Reliant executive paints dire power picture for US West

Electricity shortages in the US West could total a horrific 13.1 Gw this summer, Joe Bob Perkins, president of Reliant Energy Inc.�s wholesale division, said Wednesday. 'A regionwide plan is needed and this is of the highest urgency,' he said, during a media briefing. Based on calculations of shortages by the Western States Coordinating Council, Perkins said, reducing demand appears to be the region's only hope for the summer.


By Ann de Rouffignac
OGJ Online

HOUSTON, Mar. 21�Electricity shortages in the US West could total a horrific 13.1 Gw this summer, Joe Bob Perkins, president of Reliant Energy Inc.�s wholesale division, said Wednesday.

�A regionwide plan is needed and this is of the highest urgency,� he said, during a media briefing.

Based on calculations of shortages by the Western States Coordinating Council, Perkins said, reducing demand appears to be the region's only hope for the summer.

To avoid blackouts, Perkins said conservation in California alone could produce savings of 6.1 Gw and in the rest of the West, 12.4 Gw. Without conservation more blackouts in California are all but inevitable and reducing electricity demand is the only tool left. Perkins said it's too late for a supply response to help California this summer.

He said estimates for blackouts in California range from 20-1,100 hr for the rest of this year. The 1,100 hr of blackouts is a worst case scenario forecast by the California Independent System Operator.

�It�s not a matter of if, it�s a matter of when there are blackouts,� he said. �There is little doubt without record precipitation, California will be in a shortage mode and Stage 3s throughout most of the summer.�

The loss of hydroelectric resources, loss of imports, warmer weather for the summer, and continued high growth in demand would set up this dire picture, Perkins said. Reliant Energy owns 9% of the generating capacity in the California ISO control area.

�There is no silver bullet here. There is no near term supply increase,� he said. The drought in the Pacific Northwest is limiting hydroelectric capacity and reducing imports to California from that region. Electricity imports are running 4,000 Mw below what is customary, said Perkins.

If the West doesn�t curtail or conserve power, California will have a high level of blackouts and California�s economic slowdown will ripple through the region. Supply has not kept up with demand throughout the region.

Repercussions from a power shortfall will cut across industries. Perkins predicted refined products will be in short supply with accompanying higher prices. And he warned agricultural product shortages will also be accompanied by higher prices.

Perkins said the quickest and surest way to achieve conservation is through price signals. To bolster his argument, Perkins cited a study by the Cambridge Energy Research Associates that estimated a 20% increase in retail rates in California would immediately cut demand by 2,000 Mw.

Except for San Diego Gas & Electric Co.�s territory, investor-owned utility rates have been under a rate freeze, and the power companies have not been able to fully recover their wholesale power costs.

Contact Annd@OGJonline.com

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