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Energy Production and Use in California
2001 2002
Source: California Energy Commissionhttp://www.energy.ca.gov/html/energysources.html
California Electricity Generation (GWhr)
0
50,000
100,000
150,000
200,000
250,000
300,000
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
Imports
Solar
Wind
OrganicWaste
Geothermal
Gas
Oil
Coal
Nuclear
Hydroelectric
Source: California Energy Commission http://www.energy.ca.gov
California Electricity Use (Average MW)
Source: California Energy Commission
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
26,000
28,000
30,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Average MW
Residential Commercial Industrial Agricultural & Water Pumping Other
Recent Problem: The California Energy Crisis
The Dual Crisis in California• Electricity Crisis
– Inadequate Supply
–High Wholesale Prices
• Financial Crisis
–Draining all Financial Assets of Utilities
–PG&E Bankruptcy
–SCE Settlement after Almost Bankruptcy
–Decimation of State Budget
Non-Firm Peak Power Prices. Average of High and Low for Week Source: Western Price Survey
$0
$500
$1,000
$1,500
$2,000
$2,5004
/1/2
00
0
5/1
/20
00
6/1
/20
00
7/1
/20
00
8/1
/20
00
9/1
/20
00
10
/1/2
00
0
11
/1/2
00
0
12
/1/2
00
0
1/1
/20
01
2/1
/20
01
3/1
/20
01
4/1
/20
01
5/1
/20
01
6/1
/20
01
7/1
/20
01
8/1
/20
01
9/1
/20
01
10
/1/2
00
1
Week Beginning Date
$/MWh
Mid-ColumbiaCOBPalo VerdeCalifornia PXCalifornia NP 15California SP 15
$0
$100
$200
$300
$400
$5004/
1/20
00
5/1/
2000
6/1/
2000
7/1/
2000
8/1/
2000
9/1/
2000
10/1
/200
0
11/1
/200
0
12/1
/200
0
1/1/
2001
2/1/
2001
3/1/
2001
4/1/
2001
5/1/
2001
6/1/
2001
7/1/
2001
8/1/
2001
9/1/
2001
10/1
/200
1
Week Beginning Date
$/MWh
Mid-ColumbiaCOBPalo VerdeCalifornia PXCalifornia NP 15California SP 15
Non-Firm Peak Power Prices. Average of High and Low for Week Source: Western Price Survey
$0
$100
$200
$300
$400
$500
$60010
/1/2
000
11/1
/200
0
12/1
/200
0
1/1/
2001
2/1/
2001
3/1/
2001
4/1/
2001
5/1/
2001
6/1/
2001
NG Marginal Costs ($/MWhr)
PG&E Citygate at 6.8 MMBtu/MWh
PG&E Citygate at 10 MMBtu/MWh
Marginal Cost of Natural Gas per MWhr
Natural Gas Spot Prices in California
Source: Enerfax.com
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
$55
$601
0/1
/20
00
11
/1/2
00
0
12
/1/2
00
0
1/1
/20
01
2/1
/20
01
3/1
/20
01
4/1
/20
01
5/1
/20
01
6/1
/20
01
$/MMBtu PG&E Citygate Price Southern California Border Price
$0
$100
$200
$300
$400
$500
$60010
/1/2
000
11/1
/200
0
12/1
/200
0
1/1/
2001
2/1/
2001
3/1/
2001
4/1/
2001
5/1/
2001
6/1/
2001
NG Marginal Costs ($/MWhr)
Southern California Border at 6.8 MMBtu/MWh
Southern California Border at 10 MMBtu/MWh
Marginal Cost of Natural Gas per MWhr
The Dual Crisis
• Although all municipal utilities and investor-owned utilities (IOUs) throughout the West faced the electricity crisis, on the California IOUs experienced the financial crisis.
• Only these were under direct regulatory control of the California governor and the CPUC.
• Two regulatory rules forced California IOUs into a financial crisis. IOUs were precluded from using long-term electricity purchase contracts to protect themselves from wholesale price spikes. Once wholesale prices sky-rocketed, Governor Davis and CPUC refused to allow retail price increases needed to keep investor-owned utilities financially viable and to encourage energy conservation.
Current Problem: High Prices of Delivered Energy
Power Costs (cents/kWh)
Cal Rates
US Average
Western States Average
Residential
12.1
8.5
7.5
Commercial
13.3
8.0
6.6
Industrial
8.7
4.9
4.8
Source: US Energy Information Agency, Electric Power Monthly
Price/MWhr over time
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
$110
$120
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
$/M
Wh
r
Long Term Contract Price Future Prices as of July 2001
Long Term Contracts Entered Into By California
Expected Price Range with $3 - $5 Gas
Annual Rate of Expenditures
$-
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11
Bill
ion
s o
f D
olla
rs P
er Y
ear
Bond Payments
• $13 Billion Bonds Proposed• 15 Year Payments• 4% to 5% Interest
• Annual Payment for Next 15 years:
$1.2 Billion Per Year
The Challenge: Adequate Electricity Supplies for the Future
Policy Framework Advanced by Arnold Schwarzenegger
DuringCampaign
Arnold Schwarzenegger’s Announced Energy Program
• Create a coherent energy strategy to stimulate private investment; align the state energy agencies to support that strategy
• Reform the wholesale power market to ensure stable supplies• Reform retail power markets to ensure competitive prices and
better demand response• Assure adequate electricity generation capacity• Assure adequate and diverse fuel for power generation • Support all cost effective conservation and efficiency • Increase the reliability of the transmission grid • Support and encourage appropriate energy research and
development • Explore ways to lower the cost of California’s overpriced
power purchase agreements
Source: http://www.joinarnold.com/en/agenda/