California has fixed regulatory flaws that contributed to the energy crisis of 2000-01 and needs new power plants to ensure adequate supplies, the governor’s chief energy advisor said Monday.
A rule adopted last month requiring utilities to have a 15% generating capacity surplus should lead to more supply contracts with plant developers, said Joe Desmond, Gov. Arnold Schwarzenegger’s deputy secretary for energy.
Speaking at an investor conference in New York, Desmond said that developers could use such contracts to persuade lenders to back their projects.
The state also is forming a market in which power companies would be paid for keeping plants on standby, bolstering profits when electricity demand is weak, Desmond said, adding that investors have balked at building new plants partly out of concern that California’s policies and power-market rules won’t let generators recoup their costs.
“We’ve turned the corner,” Desmond said. “There is a clear, consistent energy policy for us moving forward, returning stability to the marketplace.”
To avoid a repeat of the crisis, the state must add 1,000 megawatts a year to its generating capacity for the next 15 years, Desmond said.