(Updates with water board comment in sixth paragraph and power prices in 10th.)
July 1 (Bloomberg) -- California, which uses more electricity than all of Mexico, needs to ensure that power plants are getting enough water amid the worst drought in a century to avoid grid failures.
The California Energy Commission, the state Public Utilities Commission and grid operator California Independent System Operator Corp. said in a joint letter that water curtailments that cut the state’s generating capacity would threaten grid reliability and have “substantial potential for serious public health and safety impacts.” The agencies asked the state Water Resources Control Board to make sure plants are getting the water they need.
The worst drought on record is already testing California’s power grid by shrinking hydropower supplies and sparking a record number of wildfires that have taken down transmission lines in Southern California. The California ISO estimated last month that as much as 1,150 megawatts of gas-fired generation is at risk of shutting because of water supply curtailments.
The agencies recommended “a mechanism allowing for swift response in the event of an actual or threatened emergency to California’s electricity grid or supplies,” according to the letter, which was signed yesterday and e-mailed to Bloomberg today.
While curtailments have so far had a “very minimal” impact on the state’s natural gas-fired power plants, water is essential for cooling their operations, the California Energy Commission said in an e-mailed statement today. The agency said it’s working with electricity producers on license amendments that would allow them to use alternative sources of water.
The state water board is considering emergency regulations to establish a quicker and more effective way of imposing water curtailments. All comments on the proposed rules will be “carefully weighed and considered” before the agency decides, Kathie Smith, spokeswoman for the water board in Sacramento, said by e-mail today.
As of April 29, precipitation across California was 56 percent of normal, and the state’s reservoir storage was 63 percent of average, the California ISO said in a May 9 report. The shortage may shrink hydroelectric generation by as much as 1,669 megawatts when demand peaks this year, according to the grid operator.
Wildfires in May took out several high-voltage transmission lines operated by Sempra Energy’s San Diego Gas & Electric Co. utility as a heatwave caused power prices to surge. The region is already vulnerable to grid failures following the shutdown of Edison International’s San Onofre nuclear power plant.
In Northern California, PG&E Corp.’s Pacific Gas and Electric Co., which operates the largest investor-owned hydroelectric system in the U.S., said it was catching water at the beginning of this year to use when demand peaks.
Spot power at the Northern California’s NP15 hub fell $17.41, or 43 percent, to average $37.77 a megawatt-hour for the hour ended at noon, data compiled by Bloomberg show. Power at the Southern California SP15 hub sank $10.46, or 27 percent, to average $27.71.