Squeezing Scarcity From Abundance

Deck: 

California's pursuit of a centralized administrative solution in reliability hinders everyday operational issues.

Fortnightly Magazine - August 2005
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In March and April of this year, three California government agencies, the California Public Utilities Commission (PUC), the California Energy Commission (CEC), and the California Independent System Operator (Cal-ISO), expressed concerns about possible blackouts in Southern California this summer1—almost inconceivable by any traditional utility planning standards for a region with capacity margins above 30 percent for summer 2005.2

Part of the problem reflects an error in planning-the continued treatment of California as a single region for planning purposes-but the larger issue is ideological. California's continued pursuit of a centralized administrative solution to reliability has left it ill-equipped to address everyday operational issues. In this case, a fairly simple exercise in prudent utility practice has been allocated among too many parties, and no one is actually in charge of a solution. It remains to be seen whether Gov. Schwarzenegger's plan to consolidate some functions of California's agencies within a new state Department of Energy will further complicate reliability planning or make it simpler.

The irony of the belief in better reliability through markets is that Cal-ISO's short-term purchases of system reserves could very well raise prices and reduce reliability.

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