Navarros Estimate

Peter Navarro, economist at UC Irvine, in conjunction with Utility Consuiners1 s Action Network

^Jennifer Coleman, "Power costs could be triple last year's for Californians," AP release, 22 Apr. 2001

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Factors driving comparisons

• Last summer, soaring costs drove three utilities to brink of financial ruin

• This summer costs may rise by as much as three-fold

i Drought-induced reduction of hydroelectric power supplies in Pacific Northwest

■ Predicted hotter-than-average summer

■ Competition from other states

• State buys about 1/3 of its power from spot market

• Spot market likely to see substantial increases

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Prices likely per kilowatt-hour

• Last summer, peak average high price was 86 cents per KWHR

• Consumer rates capped at about 10 cents per KWHR

• The growing gap will have to be filled by state funds, which themselves are dwindling

• Eventually the California taxpayers have to pay the difference, which is from 10 to 20 times what they are paying now for capped power

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Covering debt already incurred

* Since January, California has authorized $5.7 billion to buy power for customers of Pacific Gas and Electric Co and Southern California Edison

• The two utilities' credit was cut off due to

■ Soaring wholesale costs

■ Cap on consumer rates

■ Went nearly $14 Billion in debt

♦ San Diego Gas and Electric Co. incurred debts but is in better shape

• State will be repaid by $ 10 Billion in bonds

■ Expected to be issued in May

■ Expected to last till September but will not

■ PG&E and Edison Customers will pay off the bonds

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Deteriorating situation, rising prices

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* Prices rising

■ Will rise even more as demand increases

■ Demand will rise by about 50 percent during the summer

* California's own generation resources cannot meet projected peak: demands and reserve requirements

■ May fall by 3?500 megawatts short (peaks)

■ Enough power for 2.6 million households

* Power grid manager must depend on imports

■ Northwest drought makes extra power scarce to find

■ Northwest utilities themselves may have to import, not supply extra

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