United States

United States


The California Public Utility Commission (CPUC) has proposed a restructuring of the power market based on a "power pool." The American Wind Energy Association (AWEA) has praised the initiative while several developers are alert to the many problems of a pool like that in Britain. The pool system was one of two options, the other being retail wheeling. The deregulation plan for California is of current interest because it is likely to become the model for deregulation throughout the US.

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Not all wind plant developers are eager to jump headlong into California's proposed power pool, even though the American Wind Energy Association (AWEA) praised the power market restructuring proposal put forward by the California Public Utility Commission (CPUC) in late May (Windpower Monthly, June 1995). Some developers seem all to aware of how murky the CPUC's British style pool might turn out to be.

The pool was one of two options for deregulation of the power market which the CPUC had been considering, the other being a "retail wheeling" proposal. Though the threat of deregulation last spring in the form of "retail wheeling" thwarted plans by many of the large US wind developers to pursue new projects, the wholesale power pool, now endorsed by the majority of CPUC commissioners, raises almost as many questions as it answers.

Some developers, such as FloWind of San Rafael, echo AWEA's positive comments. "We are cautiously optimistic," says the firm's attorney, David Simpson, with San Francisco-based Young, Vogl, Harlick & Wilson, referring to the inclusion of AWEA's proposed "renewables portfolio standard" in the wholesale power pool proposal. The standard would require each state to set fuel supply diversity goals that would include wind power. "FloWind feels [the renewables portfolio standard] has the best chance of delivering new renewable resources. It is the most elegant, most simple and compelling approach."

But representatives of other developers are less generous in their assessment. Jeff Ghilardi, SeaWest's vice president, says the wholesale pool does not address the primary problem facing developers. "We have a lack of access to customers, " he complains. "Today there's only one customer -- and that is the utility. There's still only one customer [under the proposal] -- and that's the utility's pool." In order to reap the benefits of competition, there needs to be some mechanism, he points out, to gain access to new customers wanting to purchase wind power. "There are plenty of suppliers. There are just not enough customers," he adds.

Other wind companies are more wary about ruffling the waters with opinions at this point. Neither New World Power nor Kenetech wish to comment on the CPUC proposal. Zond Systems, too, is being careful, though a company representative admits the firm leans towards the "retail wheeling" model that was rejected by the majority of CPUC commissioners. At a time when laws like the Public Utility Regulatory Policy Act (PURPA) may be wiped off the books, "Wind developers need to think about who their customers are," he adds. It is also hard to sell wind power into a pool because it is not a dispatchable resource like a coal plant. "You can't tell the pool that you can provide two hours of power at two o'clock tomorrow when you don't know whether the wind will be blowing," he points out. The key issue, from his vantage point, is utility divestiture. "The market power of utilities will distort a competitive market place," whether one uses a pool or direct access system, he feels.

The one point of consensus among wind developers is this: the California Legislature, as well as the Federal Energy Regulatory Commission, will play major roles in the final California deregulation plan. And whatever comes out of this process will also likely be the model for deregulation throughout the US.

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