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LCG Publishes 2024 Annual Outlook for Texas Electricity Market (ERCOT)

LCG, October 10, 2023 – LCG Consulting (LCG) has released its annual outlook of the ERCOT wholesale electricity market for 2024, based on the most likely weather, market, transmission, and generator conditions.

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LCG Publishes 2024 Annual Outlook for Texas Electricity Market (ERCOT)

LCG, October 10, 2023 – LCG Consulting (LCG) has released its annual outlook of the ERCOT wholesale electricity market for 2024, based on the most likely weather, market, transmission, and generator conditions.

Read more

Industry News

Report Says California Bought Too Much Power

LCG, Aug. 13, 2001--When California sold surplus power at a loss of $46 million in July, eyebrows were raised, and if a report in Saturday's Los Angeles Times is on the money, entire foreheads may disappear.

According to the newspaper's analysis of the state's electricity purchases and projections of demand for power, the losses could add up to $500 million in the year ahead and be even higher farther into the future.

In pursuing what some critics have called a long-term fix for a short-term problem, the administration of Gov. Gray Davis has signed contracts with power producers for up to 20 years, committing the state to about $40 billion in power purchases, mostly over the next 10 years. The contracts were seen as necessary to protect the state against soaring wholesale power prices which resulted from an insufficiency of supply to meet growing demand.

Though the state's population had grown by 4 million during the 1990s, no new power plants had been built to provide electricity for those people or the businesses that employed and served them. The law of supply and demand guaranteed that power prices would soar in a free market.

But the advent of a free market for wholesale electricity, spawned in 1966 by passage of California's electric industry restructuring law, brought with it a rash of applications by private businesses to build so-called "merchant" power plants -- plants that would sell their output to the highest bidder. By 1998, the year that quasi-deregulation came to the state's electric industry, there were plans for more than 10,000 megawatts of new generation, a 20 percent increase in the state's capacity.

The new plants represented by those plans were mired in tedious and lengthy permitting processes before the California Energy Commission, which licenses power plants in the state, but when Davis at last became aware of the power shortage he issued orders to speed up the process. The result has been that new sources of generation began producing power this spring and more new plants come on line every week.

Add to that improvements in efficiency at older plants, once owned by the state's investor-owned utilities but purchased from them by other energy companies as a result of the restructuring law, and the state is moving rapidly toward a surplus of generation capacity.

The Times sees the oversupply problem reaching full flower in 2004, a year for which the state has purchased 43 percent of the expected demand of the three big utilities. The utilities think the state will need to furnish only about 35 percent of their demand.

Davis' spokeswoman, Hilary McLean, defended the purchases. "Locking in the power surplus was done on purpose," she said. "California was faced with the very strong and real possibility of blackouts."

But the blackouts haven't come, partly as a result of new power plants coming on line, partly because the older plants are repaired and operating better and mostly because it has been an uncommonly cool summer so far in California.

What no one in a position of authority has admitted is that almost no one in the industry really knows what to do about a free wholesale power market, but one insider came close.

"We are all on this huge learning curve for electricity markets," Doug Larson, executive director of the Western Interstate Energy Board, told the Times. "We have never gone from a shortage to a surplus in an environment where market forces set the prices."

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