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CA ENERGY CRISIS UPDATE STATE SEEKS TO BAN FOUR MORE COMPANIES FROM MARKET PRICING The California Independent System Operator on June 8 asked the Federal Energy Regulatory Commission to ban four power plant owners from selling power at market prices in California. The ISO says the four generatorsMirant, Duke, Dynergy and Relianthave charged excess prices and manipulated the states market. The companies can continue to sell power at market prices only if their authorization to do so is renewed by FERC. The ISO on May 25 asked FERC to ban AES Corp. and Williams Cos. from the California market. Without FERCs approval to participate in the market, the companies would only be able to sell their power on a cost-plus basis. GENERATORS FIND WAYS AROUND NEW FERC ORDER The FERC order that places modest limits on wholesale power prices during emergencies succeeded in reducing rates for last-minute electricity purchases during two power emergencies in late May, but power suppliers are already finding ways to circumvent the order, according to a report in the Los Angles Times. The FERC order resulted in a 64% cut in the wholesale price of power immediately after an emergency was declared on May 30, according to data from the California Independent System Operator. The following day, May 31, a second declared emergency also sent prices plummeting. But during that May 31 emergency, power plant owners began selling more electricity to out-of-state buyers. In a process called megawatt laundering, that electricity can later be sold back to the state by out-of-state marketers, who are not as tightly controlled by the FERCs order. MYSTERIOUS DROP IN NATURAL GAS PRICES The markup for natural gas shipped from producing basins in Texas to the Southern California border has plunged by 96% since May 31, when the contract between two El Paso subsidiaries expired and about 30 competitors entered the market. State officials and utilities have complained to the Federal Energy Regulatory Commission that the El Paso subsidiaries restricted gas supplies on a major pipeline system last year, creating an artificial shortage that sent energy costs soaring. The charges are being heard by a FERC administrative law judge. NEW INCENTIVES FOR BUSINESSES TO CUT POWER USE California businesses will be offered financial incentives to curtail electricity use during peak hours under a new program unveiled June 9 by Gov. Gray Davis. The new program allows the state to pay companies under a novel bidding process, where companies would offer to cut back on electricity at bid prices per megawatt. State officials would accept the bid if it is lower than the cost form energy generators. CALPINE ANNOUNCES NEW POWER PLANT PROJECT Calpine Corp. of San Jose announced on June 8 it plans to build a major power plant in western Riverside County. It is the 10th plant Calpine has proposed constructing in California.
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