California's Davis seeks to avert summer blackouts

Faced with the prospect of widespread blackouts, California Gov. Gray Davis issued an executive order Thursday to add electricity peaking facilities by summer, coax more output from existing plants, and provide tax incentives for more renewable power facilities. Davis says a package of 'special incentives' signed Thursday will add an additional 5,000 Mw of power by July 2001. The California ISO is projecting a shortfall of 6,815 Mw in June.


Ann de Rouffignac
OGJ Online

HOUSTON, Feb. 8�Faced with the prospect of widespread blackouts, California Gov. Gray Davis issued an executive order Thursday to add electricity peaking facilities by summer, coax more output from existing plants, and provide tax incentives for more renewable power facilities.

The governor also reported he is working with legislators on a stabilization plan for the state�s investor-owned utilities, but he released no specifics.

Davis says a package of "special incentives" contained in a series of orders signed Thursday will add an additional 5,000 Mw of power by July 2001. The California Independent System Operator is projecting a shortfall of 6,815 Mw in June and almost certain blackouts.

Davis directed the California Energy Commission (CEC) to use emergency siting powers to permit natural gas-fired or renewable peaking power plants that can on line during peak summer demand this year. Owners of power plants contracting to sell power to the California Department of Water Resources can apply for an permit that will be completed in 21 days.

The governor also requested President Bush to direct federal agencies to complete the permit process in the same amount of time.

The governor signed another order that would provide a bonus for developers who can complete construction and bring plants online by July 2001. Under this order, the bonuses will be awarded based on the size of the plant.

He ordered the CEC to reduce the permitting time for new base load plants to 120 days from the usual several years. Davis also is seeking legislation to give financial incentives to local agencies to expedite the permitting process for the siting of new power plants.

Opposition of local government to power plants is legendary in California. The local community of San Jose, for example, has thwarted the development of a large gas-fired power plant by Calpine Corp. even though the plant is supported by environmentalists and the California Energy Commission staff.

Another executive order will allow existing power facilities to increase operating hours and waives cumbersome timelines for retrofits and restarts. Mitigation fees will be used as offsets when needed.

To increase output of existing power plants, the governor instructed the California Air Resources Board to establish a State Emissions Offset Bank to allow facilities to pay mitigation fees to compensate for increased operations. The fees will be used to clean up facilities and other sources of air pollution such as older power plants and diesel machinery.

There is already an existing emissions credit market that operates in the southern part of the state. Officials with the California South Coast Air Quality Management District were still evaluating the information and what it means to existing agreement with power plants.

�We don�t know who will do what at this point,� says Bill Kelly, spokesman for the board. �We didn�t receive a copy of the executive order yet.�

The air quality board was already responding to the power crisis by amending the only emissions credits market that functions in the state. On Tuesday, the board allowed certain power plants representing almost 2,000 Mw to continue operating for 2-3 years without having to buy credits on the market. These plants would then schedule installation of pollution control equipment as previously agreed when the grid could most afford to have those plants out of operation.

Davis also provided incentives to develop and install renewable generation. He said he will support legislation that provides $50 million in rebates for small renewable energy systems, provides a 50% tax credit toward the purchase and installation of renewable energy systems for homes and businesses, and eliminates standby charges for small renewable and other clean distributed generation.

While the governor will back legislation that will use taxpayer money to increase the energy supply, Jan Smutney-Jones, executive director of California Independent Energy Producers, noted that the private sector is investing billions of dollars to buy, modernize, and build new power plants now.

(Contact Ann de Rouffignac at Annd@OGJonline.com)

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