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27. California Energy Commission (1980).

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a. Utility projections. The CEC forecasts slower growth for most of these utilities.

b. Incorporates all publicly-owned utility loads within PG&E's overall service area (including WAPA-served loads), except those of SMUD and DWR.

c. Not additive. WAPA sells power mostly to publicly-owned utilities within PG&E's overall service area.

d. Approximation.

e. CEC staff forecast.

The California Department of Water Resources (DWR) has no service area as such, but it is responsible for the State Water Project, which consumes almost 400 aMW to pump water from northern California reservoirs to Central Valley and southern California water users. DWR expects rapid load growth as water deliveries continue to increase." The Western Area Power Administration (WAPA) sells power from the federal Central Valley Project, mostly to publicly-owned utilities in northern California. Both DWR and WAPA have or control generating resources (almost exclusively hydroelectric) and make purchases from other utilities, both within and outside of California.

28. Derived from CEC PRELIMinary Report, supra note 7; WESTERN AREA POWER ADMIN. (WAPA Sacramento Area), FINAL POWER Marketing PLAN, CENTRAL VALLEY PROJECT (1981).

29. See CALIFORNIA DEP'T OF WATER RESOURCES (DWR), THE CALIFORNIA STATE WATER PROJECT-CURRENT ACTIVITIES AND FUTURE Management PLANS 18 (1981).

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California's electric generating resources are also quite different from those of the Northwest, where hydropower predominates. Table 2 shows actual 1981 California capacity and energy from each type of resource, along with utility expectations for 1994.

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b. Includes pumped storage capacity and energy lost in pumping. The 1981 MW figure reflects actual conditions; the 1994 MW figure is based on assumed adverse water conditions.

Of particular importance for the Northwest is California's expensive oil/gas-fired (dual fuel capability) generation. This system provided about one-half of California's capacity and energy dur

30. Derived from CEC, PRELIMinary Report, supra note 7.

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ing 1981, but is expected to decline to about 35% of capacity and 20% of energy by 1994. Oil-fired generation presently costs about 6 ¢/kwh and gas-fired generation costs about 5.5 ¢/kwh."1 In 1982 the California utilities sharply reduced their use of oil in favor of less expensive gas, but they can switch back to oil if gas becomes the more expensive fuel." California's use of these high cost fuels creates a market for importing power from low operating cost generating resources (hydro, nuclear, coal) in adjoining regions, and permits California utilities to curtail oil/gas-fired plants to minimum operating levels or to shut them off.

33

Most of the expected additional generating resources planned for 1994 are already under construction, including 4400 MW of nuclear plants in California nearing completion (or, in the case of San Onofre 2, already operating). The California utilities are also constructing 1900 MW of coal-fired capacity and a 1200 MW share of the Palo Verde nuclear power plants in Arizona. In addition, the utilities and independent power producers are building 2800 MW of hydro, geothermal, cogeneration, biomass, and wind generation. The new power supply resources listed in the California utilities' plans for 1994, but not yet under construction, include about 2000 MW (1300 aMW) of coal and 1000 MW (400 aMW) of large hydroelectric facilities. If these plants are built and California's load grows as envisioned by the California utilties, oil/gas-fired generation will fall sharply over the next few years and then gradually increase to about 5500 aMW in 1994. Thus there is a large potential market for Northwest power, consisting of (1) the coal and large hydroelectric power plants California could avoid building (about 1700 aMW) and (2) the remaining oil/gas-fired capacity California could avoid operating.

Even if less expensive power is available, however, the Cali

31. PACIFIC GAS & ELEC. Co., ENERGY COST Adjustment and Results oF OPERATIONS 1-4 (1982) (submitted to Cal. Pub. Utils. Comm'n (CPUC), Application No. 82-09-51); Southern Cal. Edison Co., Forecast of Operations of THE ENERGY COST Adjustment Clause for a JanUARY 1, 1983, Revision Date VI-6 (1982) (submitted to CPUC, Application No. 82-11-04). With OPEC in disarray, the price of oil on the spot market has dropped to about $29 per barrel, equivalent to 5¢/ kwh. The price of gas for electricity generation generally tracks the cost of oil.

32. During the first half of 1982, the California utilities reduced oil-fired generation to only 4285 gigawatt hours (gwh) (978 aMW) during the six-month period, compared with 14,087 gwh (3216 aMW) over the first half of 1981. CEC, ENERGY WATCH 17 (July & Oct. 1982).

33. CEC PRELiminary Report, supra note 7, at 7-7.

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fornia utilities need to operate some of their oil/gas-fired capacity to meet daily peak loads, and then reduce (but not shut off) oil/ gas-fired plants during light load hours at night. The output of baseload geotheormal, nuclear, and coal-fired power plants cannot be adjusted rapidly enough to follow load, and California has insufficient hydroelectric capacity to accommodate all load fluctuations." Thus an appreciable quantity of oil/gas-fired generation will remain in California, even though other sources of power may appear to be less costly."

II. OPPORTUNITIES FOR ADDITIONAL NORTHWEST-CALIFORNIA

TRANSACTIONS

A. Transmission Limitations and Potential Expansion

Surplus power, energy, and capacity from the Northwest became available to California with completion of the Pacific Intertie transmission system. The system consists of two 945-mile 500 kv ac lines and one 846-mile 800 kv dc line that began operating in 1968 and 1970, respectively. The ac lines were designed to carry 2000 MW, with the dc line adding another 1400 MW. Technical improvements have increased the capacity of the ac lines to 2800 MW and the dc line to 1556 MW for a total present transmission capability of 4356 MW. BPA and the southern California utilities are now spending $80 million to upgrade the existing dc line from 800 kv to 1000 kv. This will add almost 400 MW to the line's 1985 completed capacity and bring total Pacific Intertie capacity to about 4750 MW.

Figure 3 shows the existing transmission lines connecting the Northwest and California (as of mid-1983). Two proposed additions are a third 500 kv ac line from Malin (at the Oregon-California border) to the Tesla substation in central California, and a second 1000 kv dc line from the Columbia River to the Mead substation in Nevada (adjacent to Hoover Dam) and from Mead branching to southern California and to the Phoenix, Arizona area. The third ac line would add about 1600 MW to Pacific Intertie capacity, while the second dc line would add roughly 2000 MW.

34. Id. at 6-24.

35. See infra notes 54-68 and accompanying text.

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