California ISO votes to buy peaking power

In a contentious session, the California Independent System Operator board Monday evening voted to enter into contracts for 2,000 Mw of electric peaking power for $255 million/year for 3 years. The emergency meeting was called earlier Monday to respond to a request from the state�s Electricity Oversight Board (EOB) to defer signing the contracts until the state's electric utilities had a chance to submit bids to supply the peaking power themselves.


Ann de Rouffignac
OGJ Online

In a contentious session, the California Independent System Operator board Monday evening voted to enter into contracts for 2,000 Mw of electric peaking power for $255 million/year for 3 years.

The emergency meeting was called earlier Monday to respond to a request from the California Electricity Oversight Board (EOB) to defer signing the contracts until the state's electric utilities had a chance to submit bids to supply the peaking power themselves.

The board reasoned the contracts are in the final stages of negotiation and should go forward or the suppliers will go else where. The board passed the resolution 15 for, 3 opposed, 4 abstentions, and 1 recusal.

�We should vote in favor of confirming the execution of these contracts because the power is urgently needed. We are projected to be 8,000 Mw short at peak next summer,� ISO CEO Terry Winter said before the vote was taken.

The ISO issued requests for proposals for peaking power late in the summer, and the responses were due in early October. The ISO said contract prices and other information about the peaking plants has been forwarded to the oversight board every step of the process.

�Even with the new capacity, we could still have blackouts next summer,� Winter stressed in the discussion before the vote. �The cost per household is $6/year for the new capacity.�

Questions were raised by some board members about the price of the power that the ISO is buying. They claimed the power is very expensive and more emphasis should be placed on demand side management contracts to reduce load at peak rather than building new peaking plants.

The ISO had asked the EOB for assurances California utilities will have additional peaking power to commit to solve the emergency, if it wanted the ISO to quit pursuing the peaking power. The oversight board could not provide that information before the meeting, Winter said.

In another discussion, a spokesman for the California Public Utilities Commission (PUC) said formal proceedings had not been convened to allow utilities to build their own new peaking facilities. Those proceedings are under discussion now, the spokesman said.

Exactly what role the PUC will play in insuring there will be sufficient power available next summer is not clear.

�Who is responsible for what?" asked one ISO board member. �What if we have blackouts next summer? Whose responsibility is that?�

A PUC representative suggested the agency will be ultimately responsible if the lights go out next summer. Some ISO board members said, on the other hand, the grid operator will assume reliability is its top priority until it is told otherwise by the state or Federal Energy Regulatory Commission.

More in Capacities