California returned energy at night
Most Oregonians knew California was draining away megawatts of electricity every day last spring and summer.
What they may not have known is that each night the Golden State was returning twice as much to the Northwest on the intertie lines east of Medford.
Bonneville Power Administration chief operating officer Steven Hickok told a Chamber of Medford/Jackson County Forum audience Monday that the power exchange actually benefited the Northwest utility customers.
They weren't one-way transactions; we didn't have power to send one way, Hickok said. What we were doing was daily exchanges where we would send them power on their peak (demand time), and they would send it back off-peak into our reservoirs. ... those were mostly two-for-one exchanges.
A lot of people thought ?Whoa, wait a minute, I know power is flowing to California. Isn't something wrong happening here?? I can report to you that, no, we were only doing the business that made sense for our service area for our customers.
Hickok said the rolling blackouts, price spikes and shortages of last year all could happen again because California has not taken the steps needed to fix its broken system.
Hickok compared the generation and transmission of electricity to telephone lines, gas lines and highways.
Highways work fine if there are no trucks on them, he said. The wires don't work well unless the generation is operating within close tolerances in one synchronous machine and we're manufacturing power at exactly the pace it's being consumed
With all the other commodities when the storage is depleted, prices go up; prices go down for a period of time, Hickok said. But in electrical power, there is virtually no storage. The Columbia River reservoirs are a bit of an exception to that rule. But for the most part, you have to have enough stand-by generation to follow whatever is happening at retail. If you haven't got reserve margins that are adequate enough to handle that, when you get to the edge what happens? Extreme volatility. Because the retail suppliers are obligated to keep your lights on.
As a result, the generation and retail sale of electricity are out of kilter.
In a market environment, Hickok said, if you?re able to charge the moon and there is no other alternative supplier out there, you get the moon.
Half of the power plants in California were sold in the mid-1990s. Although there wasn't a great earlier return for several years. When the market conditions changed, profits rose radically.
In 1999, it cost $7 billion to provide California with electricity. A year later, it was $27 billion.
The same resources were engaged, Hickok said. Where did the money go? It went to the investors. It was thought we could de-regulate the power supply and work a competitive market. I would argue we haven't quite got there yet.
The same factors that buried California utilities in debt and caused rolling blackouts a year ago could return, Hickok predicted.
States and stakeholders of the Western electric power system need to restructure the system to reconnect wholesale and retail power markets to end the paralyzing confusion about future competition.
California failed abysmally. It charted its course to retail restructuring amid the ?wonderful? fiction of 1995, he said. It myopically chose to throw most of the consumers of the state into the day-ahead market. It caused most of the power plants supplying this market to be sold into the hands of merchants who have no load-serving obligation — out of the hands of the utilities who do. It lowered and froze retail rates in a way that first prevented alternative suppliers from developing retail markets and later prevented the utilities from recovering their costs of purchasing daily power from the merchants.
It is hard to imagine a more wrong-headed strategy And yet, each succeeding step that California has taken since the collapse of its major institutions of electricity service has demonstrated the depth of new untapped reservoirs of lunacy.
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