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RE: More demand or less supply?
From: "David Schwartz" <davids () webmaster com>
Date: Fri, 18 May 2001 13:01:18 -0700



Why is 2 to 3 times more capacity offline this year compared with previous
years?  I don't know.  It appears the "supply" shortage is not due to
increased demand, or even the lack of new power plant capacity; but due
to the shutdown of existing capacity by generation companies at a higher
rate than normal.

        I think more capacity is offline than previous years because of a large
number of factors. Some of the most important are:

        1) The ISO has designated more "no touch" days than in previous years. This
makes it harder for plant operators to schedule their maintenance
effectively. Less effective normal maintenance means more emergency and
unplanned maintenance.

        2) The PG&E bankrupcy combined with other utilities being unable (or
unwilling) to pay their bills has resulted in generators not getting paid.
Generators are hard pressed to keep their plants running when they aren't
being paid and don't know if they will ever be paid.

        3) The increased prices earlier in the year prompted utilities to produce
more of their own power and to buy as little as possible from outside
sources. This means that more plants have used up their air pollution
allotments for the year. It also means that more maintenance is needed now
than would otherwise be required at this time of the year.

        Personally, I'm fairly certain that most of the blame for our current
crisis rests with the courts who compelled the utilities to buy power
regardless of the price. There is absolutely no rational defense for this
ruling that I can imagine, and with no bargaining power, the utilities were
raped by the generators.

        David Schwartz



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