipulation possible.
I still find it interesting that there is no evidence as to how much manipulation occurred or how effective it was. All we have is memos suggesting that Enron try it and testimony from traders that they were pressured to do it. What I want to know is the extent and effectiveness of these tactics, information which seems scant at best.
Enron was paid tens of millions of dollars in 2000 by the ISO to free up the congested line in order to allow electricity to be sent to Northern California, the traders said.Compared to billions of dollars of rate increases, this is hardly a significant number.
D
It is all a murky mess in my mind., I've forgoton path 26 -- where is that? I think path 15 is the big one thru the Tehatchipi's(sp?)
I am sure the media is going to explain all of this murky mess to we citizen''s!! /sarcasm/
I think Path 26 is the big hummer that runs south-to-north up the west side of the San Joaquin Valley. If not, then that's Path 15. In which case, Path 26 would be the big hummer thru the Tehachapis.
And for spelling Tehachapis.
Got to get that straight!
Unfortunately, I have an older computer with an older version of Acrobat Reader, and am unable to view the charts.
This other one might be interesting, too. California ISO Congestion Management Reform Stakeholder Meeting, Folsom, CA, July 13-14,2000
The utilities argued for one-year transmission contracts, but the Cal-ISO forced them into three-year contracts, against their wishes. From the last link in the previous post:
There is a flaw in offering 50% of the FTRs on a three-year term, at least initially. Neither the ISO nor market participants know thether or not the LRA [Local Reliability Areas, I think] boundaries are stable. They may change, or at least initially, there may be a fear of them changing. Hence, initially, we ould recommend offering only 1 year FTRs [Firm Transmission Rights] for the first year, then if boundaries didn't change, go forward on a rolling basis (1/3 at a time) with three year contractrs. The other reason is the general fear that things (i.e. price caps) may change and therefore significantly alter the value of the FTRs. Three year term is simply too long for the market to be comfortable with at this time.
The utilities wanted a real market, but the State denied them. Why are are you not covering the other side of the story Mr. "unbiased reporter" Jason Leopold?
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