MorganEnergy

A casual glance at this report from Platts could make you very worried about the state of the California electricity market. Hitting the price cap 465 times in June? Why, where are 720 hours in the whole month!

Fortunately that’s not quite what they mean. To start with these are prices from the Real Time market. They are almost certainly 5 minute prices, not hourly prices. The hourly price is an average of the 5 minute prices. In addition a quick check of CalISO‘s web site shows that what they actually reported was 465 prices over $250/MWh, not 465 prices hitting the $399.99/MWh price cap. According to the OASIS data, hourly real time prices in both the NP15 and SP15 zones exceeded $250/MWh only 30 times in June.

Then again, that’s once a day, which is quite a lot. It is probably about time for some politician to complain that the market is failing because it is not encouraging new build.

A report issued by the California Public Utilities Commission (CPUC) last week could spell major trouble for San Diego Gas & Electric (SDG&E) and Cox Communications. Last year a number of major wildfires hit the San Diego area, causing widespread damage. Two people died in the fires, and 1,347 homes were destroyed. An investigation by the CPUC’s Consumer Protection & Safety Division puts the blame firmly on inadequate maintenance of transmission wires and cites both SDG&E and Cox as having been in breach of general orders covering required levels of safety. The full report is available from the CPUC web site, and the San Diego Union-Tribune has detailed reports here and here.

SDG&E and Cox are, of course, denying any wrong-doing, and may yet be proved innocent. However, the cost of dealing with the case is still likely to be enormous. There are clear risk management lessons here for other utilities.

With a heat wave building up and wild fires already affecting many areas the California ISO has issued a “Flex Alert” warning to consumers for today, tomorrow and Thursday. The ISO does not expect power to be interrupted, but voluntary demand-side management agreements may be called into play. Californians had a lot of practice at power conservation during the infamous energy crisis, and the systems developed then are now used to encourage responsible energy use during times of nature-induced shortages. CA ISO’s press release can be found here, and consumers are being directed to the special Flex Your Power web site that gives tips for reducing energy use.