Calpine to Step Up Investment in California Power Projects
LCG, Nov. 22, 2000--Calpine Corp. said yesterday it would add more than 1,000 megawatts of capacity to California's power portfolio next summer and plans to increase its power development program in the state by more than 60 percent."Calpine is committed to California," said Calpine vice president Jim Macias. "In addition to our 4,700 megawatt energy program currently under way, Calpine expects to announce plans to develop an additional 3,000 megawatts of new capacity in California.""In all, we have a program in place to build some 7,700 megawatts of clean, energy-efficient generation in and around California over the next five years, representing a $4 billion investment in California's energy market," he said.That California Energy Commission study, reported on here yesterday, that predicts that there will be sufficient power in the state next summer, predicates its findings in part on the development of new sources of generation. Calpine says that's what the company is trying to do.It isn't always easy. In its home town of San Jose, Calif., Calpine wants to build a 600 megawatt natural gas-fueled, combined-cycle power plant on some agricultural land on the wrong side of the Interstate. There are people living a couple of miles on the other side of the highway who think that's too close to home.The Metcalf Energy Center is also opposed by Cisco Systems, which is building a campus nearby. "Campus" is what high-tech firms call their factories, and Cisco Systems' factory will employ 20,000 workers. Those employees will probably use 20 megawatts of power in their homes and another 20 at work, but Cisco Systems hasn't said where it will come from.Calpine will get two new power plants on-line next summer -- their Sutter and Los Medanos projects will provide more than 1,000 megawatts of the power the Energy Commission is depending on to make its prediction come true. But the report also assumes voluntary reduction in peak demand, continued availability of imported power from outside the state, and continued operation of aging power plants.Macias summed it up: "California's fundamental problem is an antiquated electric power infrastructure, which is threatening reliability," he said. "No major gas-fired generation has been built since 1972. In fact, approximately 80% of California's gas-fired plants are over 30 years old. As a result, this over-worked, inefficient generation base is frequently down for repair and maintenance. Currently, over 10,000 megawatts of needed capacity is off-line for this reason."Macias also pointed out one other problem with the state's electricity structure imposed by the deregulation law enacted in 1996. "One of the key market flaws in California has been the inability of utilities to buy power ahead of time at a pre-determined price," he said. "Until recently, California's utilities were largely limited to buying power in the volatile 'spot market,' and had little ability to purchase power more than one day in advance of their customers' need.""This is analogous to a travel strategy of consistently showing up at an airport without a ticket, hoping there's an extra seat at a reasonable price."
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