When I was looking up about $PCG and $EIX, and determining how vulnerable they were to fire liability, I noticed reports of PCG facing decreasing demands of electricity.
Then I came across this article that explained that the entirety of California has been dealing with a massive surplus of power generation, and how public utility companies are compensated by the state to keep building more power plants while independent utility companies can't sell their electricity.
We're using less electricity. Some power plants have even shut down. So why do state officials keep approving new ones?
California has a big — and growing — glut of power, an investigation by the Los Angeles Times has found. The state’s power plants are on track to be able to produce at least 21% more electricity than it needs by 2020, based on official estimates. And that doesn’t even count the soaring production of electricity by rooftop solar panels that has added to the surplus.
Independents like Calpine don’t have a captive audience of residential customers like regulated utilities do. Instead, they sell their electricity under contract or into the electricity market, and make money only if they can find customers for their power.
Calpine's natural gas plant (Sutter Energy Center) was built in 2001 and expected to operate for 30-40 years. It was forced to shut down in 2016 because it couldn't sell enough electricity to keep operating the plant without hitting the zero/negative electricity price area, even as public utility companies (such as PCG) keep building more power plants.
In contrast, publicly regulated utilities such as PG&E operate under more accommodating rules. Most of their revenue comes from electric rates approved by regulators that are set at a level to guarantee the utility recovers all costs for operating the electric system as well as the cost of building or buying a power plant — plus their guaranteed profit.
The missteps of regulators have been compounded by the self-interest of California utilities, Lynch and other critics contend. Utilities are typically guaranteed a rate of return of about 10.5% for the cost of each new plant regardless of need. This creates a major incentive to keep construction going: Utilities can make more money building new plants than by buying and reselling readily available electricity from existing plants run by competitors.
I guess I'm going to need to reevaluate my holdings of $NYLD, $NEP and $PEGI to see if they're getting the short end of the stick in California.
Submitted January 09, 2018 at 11:22AM by COMPUTER1313 http://ift.tt/2CX3ChI
