Cal-ISO emergency meeting today to discuss peaking power contracts

OGJ Online

Oct. 30, 2000—The California Independent System Operator called an emergency meeting for today at 4 p.m. PST to discuss a request from state regulators to abandon the ISO’s contract negotiations with generation companies for peak electricity capacity.

The state’s Electricity Oversight Board (EOB) sent a letter to the California ISO asking to ISO hold up sign any contracts with generators for new peaking power. The oversight board wants the California Public Utilities Commission to obtain additional bids from the regulated utilities to construct and operate the new plants.

“What do they want us do?” says Patrick Dorinson, spokesman for the ISO. “Hold off, go forward. We need some guidance at this point.”

The letter from the oversight board states bids from the ISO should be compared with new bids to be obtained from local utilities to determine the most cost-effective power. The oversight board said it is concerned that the power being negotiated for by the ISO is “very expensive.”

“The Electricity Oversight Board is concerned that the CAISO intends to sign these contracts without providing the EOB with any review of final terms and conditions of the contracts and their costs,” stated Loretta Lynch, president of the California Public Utilities Commission, in the Oct. 26th letter to the CAISO.

The ISO issued requests for proposals (RFP) at the end of the summer for new peaking plants needed to make up for an expected short fall at peak for summer 2001. The RFPs were received in late September. The ISO is in final stages of selecting the most economical and efficient plant proposals for about 2,000 Mw of new power.

The ISO has said for some time that the state faces blackouts and brownouts, if additional power is not online by the summer of 2001, but ISO management was concerned the needed peaking power would not be there fast enough to solve the problem. The ISO took the initiative to get more power built given its mission of reliability.

“We make a move and then they come back and nail us,” says Dorinson.

For every day there is a delay, it is less likely that the new peaking plants can be built and operational in time for the first summer heat wave which could come as early as May, he says.

Terry Winter, president and CEO of the ISO, responded on Oct. 27 to the oversight board’s letter. He requested that the California Public Utilities Commission provide by noon today the specific amount of new lower cost megawatts of peaking capacity that it can “assure” the ISO will be available by June 1, 2001.

“We have an emergency. To do nothing to finalize contracts for added capacity in the immediate future increases the likelihood of blackouts next summer,” said Winter.

By 2 p.m. PST today, the oversight board had not provided any information about peaking power projects that could be built by the utilities.