California ISO declares Stage 1 alert; suppliers grow restive

With 10,000 Mw offline, the California Independent System Operator Tuesday called a Stage 1 power emergency, signaling reserves have dipped below 7%, and appealed to the public to conserve power. The emergency declaration comes at a time suppliers are growing increasingly restive about their dealings with the grid operator. Monday Reliant Energy Inc. asked FERC to halt ISO efforts to eliminate requirements for investor-owned utilities to provide payment security to purchase electricity.

Jan 9th, 2001


With 10,000 Mw offline, the California Independent System Operator Tuesday called a Stage 1 power emergency, signaling reserves have dipped below 7%, and appealed to the public to conserve power. The emergency declaration comes at a time suppliers are growing increasingly restive about their dealings with the grid operator.

The ISO said a high number of plants are down due to both planned and forced outages. The grid operator also said imports from the Northwest are lean and that Path 15, the high-voltage lines feeding power back and forth between the southern and northern parts of the state are congested.

Consumption is projected to peak at 32,322 Mw Tuesday. Earlier, the ISO put out a call to purchase 3,000 Mw of electricity.

The ISO also called a Stage 1 emergency Monday afternoon, the first in nearly 2 weeks. With the investor-owned utilities running out of cash, suppliers have becoming increasingly litigious and electricity has become increasingly difficult and more complex for the grid operator to secure.

Reliant files complaint
Monday Reliant Energy Inc. asked the Federal Energy Regulatory Commission to halt ISO efforts to eliminate requirements for investor-owned utilities to provide payment security to purchase electricity. The change forces electricity suppliers to take on greater financial risk for selling electricity in the California market.

The Jan. 4 action by the ISO followed the downgrading of the credit ratings of Southern California Edison Co. and Pacific Gas and Electric Co. Reliant's emergency filing not only seeks a stay of the ISO's relaxed credit standards, but also requests FERC to ensure power suppliers selling to the ISO are given reasonable assurance they'll be paid for power delivered.

Up to now, the ISO and the California Power Exchange (PX) have made all payments when due, Reliant said. But the Houston energy company said underrecoveries in wholesale power costs have placed such a financial burden on California's investor-owned utilities there is increasing doubt about the ability of the ISO and the PX to continue to make payments.

Reliant said its total receivables with the ISO and the PX have varied seasonally from $5 million to $270 million over the past 12 months.

Separately, in a FERC filing, Dynegy Inc. recently claimed it lost $2 million and could lose �tens of millions of dollars" in its dealings with the ISO.

Dynegy alleged in a Dec. 22 complaint the ISO pays less for power from in-state generators, while paying higher market-based rates for out-of-state power during emergencies. The Houston-based energy merchant says the tariff paid under these conditions is less than its short-term marginal costs to operate its plants. The ISO can impose the tariff when it has declared a situation of short supply.

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