The California Energy Crisis Continuing Update Lon W

The California Energy Crisis Continuing Update Lon W. House, Ph. D. 530. 676. 8956 ACWA Energy Advisor

Gas Pipelines

Natural Gas Storage Facilities

New CA Gas Projects PGT-GTN and PG&E Company at Malin (1) Kern River Pipeline (2) So. Cal. Gas - Wheeler Ridge and other in-state expansion (3) Kern River Lateral to High Desert (3) Transwestern pipeline expansion (4) Questar Southern Trails Pipeline (4) So. Cal. Gas Line 6900 to SDG&E (5) North Baja to Mexico (6) 1 2 3 4 5 6

LNG Projects

• Natural Gas Futures (April 30, 2003) – June ‘ 03 - $5. 24 – June ‘ 03 -Oct ‘ 03 - $5. 33 – Balance ‘ 03 - $5. 33 – 12 month - $5. 29 – 2004 - $4. 89 – 2005 - $4. 60

May 2003 Futures

Generation Additions in California

Energy Companies California Power Plants Withdrawn: 2000 634 MW withdrawn 2001 1, 591 MW withdrawn 2003 2, 821 MW withdrawn

Delayed/Cancelled Projects

Will We Make It Through The Next Two Years?

Electricity Price Forecasts

Important Decisions • Self-Generation - CPUC D. 03 -04 -030 Departing Load Obligation - exemptions • • Generating before February 1, 2001 Biogas digestors <1 MW and subject to net metering (solar) Eligible for CPUC/CEC self-generation programs: photovoltaics; wind turbines; fuel cells; microturbines, small gas turbines and internal combustion engines with waste heat recovery. No diesel or back-up • >1 MW “ultra-clean and low emissions” do not pay DWR ongoing charges or HPC • 3, 000 MW cumulative total - do not have to pay DWR ongoing charges: 1500 MW renewable, nonrenewable generation amounts caps: – 2004 600 MW – 7/1/2008 500 MW – 2008+ 400 MW

Important Proposed Decision in R. 02 -06 -001 • Technical Assistance Available • $50/k. W. Can be either equipment or behavior. $25/k. W when expected load drop certified by registered engineer, $25/k. W when 50% of estimated load is dropped • Has to have advanced meter (interval meter, communication pathway, and internet-based access to usage information) • Reduction = load drop from average of same hour in 3 highest use days during the past two weeks • CPP - Critical Peak Pricing - All Utilities – 5 to 15 summer weekdays/year, notification the day before – CPP days: 3 -6 pm energy 5 x regular on peak price noon-3 and 6 -7 pm energy 3 x partial peak price – Non CPP days - energy costs discounted – Rate protection available - never pay more than under old tariff • HPO - Hourly Pricing Option - SDG&E – Day ahead price signal • DBP - Demand Biding Program - All Utilities – You offer amount and price – Between noon and 8 pm weekdays – Triggered when energy price >15¢/k. Wh – Emergency test trigger twice a year for less than 4 hours, will pay you 50¢/k. Wh

Conclusions/ Recommendations • High electricity (through 2011) and probably natural gas prices around for awhile • Traditional tariffs (I-6) disappearing • Regulatory agencies eventually want to go to real-time pricing for everyone • Take advantage of technical assistance $$ now, figure out what you can do before you have to do it • Look into demand reduction pilot programs (e. g. CPP) to test your operational changes while you are still protected on the down side • Stay tuned, the California Energy Crisis just keeps on happening