California Power Authority proposes 'green' electricity strategy

By the OGJ Online Staff

HOUSTON, Jan. 22 -- The state-funded California Power Authority said it will meet California's need for 8,000 Mw of new capacity by 2006 with energy efficiency programs and renewable energy projects.

In a report to Gov. Gray Davis, the newly created state entity also predicted its plan will reduce natural gas consumption by $10-$15 billion. The state entity said buying gas drains money from the California economy instead of stimulating growth inside the state.

More capacity is required in California to guard against a repeat of the energy disaster the state suffered in 2000-2001, CPA said. The state entity's plan calls for $3.3 billion in total capital investments for 2002-2003 from public and private sources and another $17.3 billion by 2006.

CPA reported electricity reserves will fall to 5-13% within the next 4 years far below the target of 22%. It recommended diversifying the fuel mix to become less dependent on natural gas and emphasizing conservation and renewable energy. After successfully cutting energy use last year, CPA said Californians need to be refocused on conservation because their efforts have tapered off.

"We have found that there is sufficient opportunity in energy efficiency, load management, renewables, and decentralized generating resources to meet all of the projected load growth," according to the report.

Finally, it found specific transmission constraints, particularly in the San Francisco and San Jose corridor, need to be rectified.

The state will arrange financing for permanent efficiency changes and for new renewable energy projects. CPA said it will leverage its $5 billion of bond authority with at least $2-$5 billion or as much as $8-12 billion from the private sector and other public organizations to finance the plan.

The money will be targeted for renewable energy to insure 50% of the energy needs of state and local public buildings is met with renewable sources by 2006. Other investments will be made in strategic power reserves to help meet peak demand in certain areas and in energy efficiency, and load management projects.

CPA predicted the strategy will lower overall electricity costs by $20-40 billion primarily by dampening volatile spot market prices. Nitrogen oxide emissions will be reduced by 100,000 tons, it said. The plan will also create 5,000-10,000 more jobs than a conventional strategy, according to CPA.

The state entity also asked for authority to finance new transmission lines and for increased and more "viable" power of eminent domain to take over privately operated power projects and undeveloped sites.

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