Skip to comments.California: Enron linked to California blackouts : Traders said manipulation began energy crisis
Posted on 05/16/2002 10:55:57 PM PDT by Ernest_at_the_Beach
LOS ANGELES (CBS.MW) -- Two days of rolling blackouts in June 2000 that marked the beginning of California's energy crisis were directly caused by manipulative energy trading, according to a dozen former traders for Enron and its rivals.
The blackouts left more than 100,000 businesses and residential customers in the dark for parts of two days, trapped people in elevators and shut down some offices of high-tech companies such as Cisco Systems and Apple Computer, as well as chipmaking plants, costing millions of dollars in lost revenue.
The traders said that Enron's former president, Jeff Skilling, pushed them to "trade aggressively" in California and to do whatever was necessary to take advantage of the state's wholesale market to boost the price of Enron's stock (ENRNQ: news, chart, profile).
"Skilling would say, 'if you can't do that then you need to find a job at another company,'" said one former senior Enron trader, who requested anonymity because of concerns about potential investigations. "He said we should go trade pork bellies if we can't be aggressive."
The traders also said that Enron's retail unit, Enron Energy Services, or EES, used the fear created by the blackouts to push large California businesses into more than $1 billion in long-term energy contracts.
The disclosures brought a harsh response from California Gov. Gray Davis, who said in an interview with CBS MarketWatch.com that Enron should be prosecuted for its actions.
"Someone at Enron should go to jail," Davis said. "Purposely putting people's lives in jeopardy in the name of greed is inexcusable."
The disclosures come as Congress turns up the heat on Enron and the energy industry over their involvement in the California electricity crisis of 2000 and 2001. Senate Democrats on Wednesday said they would ask Army Secretary Thomas White, who was vice chairman of EES during the energy crisis, to testify about the unit's role. See full story.
The senior traders, all of whom requested anonymity, now work at other energy companies including Duke Energy (DUK: news, chart, profile), Reliant Energy (REI: news, chart, profile), Dynegy (DYN: news, chart, profile), Williams Cos. (WMB: news, chart, profile) and UBS Warburg (UBS: news, chart, profile). Warburg won Enron's trading unit in an auction earlier this year.
The traders said they agreed to speak after another former Enron employee, David Fabian, wrote a letter to California Sen. Barbara Boxer in February saying he overheard traders talk about manipulating California's power market during 2000.
The allegations Fabian made in his letter to Boxer in February matched details in internal Enron memos released last week by the Federal Energy Regulatory Commission. The memos -- written in December 2000 -- describe how Enron traders could reap enormous profits for the company by exploiting loopholes in California's flawed electricity market.
Skilling was named chief executive of Enron one week after company attorneys wrote a Dec. 6, 2000 memo describing the now famous "Death Star," "Ricochet," and "Fat Boy" trading strategies.
In an interview with several news organizations at the time, Skilling said Enron would be in an even stronger position in 2001 because of its "abundant" supplies of power and gas. But he said questions raised by other energy companies about California's ability to pay for power could result in Enron limiting its sales to the state.
"As the (utilities') credit exposure gets too high, we will limit the amount of power we deliver into California," Skilling said at the time. "Eventually, the state is going to have to provide these companies with the credit support from somewhere to support their purchases."
A spokeswoman for Skilling would not comment for this story. A spokesman for Enron also declined comment. Enron has consistently maintained that its trading strategies didn't violate any laws.
The traders and former traders, who traded electricity in the spot and forward markets, have retained lawyers in the event that the U.S. Department of Justice or congressional committees investigating Enron's role in California's power crisis subpoena them.
Fabian said in his Feb. 6 letter to Boxer that "There is a single connection between Northern and Southern California power grids. I heard that Enron traders purposely overbooked that line then caused others to need it, which allowed Enron to price gouge at will."
Gregg Fishman, spokesman for the California Independent System Operator, the state agency that manages the power grid, called the practice "phantom congestion," a reference made in the internal Enron memos released last week. "Phantom congestion" means power is being sent over a transmission line by the party holding the transmission rights simply to force others to pay more to use the line, according to Fishman.
The traders said Enron held the transmission rights on Path 26, a key transmission line connecting Northern California to Central California and also connecting to Path 15, a major bottleneck grid pathway in Northern California.
In fact, the dozen traders said they began manipulating California's power grid beginning in February 2000 and continued until the spring of 2001. The traders said the practices they engaged in resulted in two days of rolling blackouts in Northern California in the summer of 2000.
On June 14 and June 15 that summer, when a heat wave swept through Northern California and pushed temperatures above 100 degrees, the traders said Enron clogged Path 26 with power, essentially creating a bottleneck that would not allow power to be sent via Path 15 to Northern California.
"What we did was overbook the line we had the rights on during a shortage or in a heat wave,'" one trader said. "We did this in June 2000 when the Bay Area was going through a heat wave and the ISO couldn't send power to the North. The ISO has to pay Enron to free up the line in order to send power to San Francisco to keep the lights on. But by the time they agreed to pay us, rolling blackouts had already hit California and the price for electricity went through the roof."
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.
The traders said this was one of the ways Enron allegedly manipulated the price of power in California and continued to do so until mid-2001, when power prices sharply declined.
Gary Stern, the director of market monitoring for Southern California Edison (EIX: news, chart, profile), said he has long suspected that Enron manipulated power flows in the state to reap enormous profits.
"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.
Enron paid a modest price for the transmission capacity because it was a new transmission path with no pricing history, he said. "After Enron acquired the capacity, we began seeing significant levels of congestion in the day-ahead market on that path and the congestion revenues accumulating for Enron began to mount. We estimated that in the first six months of 2000 Enron profited $30 million to $50 million on Path 26 by buying the firm transmission right at a low price then receiving the revenue from high levels of transmission congestion. It appears that the congestion was, in part, created by Enron's own traders."
Information available from the ISO shows that congestion revenues on Path 15 and 26 within the first six months of 2000 increased tenfold, from about $20 a megawatt-hour to more than $200. But there is no evidence that an increase in electricity consumption in California is the reason for the transmission line congestion, according to the ISO.
"The number of hours congested decreased on most paths in 2001, compared to 2000, with the exception of Path 26," according to a January 2002 report from the grid operator's department of market analysis.
Joe Wagner, a former Enron power trader said he is "sure Enron did use the market rules to their advantage in California" but he believes the state's troubled power market also played a part in exacerbating the crisis.
"Enron found legal ways to make money given the market rules that were in place and these strategies probably did influence prices somewhat," Wagner said. "Enron did game the transmission rights market, but so did many other companies. Enron sent a letter to the state of California in 2000 telling them the market was flawed. Enron offered to help the state set up a good market. This letter was sent out to all Houston Enron employees so they could see that we had nothing to do with the crisis."
The former Enron traders said skyrocketing power prices enabled Enron Energy Services to sign contracts with large businesses whose owners feared they would be hit with expensive electricity bills. The crisis in California also helped the retail unit sign contracts with large businesses in other states because business executives feared deregulation of the electricity markets there would result in a California-like crisis.
"This was like the perfect storm," said former EES executive Steve Barth. "First, our traders are able to buy power for $250 in California and sell it to Arizona for $1,200 and then resell it to California for five times that. Then EES was able to go to these large companies and say 'sign a 10-year contract with us and we'll save you millions.'"
During the height of the crisis, EES signed more than $1 billion in long-term energy deals with companies such as Compaq Computer Corp., Starwood Hotels & Resorts, Rich Products Corp. and Prudential Insurance of America, all of which have operations in California.
Army Secretary Thomas White was vice chairman of EES during the time of California's power crisis.
Barth said White got EES' sales team to take advantage of the California crisis by offering large businesses a break on their electricity bills if they would sign lucrative deals with EES.
"Thomas White told us the California electricity crisis was our chance to turn EES into a profitable unit of Enron," Barth said. "He said the energy crisis in California would put EES on the map."
A spokesman for the Pentagon said White has cooperated with all official inquiries into the Enron situation and that he has consistently maintained that EES was not engaged in any "shenanigans."
The Enron traders said their competitors at other rival energy companies learned of their tricks through word of mouth at local bars in Houston and soon everyone was buying power in California for $250 and selling to Nevada or Washington for $1,200.
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The power went out in California because California's power companies stopped buying electricity.
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.
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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Path 15 is the big hummer up the west side of the San Joaquin Valley. The valley itself is ZP-26 -- one of the three electricity pricing zones in the state.
Incredibly, Path 15 is the only transmission line that connects Northern and Southern California -- and ZP-26 with either. In other words, at this point, the California "grid" is actually a single "string".
Not only did the greens make it impossible to construct power plants, they blocked the routes of transmission lines, as well.
Creating a choke point in a deregulated market is inviting some kind of manipulation.
You obviously don't understand that truth means nothing to Democrats, all they are concerned about is projecting an image of caring. Seriously, good comments.
Well! You certainly have done a great job of pulling his covers right offa his danged bed!!! (and offa his head, too!!!)
Keep it up "cod" and you'll finally embareass him literally, as the word it'self spells it out!!!
The Greens in this State have made it degenerate!!!
This sounds a lot like the three union pukes who "heard" that their power plant was purposely dumping load to drive up the price of electricity. (It turned out that the Cal-ISO was ordering them to shed load.)
What I see is a company trying to play (I will admit agressively) by the rules layed down by the idiot regulators and lawmakers in California.
I see crybabies bellyaching over mistakes they made, and of course as usual "the people" suffer from their incompetence.
Grey-out Davis: Wahhhhh!! Mommy, Mommy, Jeffery's being mean to me, Wahhhh!!!!!
Which, apparently, isn't enough.
Another take on Enron: Pundits have been bloviating on the subject of Enron and its potential political ramifications for weeks now. This is the O'Toole File take on the story.
The whole Enronathon is probably an equal opportunity scandal at the national level; both sides took money, both sides did some favors, and, if Dems are generally helped by a climate of corporate suspicion, Republicans are assisted by the anti-Washington sentiment generated by the attack on Enron's Congressional inquisitors. The real effect will be on the presidential election of 2004.
If George W. Bush wants to turn the next presidential election into a victory lap, he's got to peel off a part of the Democratic electoral base. (The vaunted Republican electoral L is long gone.) That means that he has to be at least competitive in states that have been reliably Democratic. Until the Enron scandal broke, the Bush folks clearly meant to concentrate on the newly-Democratic Far West. Post Enron, that may no longer be possible.
Before the scandal, the California energy crisis, with its double-digit price increases and rolling blackouts, was hard to explain to voters. Republicans talked about failed deregulation and free-market principles; Democrats went on about spot prices and some Texas company called Enron.
Six of one, half-dozen of the other.
Suddenly, the Democratic story is simple. A bunch of crooks called Enron cut off your power and extorted your money to turn it back on. And guess what? George W. Bush let them get away with it. Wait for the thirty second spots, and see how easy it is to communicate this idea.
All of which means that the Far West probably won't be competitive in 2002, even if Richard Riordan wins the governorship as a Rockefeller Republican. That means we're back to fighting over Pennsylvania, Michigan, etc., states that have been trending Democratic in recent years. In other words, don't look for the "Enron effect" in national polls. Look for it where all presidential politics ultimately plays out -- state by state. Particularly out West.
[posted by Jack O'Toole at 5:55 PM | link]
Southern CA has plenty of juice, since all those plants in Arizona and Nevada tie in down there. The NIMBYs and BANANAs in the Bay Area are the ones that need it.
And they are the very ones who don't want those ugly towers spoiling their view of the cotton fields in the valley...or of their precious windmills in the Altamont...
The ability to make energy flow through those wires to homes, factories, hospitals, and stores is what separates America from countries like Zimbabwe.
As well they should be, to any thinking human being.
Problem is the green wienies are neither engineers nor philosophers. They are soft-headed soccer moms (and dads), influenced by friggin' fundamentalist Luddites.
I used to do advertising for a company that manufactured T & D towers, so I've got an appreciation for the beasts also.
I know that I have been talking to reporters I know telling them that they should be ashamed to just re-write Democratic party press releases. Actually a number have said that I was right and that they will try to get some time to do a story on what is being left out of the current batch of stories. I have even given them some hard questions to ask Democrats who have been the most vocal.
Which brings up the one-two that the dem's are doing, Enron and Bush was briefed on attacks. I would suspect that the purpose of this is to try to create a media reporter opportunity. That is if Cheney talks about what Bush new, the reporters will ask about Enron, when Cheney talks about deregulation, the reporters will muddy the water and ask about 9-11. I suspect that this is a planned Democratic party ploy that has been focused group tested.
Agreed. Rush is going to have to eat his words about the Dems not being able to get any "traction" on any of their traditional issues.
The phrase "Greedy Capitalists" works in modern America just like "Greedy Jews" did in Weimar Germany.
Rush has an ego as large as..... Anyway, I doubt that Rush will ever eat any of his words unless he is forced to. I admire what he has done in opening up alternate views and providing insight as to what is happening.
You are right about "greedy capitalists," but with one exception that I still don't know how it will play out. When I was a boy growing up, stocks were something that rich folks invested in. My folks were hard working people and they aspired to own land, to own government or municipal bonds, to have money in a savings account or a CD; but not stocks. Today, so many working class people own stocks or stock-based mutual funds in their self directed retirement accounts, that "greedy capitalist" may not have the same sweeping political condemnation it once had.
In helping to pay for college, I worked on the docks as a casual laborer for the ILWU. It was interesting because of the people. One guy I regularly sat and ate lunch with one summer was a card carry member of the communist party who would try to argue philosophy with me. Another guy was out of prison after having served his term for killing his wife. If one of my sons was on the docks this summer, I would suspect he would have to associate with some folks with shaddy pasts, but I bet that in addition to hearing about how evil managment was in keeping too much money, he would hear folks talking about what evil management of certain dot.com stocks had done to the working people of this country by tanking their retirement. That is what I think is one of the sub-plots to the whole Democratic party Enron chant. The key play in the Democratic handbook lately has seemed to be class warfare, which Rush volcalized very well. I suspect that part of Enron may be related as much to images of rich greedy evil capitalists (as opposed to good capitalists who balloon IRA retirement accounts on behalf of stockholders) taking money from the working class as it is to anyking of Bush/Cheney-Texas Energy company connection.
002 The ISO's job is to promote markets - to provide the structure for markets to develop. The job of the ISO is NOT to be the primary market for transmission-related products. It needs to emphasize transparency, flexibility and simplicity in order for markets to work. The ISO must also give amrekts a chance to work - not redesign and restructure markets every 6 months, and certainly not interfering in the market by imposing unreasonable price controls.
003 System security constraints have not been adequately considered in the ISO proposal.
004 if you are going to operate in a real-time mode, you need more of a real-time market...i.e. closer to the actual operating hour, not 2.5 hours ahead, with price transparency & no complicated bidding procedures. you need to be compatible with the fast moving real-time system thus simplifying your software, bidding procedure
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015 If the capacity has to be bid into the DA market against a load than doesn't this preclude those units from providing A/S?
016 FINALLY , FINALLY we are getting around to discussing what we should have been discussing since March: the price caps/bid caps! Too much time and energy has been wasted on the zonal/nodal debate and the market separation/poolco debate, when none of that was really broken in the first place (and just needed some tweaking). Let's focus the meetings on the caps issue - that's where the real issue lies!
017 If ISO is considering setting LR capacity payment at "Incremental" cost of new generating unit, who decides what that cost is?
How do you determine the cost of emissions in San "Diego?
025 Why require bid cap for plant and then pay the highest price of the plant in the local area? Doesn't this promote market power abuse, i.e., others can obtain the highest price if some or all withdraw (e.g., by taking plant out of service)? EW
026 Let's get real. There HAS to be some centralized control (i.e., requiring some units to bid or to otherwise make themselves available to provide energy/capacity). The fundamental physical problem is that some units, which have market power, have to provide services, and cannot be allowed to withhold such services. The challenge is to find the way to do this least-intrusively and without giving the ISO carte blanche to do more than what is absolutely needed to be done centrally. The ISO's proposal needs some work - there are a lot of questions, and the philosophy behind the proposed definitions of the caps seems all wrong - but it looks like a very good foundation for more discussion.
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032 Revenue from the FTR auction could be allocated to offset the TAC as it is done today. The other options presented severely distort the market. The first idea is to use the funds for path specific upgrades. Assume that the ISO collected hundreds of millions of dollars to upgrade path 26, but just as the ISO allocated the expenditure nearly all congestion is eliminated by new generation construction, the path specific allocation would be a complete waste of money. The second option of giving the money to load in the congested area mutes the essential price signals needed to get load response. When will we learn that in order to get the market to respond to true physical limits the prices must reflect those limits. Get a clue, do not mitigate valid market price signals.
Jump to new section WITH POSSIBLY SOME OF THE BEST STUFF
001 Clarification. There was market power in the old world. Regulation was the market power mitigation measure in the old world. And regulation is still needed where market power exists.
002 FTRs can provide necessary price signals for long term grid upgrades if they are offered for non-specific term. Allow bidders to bid for capacity and term. Demand for capacity could determine need for new capacity. It could also address new generator capacity - if you want the capacity bid for it. Just have to make sure that the FTR provides a firm path for the term of the FTR.
003 As indicated in the report, new-gen policy should support upgrades that are economically justified. 004 Market participants, not the ISO, need to reconcile the need for grid expansion to facilitate bulk power transfers with the competitive option of new load center sited generators. To the extent that a new generator option sustains or worsens market power, then the ISO has a role to mitigate any market abuse.
005 Cost allocation - you must continue to consider the fact of the retail rate freeze and the requirement that utilities NOT geographically deaverage energy rates in choosing a cost-allocation methodology. For example, ESP's (direct access providers) will be disadvantaged if they have to pass locational reliability costs from the new capacity auction and associated energy to customers in the new LPA where the incumbent utilities MUST average these costs across their service territories. Transmission investment - thank you for finally recognizing that current incentives are inadequate to bring the needed investment in transmission. For example, there is every reason to believe that Tesla should have been upgraded by now, no? Transmission planning horizons are much longer than the 3-5 years discussions we continue to have here.
006 RE. proactive role of ISO in grid expansion, I argue that this is a disincentive to new generation, in part as it is a substitute to local generation, and because it substitutes ISO decisions and investment logic for the marketplace. Thus, I suggest that the presentation of ISO in this regard needs to be reconsidered. EW
If you have made it this far, I thought I would share a frustration I had during the whole, process, that I had forgotten. Basically, a lot of utility folks and customers had concluded in California that there was a short term need for more generation. PG&E tried to get a barge sited power station in the SF Bay area, NCPA & PG&E tried to get small combustion turbines and diesel generators placed within substations and many customers in N and S California tried to install their own diesel generators. These small generation units provided a "natural alternative" to spot market purchases and hence a viable cap not mandated by FERC. Unfortunately for those in California, once folks tried to control their own destiny, the California air pollution board and its regional folks did all kinds of things to prevent local generation from happening. I always felt that the air pollution regulation in California had a lot more to do with the power crisis than it was given credit for.
Also, as point out above, the rate freeze and non-zonal retail rates was a significant source to the California power crisis what was discussed well in advance of PG&E Bankrupcy and SCE near bankrupcy.
I always felt that the air pollution regulation in California had a lot more to do with the power crisis than it was given credit for.
Oh, absolutely. We know that several plants were forced to shut down at the peak of the crisis because they had reached their "emission limits" for the year, and could not afford to purchase "RECLAIM credits" due to the price caps. From January, 2001:
The recent power shortage in California has caused the price of air pollution emissions credits to skyrocket. During 2000, electric power generators in the state consumed two-thirds of all available pollution credits available from the Reclaim program, inflating the price of the remaining credits. In 2000, a credit for one ton of nitrogen oxide (NOx) traded for an average of $45,000, which is more than 10 times the price in 1999. At one time, a one-ton credit cost as much as $105,000, according to the regional Air Quality Management Board. The total business outlays for pollution credits during 2000 amounted to an estimated $80M. In an effort to increase power output while decreasing emissions over the long term, the South Coast Air Quality Management District (AWMD) is proposing new rules that would allow power-plant operators to continue, temporarily, with the higher level of emissions that the state permitted during 2000. In return, the companies would be required to install pollution-control equipment in 2001 and 2002. Approximately 40 of the 93 generating units operating in Los Angeles, Riverside, Orange, and San Bernardino counties currently have no pollution controls. The rules would require these power companies to install cleanup devices that reduce pollution by 90% on boilers and turbines by 2003. For the policy to be implemented, these power plants would be removed from the free market for the Reclaim emission credits program that serves 364 of the Southland's largest manufacturers and oil refiners. Power producers and companies remaining in the Reclaim market that violate clean air regulations could pay into a special account in order to avoid buying credits. The money in that account would then be used by regulators to fund clean air projects across the region.
Writing about this issue seems to be taboo in the California press. I have been watching for almost an entire year now for any kind of article on the effects of lowering the emission limits in the Bay Area last December. So far, nada.
How Los Medanos Energy Center [LMEC] manages to keep operating under these new limits is a great mystery.
Yes the story line or sound byte is simple and about the only one that the Dem's have. I think that if the Administration or Simon response is, that Davis does not have clean hands in the power crisis as seen by DWR and Cal-ISO, that the story may be gutted quickly.