/javascript" src="../static/js/analytics.js"> CalTrade Report - New Energy Crisis Looming, Report Says Bay Area Economic Forum, CalTrade Report, California, electrical generation, energy conservation - New Energy Crisis Looming, Report Says - Sacramento ''underestimates future electrical power demand''../">CalTrade Report Asia Quake Victims 08/09/04 - The new study by the Bay Area Economic Forum asserts that California faces the increasing risk of a power shortage in hot weather and that higher electricity demand is likely to increase the chance of a shortage as early as 2006, even with ''normal'' temperatures; ''out of 28,000 megawatts of power proposed to be built in California since 2001?only 3800 megawatts of capacity has been achieved,'' it says. - 08/09/04 - The new study by the Bay Area Economic Forum asserts that California faces the increasing risk of a power shortage in hot weather and that higher electricity demand is likely to increase the chance of a shortage as early as 2006, even with ''normal'' temperatures; ''out of 28,000 megawatts of power proposed to be built in California since 2001?only 3800 megawatts of capacity has been achieved,'' it says. - New Energy Crisis Looming, Report Says Bay Area Economic Forum, CalTrade Report, California, electrical generation, energy conservation - New Energy Crisis Looming, Report Says

 

Tuesday, June 13, 2006

 

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New Energy Crisis Looming, Report Says

Sacramento ''underestimates future electrical power demand''

SAN FRANCISCO - 08/09/04 - A new power crisis could strike at any time, according to a new report published recently by the Bay Area Economic Forum.

The report - "Lightning Strikes Twice: California Faces the Real Risk of a Second Power Crisis" - describes the risk to California'../eWebPhotos/electricity2a.jpg" align=left vspace=15 border=0>another power shortage, and the steps needed to ensure stable energy supplies and competitively priced power.
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The report by the found that, with falling reserve margins after 2005, the state faces an increasing risk of a power shortage in hot weather and that electricity demand is likely to be higher than currently projected by the state, increasing the likelihood of a shortage as early as 2006, even in normal weather.
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Out of 28,000 megawatts of power proposed to be built in California since 2001, after plant retirements a net increase of only 3800 megawatts of capacity has been achieved.
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According to Sean Randolph, president & CEO of the San Francisco-based economic development group, "California must lay out a clear policy. The longer it fails to do so, the greater the risk of a major shortage. Policymakers need to act now to promote competitive investment in new supplies, and incentives for demand reduction."
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To avoid the catastrophic impact to the state's economy of another energy crisis, more aggressive measures are needed to expand near-term supply, he said.
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The report specifically recommends that the California Public Utilities Commission (CPUC) expedite decisions to encourage utilities to enter into market-based long-term contracts with generators, to jump-start the building of new capacity.
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"California's energy situation has been unstable for far too long," said Lenny Mendonca, a director at McKinsey & Company, the international management-consulting firm that helped develop the report.
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Demand, he said, "continues to grow, and will grow faster as the economy is recovering. Supply isn't increasing, and with the current uncertainty around state policy, won't anytime soon. Now is the time for clear direction and action if we don't want to see any more rolling blackouts."
The report determined that the state's rising power needs can also be met through aggressive measures to lock in conservation and reduce demand during peak consumption hours.
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These measures can be instituted faster than new power plants can be built, and could lead to a reduction of energy demand by as much as 20%, with up to $2.5 billion in consumer savings over the next ten years.
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Among other steps, the report recommends the installation of time-of-use meters for all power users.
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The report also urges an expedited review process for new transmission capacity, the development of new power supplies through a competitive bidding process, the creation of a market for electrical capacity - combined with required reserve targets for all energy service providers - and the re-introduction of consumer choice through a market structure in which residential consumers are served by utilities and larger businesses have the option to buy power on the open market.
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It slso found that other markets in the US and overseas that have instituted retail customer choice have been rewarded with greater efficiency and lower consumer prices.
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Currently, regulatory uncertainty and the lack of a clear policy are inhibiting the development of badly needed capacity in California.
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"As a starting point for any economy, businesses need reliable, affordable power," said Jim Wunderman, president & CEO of the Bay Area Council. "This report highlights the fixes we need to get there. I would add that some in Sacramento still don't get the message."

For example, AB 2006, now before the Senate, is a bill cloaked in good rhetoric but that in reality is bad policy. It takes us in the wrong direction, by discouraging customer choice and new private investment, and by adding more confusion to an already complicated regulatory environment," he said, adding, "After the problems of the last few years, California can't afford another misstep."
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The full Bay Area Economic Forum report is available on its website at www.bayeconfor.org.

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