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Enron Mail |
Per our conversation at the law conference, you may want to consider how the
TW negotiated rate transactions play againt PR such as that listed below. Nov 16,2000 California Power Plants Get Jolt As Natural-Gas Supplies Are Cut By Rebecca Smith Staff Reporter of The Wall Street Journal LOS ANGELES -- Southern California power plants, already stressed to their limits last summer, got another jolt this week as a cold snap caused a sharp curtailment of supplies of natural gas used to generate electricity. The power plants were able to switch to burning oil and continue to produce electricity. But the unusual curtailment of natural gas underlines concerns that an increased reliance on gas for power generation across the U.S. is putting the reliability of the nation's electricity supply at risk. That's because virtually all power plants now under construction in the U.S. burn gas and only gas. The units affected this week in San Diego were able to shift to oil only because they were older plants that originally were constructed to burn oil. Generators have been reluctant to add a dual-fuel flexibility to plants in recent years because oil is far more polluting than gas and generally has been costlier. In California, where gas-supply problems first surfaced on Monday in San Diego, there is pessimism about a Hydra-like energy crisis that seems to grow new heads every day. The state weathered three-dozen electrical emergencies last summer, caused by a shortage of electricity. Officials had hoped to solve the problem by speeding up construction of new generating plants. Now, they're finding the state may be building its way out of an electrical problem and into a gas problem. One official, who has been warning of the danger of reliance on a single fuel, said this week's disruption pointed out the necessity of developing a comprehensive energy policy that recognizes how changes in usage of oil, gas and electricity affect each other. "We don't just need new generating plants and transmission lines, we may need pipelines, too," said Terry Winter, chief executive officer of the California Independent System Operator, the organization responsible for maintaining adequate electricity supplies. "You can't look at these things in isolation." The natural-gas problems surfaced when the local gas-distribution company, San Diego Gas & Electric Co., notified power-plant operators and a handful of industrial users that it would be restricting their gas use by about half. In California, residential and small businesses have first crack at natural gas, and industrial uses are regarded as secondary, even if they are generating plants. Dynegy Inc., the Houston-based energy concern that owns some of the older plants that serve San Diego, immediately switched to oil. But it didn't like doing so; its plants create three times as much pollution when they burn oil and exhaust valuable air-pollution emission credits that power plants here need to operate. The San Diego units couldn't simply be shut down, because the state was short of power. Roughly 30% of the state's capacity already was off-line, including many of its nuclear units, as most of those plants are now undergoing repair after being run at capacity limits throughout the summer. What's more, the gas-pipeline system that feeds San Diego isn't big enough to begin with. The system was built primarily to serve residential customers and not big power plants. The problems could persist, off and on, through the winter. That's because gas-storage levels are down sharply from a year ago throughout the nation, but especially in California, because it ran its gas-fired units so hard last summer. This time last year, Southern California had 87 billion cubic feet of gas in storage. Now, it's roughly 50 billion cubic feet, or 43% less. Prices also have moved up sharply, from roughly $2.50 a million British thermal units to around $8 this week. Nationally, storage levels are down about 8% from a year ago. "Gas is trading higher in California than anywhere else in the nation," said John Lavorato, chief operating officer of Enron North America, a unit of Enron Corp. of Houston. But he said they're headed up in the Northeast, based on cold weather forecast for the next 10 days to two weeks. High prices for fuel also push up prices for the end product, electricity. In California the average price for electricity to be delivered Thursday was $228 per megawatt hour. That's double the price a week ago and five times the price a year earlier.
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