United States

United States

Delay means losses for sellers of wind

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The start to deregulation of California's electricity market did not happen as scheduled on January 1. Computer problems are preventing the much vaunted deregulation, which is now not likely until March 31. As well as being costly, the delay is also embarrassing. The state, with its $20 billion electricity market, is being keenly watched as the first in the US to deregulate (Windpower Monthly, January 1998).

Purveyors of electricity, including those offering green power, are currently stymied from marketing their product. "In a word, it's a bummer," says Julie Blunden of Green Mountain Energy Resources, which is to market wind power. "For us this means three months' lost revenue, not to mention extra marketing expense to inform customers of the change."

Of most concern appears to be the uncertainty. "Our disappointment comes mostly from the fact that this will reduce customer confidence in the process and in the reliability of switching suppliers," says Warren Byrne of Foresight Energy, a wholesaler of green electricity, including wind power, based near San Francisco.

Software problems -- as well as lack of training -- have been plaguing the state's new power agencies, which are to oversee the system. The Independent System Operator is now spending $300,000 a day, while the Power Exchange (PX) is forking out $110,000 daily -- and neither have revenues coming in. Nonetheless, consumers received the promised 10% rate reduction starting on January 1.

The postponement was announced on December 22, ten days before the scheduled start-up. On December 29 managers of the new system said they were "90%" certain they could begin operations on March 31. The delay has not surprised critics. Regulators made their decision on deregulation only in May last year, allowing those involved just eight months to develop a system of free trading for the complex and large market.

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