Brighter Energy Forecast Calls New State Agency Into Question

California is so rapidly reversing its electricity shortfall that blackouts are unlikely next summer and supplies will far outstrip demand by 2004, according to a new state energy supply forecast.

The outlook is so rosy that some officials say it calls into question the need for a new state power agency to be launched today. At the same time, the report offers good news for Gov. Gray Davis and state legislators, suggesting that they are unlikely to encounter blackouts next summer and fall as they run for reelection.

The draft report by the California Energy Commission shows that new power plants capable of supplying nearly 4 million people will go a long way toward helping the state dodge blackouts in the summer of 2002. By 2004, the state’s power supplies should be abundant enough that conservation programs won’t be necessary to stretch supplies even in an unusually hot summer.

“Statewide planning reserve margins are expected to be in the range of 15% to 32%, which should be sufficient to maintain a 7% operating reserve that is needed to ensure reliable service,” according to the California Energy Outlook, a report ordered by the Legislature in September.

Robert A. Laurie, a member of the Energy Commission, said the forecast leads him to wonder why California needs the new public power authority that will meet for the first time today. The new agency was created under legislation signed by Davis in the spring, and it has the authority to sell $5 billion in bonds to finance new power plants and conservation programs.

“The data that we believe is available,” said Laurie, “suggests very strongly that, provided the market is stabilized and some or most of those projects that have been or will be licensed actually are built, then there will be an adequate supply, including a healthy reserve by next summer.

“If that is true, what is there left for the public power authority?” he said. “That question must be answered before any moneys are spent.”

Another energy commissioner, Michal C. Moore, said: “There’s no reason for them to go out and spend $5 billion in bond money to create new or additional generating facilities that the market appears to be in the process of creating anyway.

“Our forecast would suggest that we’re on target, we’re meeting the governor’s expectations and the market is responding,” Moore said.

Davis has said that the public power authority will be a “builder of last resort” to give the state at least 15% more electricity than it needs. Such a reserve, he has said, will ensure that power prices never soar so high as they did last winter, when the cost of electricity at times was as out of line as a $20 loaf of bread.

Although power supplies are forecast to expand rapidly, natural gas--the fuel used to run most power plants in California--could be a concern over the next five years, according to the report, which is scheduled to be adopted by the commission next month.

Natural gas pipelines from the Rocky Mountains, Canada and the Southwest are running so close to capacity it could lead to price spikes.

Within California, the San Diego area is especially vulnerable to supply disruptions, according to the report. Demand there and in Mexico could outstrip the capacity of even a recently expanded pipeline, the Energy Commission concluded.

San Diego Gas & Electric spokesman Art Larson disputed the report’s conclusion, saying it contradicts another Energy Commission study showing that the utility has 30% more capacity than its customers typically demand. Besides, another pipeline from Arizona should be finished by early 2003, he said.

“There’s a lot of activity in the region that bolsters the reliability of the natural gas system,” Larson said.