FERC chairman may have overstated SoCal summer adequacy

FERC Chairman Jon Wellinghoff may have spoken too quickly, or too effusively, when asked about whether there will be enough power this summer in southern California.

After speaking to an industry conference in San Diego on June 4, Wellinghoff told a local newspaper reporter that, based on the reports he had read, he believed there would be adequate resources to meet the summer’s peak demand. He concluded by saying that the area would “be in fine shape.”

The reporter posed the question in part because of the continued outage of the San Onofre nuclear generating station, which has been off-line since late January after a steam generator tube leak was discovered.

While FERC’s press office could not confirm the accuracy of the quote, its publication nonetheless took some local utility officials by surprise.

“Demand response and conservation will be very important this summer,” a spokesperson for one utility, speaking on background, told TransmissionHub on June 5. “We’re looking at all the tools in the toolkit to get through this summer. We’re looking at everything as equally important.”

FERC’s own assessment of summer electricity reliability and markets released May 17 warned of tight margins between supply and demand in the San Diego area, and volatile power prices as a result.

“With the outage of the two San Onofre nuclear units, supply and demand conditions in Southern California, and particularly in the San Diego area, warrant close attention to electric grid operations and prices,” Alan Haymes, of FERC’s office of enforcement, said at FERC’s May 17 open meeting.

A memo from California ISO president and CEO Steve Berberich to the ISO’s Board of Governors also painted a cautious picture.

“Conservation, demand response and the return to service of Huntington Beach units 3 & 4, in addition to completing the Sunrise [Powerlink] and Barre-Ellis transmission projects, remain the key components of our contingency plan,” Berberich said in the memo. “We are working on the best course of action to ensure the [reactivated Huntington Beach] plant only runs to the extent needed to support the grid and supply energy.”

In addition, the California Public Utilities Commission in April approved additional demand-response programs by Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E) that reward consumers who cut consumption at the right time.

It may simply be a matter of semantics, or a matter of defining one’s terms.

Being “in fine shape” seems to suggest a supply that is abundant rather than merely adequate.

But if one defines being “in fine shape” as lights – or, more importantly, air conditioners – that stay on regardless of whatever extraordinary measures are taken by the utilities or sacrifices made by their customers, then the chairman may be right.

SCE is a subsidiary of Edison International (NYSE:EIX).

SDG&E is a subsidiary of Sempra Energy (NYSE:SRE).