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Electricity and Natural Gas Supply, Reserves, and Resource Adequacy

CMTA Energy Conference Energy: Growing California’s Economy. Electricity and Natural Gas Supply, Reserves, and Resource Adequacy. William J. Keese California Energy Commission July 29, 2004. An Opening Thought…. Remember the Loading Order. Promote energy efficiency

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Electricity and Natural Gas Supply, Reserves, and Resource Adequacy

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  1. CMTA Energy Conference Energy: Growing California’s Economy Electricity and Natural Gas Supply, Reserves, and Resource Adequacy William J. Keese California Energy Commission July 29, 2004

  2. An Opening Thought… Remember the Loading Order • Promote energy efficiency • Diversify portfolio with renewable energy • Offer consumers energy choices • Strengthen California’s energy infrastructure

  3. Helping the California Economy:An Energy Report Card (Post Crisis) • Energy Efficiency • 5000 MW during crisis • About one-third permanent savings • Demand Response programs being developed • Renewable Energy • Lots of PV • RPS • WREGIS • Consumer choice • No direct access and some exit fees • Core/noncore structure being addressed • California’s Energy Infrastructure • New generation and natural gas infrastructure added. • LNG on the horizon?

  4. California Electricity Outlook:Summer 2004 Emergency Response Programs/ Interruptibles Spot Market Imports High Probability Additions- Only counts plants deemed 75% or better chance of being built. Net Firm Imports Existing Generation (reflects adjustments for retiring units and 1-in-10 Summer Temperature Demand (Hot) 1-in-2 Summer Temperature Demand (Normal) both forced & planned outages)

  5. California Electricity Outlook:2004 - 2010 70,000 Emergency Response Programs/ Interruptibles 65,000 Spot Market Imports 60,000 High Probability Additions- Only counts plants deemed 75% or 55,000 better chance of being built. MegaWatts Net Firm Imports 50,000 45,000 Existing Generation (reflects adjustments for retiring units and both forced & planned outages) 40,000 1-in-10 Summer Temperature Demand (Hot) 35,000 1-in-2 Summer Temperature Demand (Normal) 30,000 2004 2005 2006 2007 2008 2009 2010

  6. California’s Electricity Outlook: Projected Operating Reserves

  7. Power Plant Status ReportOver 20,000 MW approved, but many projects not moving forward… Approved & Operating Approved & Under Construction Approved but No Construction Under Review

  8. Resource Adequacy There is still much to do... Definition: “A condition in which sufficient generation and transmission resources exist to cover load and satisfy reserve requirements” Outstanding issues: • Tradeable capacity credits • ISO dispatch control over nominated resources

  9. California’s Electricity Future… Just follow the loading order!!!

  10. Natural Gas Price Situation (Dollars per MMBtu) • High natural gas prices continue to be a national problem. • California natural gas prices have exceeded $5.00 per MMBtu for most of this year. • California is actually doing better than the rest of the nation. • Main reason: Infrastructure enhancements and efficient use of storage. 7.00 6.50 6.00 5.50 $/MMBtu 5.00 PG&E-Malin PG&E-Topock 4.50 SoCalGas Border Average Henry Hub 4.00 05/06/04 05/11/04 05/19/04 05/24/04 06/29/04 05/03/04 05/14/04 05/27/04 06/02/04 06/07/04 06/10/04 06/16/04 06/21/04 06/24/04 07/02/04 07/08/04 07/13/04 07/16/04

  11. Natural Gas Storage Capacity and Inventories(Billion Cubic Feet) 250 225 200 175 150 Billion Cubic Feet 125 100 75 Capacity 50 Inventories 25 Average inventories over the previous 5 years - Apr-2003 Apr-2004 Apr-2002 Oct-2002 Oct-2003 Oct-2001 Jun-2004 Jun-2003 Jun-2002 Feb-2003 Feb-2002 Feb-2004 Aug-2002 Dec-2002 Aug-2003 Aug-2001 Dec-2001 Dec-2003 July 15, 2004 Beginning of the month levels, unless otherwise indicated California Energy Commission estimate

  12. California’s Natural Gas OutlookGeneral Observations • Current supply/infrastructure is adequate…FOR NOW. • Prices are higher than desired, but we are positioned to do better than the rest of the nation. • Demand for natural gas is growing in California despite aggressive energy efficiency programs. • Additional import capacity is needed to meet future demand.

  13. California’s Natural Gas Future… Is LNG the Answer? Just follow the loading order!!!

  14. So Is State Policy Moving in the Right Direction??? Tradeable Capacity Market Core/Noncore Market Redesign Procurement AB 2006

  15. Closing Thought: It All Depends on Your Perspective Follow the Loading Order

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