Last week, Californians learned that Pacific Gas and Electric told state utility regulators that a damaged fuse box from a one of their power lines could be responsible for starting the large Dixie Fire currently burning in the Sierra Nevada mountains.
The Globe spoke with an energy industry expert on Tuesday, who asked to remain unnamed, about how it appeared PG&E was attempting to get out in front of this latest fire. He agreed, but there is more to it than just public relations. Specifically, he said it’s about PG&E’s credit rating, and their ability to purchase power from other energy providers.
According to Marketbeat, as of December 31, 2020, PG&E owns and operates approximately 18,000 circuit miles of interconnected transmission lines, 35 electric transmission substations, approximately 108,000 circuit miles of distribution lines, 68 transmission switching substations, and 758 distribution substations; and natural gas transmission, storage, and distribution system consisting of approximately 43,500 miles of distribution pipelines, approximately 6,300 miles of backbone and local transmission pipelines, and various storage facilities.
Pacific Gas & Electric (PG&E) officially exited bankruptcy in July 2020 after paying billions in claims and settlements, and accepting responsibility in dozens of wildfire deaths. But the utility giant is still facing significant turmoil.
How energy needs are met
In order to buy power, PG&E needs credit, the same as you do when you go to purchase a new car. If your credit is stellar, you may not need to put much money down as a deposit on the purchase. But if your credit is mediocre or poor, you will be required to put a large amount down as a deposit. Or if your credit is really bad, you won’t be purchasing a car on credit.
In the energy field, companies have to post or deposit hundreds of millions of dollars to buy power on credit. Energy companies with good credit ratings are able to make long term power purchases, thus sealing the deal on lower energy prices. Energy companies with poor credit are only able to purchase more expensive short term power – the same if you are purchasing an airline ticket in advance with a lower price, or on short notice with a higher price.
Currently, energy experts say PG&E’s credit could be downgraded in the next few days, which only drives the cost of energy up higher for consumers.
In one year PG&E stock dropped about $5.00 per share in value, posing a credit problem.
California Independent System Operator, CalISO, explains Summer 2021 conditions:
CalISO sees potential challenges in meeting demand during extreme heat waves. Such scenarios that affect a substantial portion of the Western Interconnection and cause simultaneously high loads across the West would reduce the availability of imports into the ISO balancing authority area. Improvements to supply conditions in 2021 are largely driven by the addition of new resources coming online as early as this summer. However, while forecasted load levels remain virtually unchanged under normal conditions, a second year of significantly lower-than-normal hydro conditions and an increased possibility of extreme weather events indicate the ISO may still face challenges in meeting load this summer.
California currently buys 20% to 30% of its daily supplemental energy from other states. We do not produce enough of our own energy to support the state’s needs. And with the overwhelming push by the left to rid the state of natural gas production, oil, nuclear and hydro power, intermittent renewable energy cannot provide steady, reliable power for the state’s 40 million resident.
This summer’s energy needs are looking as if they will not be met as California is facing a perfect storm.
Last summer, the August 14-15, 2020 power blackouts happened when the state was short 400 MegaWatts of energy. According to our energy expert, California is currently short 1,300 MegaWatts of hydroelectric power.
Lake Mead, the reservoir created by the Hoover Dam on the Colorado River, which supplies water to millions, has hit its lowest water levels since 1935, the year the dam was built. “The Colorado River supplies water to 40 million people, while the Hoover Dam generates electricity to about 25 million people,” ABC reported.
Lake Oroville is already so low we won’t have any hydro power from it. And the Colorado River Basin told California to expect water cutbacks. The Oregon fire has reduced California’s hydro energy by 15,000 MegaWatts of power, our energy expert said.
The other significant factor in California’s power shortages is unreliable, yet mandated, “renewable energy” and specifically solar power.
Daily peak solar power begins at 10:00am and lasts until 4:00pm, just in time for families to get home from work, school and sports, and cook dinner, watch television, do homework on computers and laptops, play video games, do laundry, run baths and showers – all things that take energy and power. This is why energy utilities are trying to force urban clients to do laundry on weekends when energy is a flat rate.
In 2019, the Sacramento Municipal Utility District began charging Sacramento electricity users and ratepayers a new tiered rate system that charges residential users higher rates between 5:00 p.m. and 8:00 p.m. These summer “peak” rates are about 40% – 200% higher.
So when solar power goes off-peak at 4:00pm in time for families to get home from work, the rates skyrocket.
Where will the power come from with solar power offline and not producing in the evening?
When renewables aren’t available, natural gas kicks in. It’s not only a reliable energy source, natural gas is the always-ready backup for intermittent solar and wind renewable energy – because the sun doesn’t always shine and goes down at night, and the wind doesn’t always blow.
But gas-powered vehicles, and natural gas are endangered species in California. Gov. Gavin Newsom issued an executive order in September 2020 requiring sales of all new passenger vehicles to be zero-emission by 2035 and “additional measures to eliminate harmful emissions from the transportation sector,” the Globe reported. Newsom also called for an end to Hydraulic Fracturing, commonly referred to as “fracking” for natural gas in California.
Cities are banning the use of natural gas. The California Energy Commission rolled out new building code drafts in May, proposing building standards to require new homes have all-electric appliances instead of natural gas appliances.
These policies, and not “extreme weather,” are leading to rolling blackouts this summer in California. The weather in the Golden State is typical – hot dry summers are normal, but power outages didn’t used to be the norm. They are now.
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