Genuine price signals about the underlying cost of consumer energy usage are an important part of energy efficiency. With those signals, consumers can adapt to save high-cost energy, while making...
Squeezing Scarcity From Abundance
California's pursuit of a centralized administrative solution in reliability hinders everyday operational issues.
Going by the Numbers
The correct place to start is the WECC 10-Year Coordinated Plan, available at www.wecc.biz. The annual coordinated plans are standard across North America. The basic methodology and structure have been consistent for more than 20 years. The aftermath of the price manipulations from May 2000 through June 2001 was a tremendous supply response, leaving the western United States and Canada with a massive surplus (see Table 1) .11
According to current forecasts, the 2005 summer peak of the WECC left 33.3 percent of the region's capacity in reserve. This is 46,873 MW-approximately the entire worst case capacity load in the Cal-ISO control area this summer. 12
Because transmission links are weak between different areas in the vast expanse covered by the WECC, the 10-Year Coordinated Plan is split into four sub-regions: Pacific Northwest, California, Rockies, and the Southwest.
Each sub-region also has a detailed analysis of future capacity loads and available resources (see Table 2) .
The WECC forecasts for California showed a healthy situation for the state as a whole-15.7 percent reserves. However, at the request of the Cal-ISO, the derivation of the ISO's contribution to this forecast has been confidential since 2001. 13
While the submission to the WECC is secret, both the CEC and the Cal-ISO publish their own slightly idiosyncratic versions of the WECC tabulation. Of the two, the CEC approach provides the closest match to traditional reliability planning standards. (see Figure 1.) 14
Comparing the official WECC tabulations with the tables from California requires care. The WECC began with total resources and then compared them with total load. The CEC complicated the problem by assuming a substantial amount of forced outages halfway through the table. This tends to obscure the conclusion by confusing planning reserve with operational reserves.
The WECC forecast 63,870 MW of capacity resources and contracts. The CEC forecast 54,773 MW of capacity, 129 MW of new resources in August, and 12,921 MW of imports-a total of 67,823 MW-almost 4,000 MW in excess of the CEC forecast. The CEC then removed 3,500 MW of plant outages, which made the WECC and CEC numbers roughly comparable. 15
Projected loads were 55,955 MW at the WECC and 57,913 MW at the CEC. Removing the forced outages from the planning reserve calculation produced a projected reserve margin of 15.7 percent-the same level as the WECC forecast.
California's forced outages have been quite high since restructuring. During the height of the market manipulation period, merchant plant thermal outages occasionally reached 50 percent. The assumed level of forced outages seemed high by comparison with recent years, but not implausible, given the incentives to withhold generation during periods when Cal-ISO may be forced to pay a premium for emergency purchases. We now know that Enron and Reliant provided fraudulent outage information as a means to raise prices, so the high levels of outages during the crisis are not surprising. However, the 3,500 MW assumed here still appeared high by industry standards-approximately 6.4 percent of all resources. The reason was that the CEC staff added