DK McDONALD, The Daily News
Aug 29, 2018

BULLHEAD CITY — In early August, Mohave Electric Cooperative issued its first energy shortage alert, but many people may have confused the announcement for something else.

“First off I want to be sure that we’re very clear that we did not indicate anything about brownouts or blackouts — that came from somewhere else,” said Tyler Carlson, Mohave Electric Cooperative chief executive officer. 

When Western Electric Coordinating Council issued an energy emergency announcement, it was to notify the pubic that power suppliers’ conditions could progress to a situation requiring suppliers to shutter loads. MEC then issued the appeal to members to voluntarily conserve during peak hours, he said.

At the end of May, California indicated that they may have possible shortages (through the summer)” Carlson said. “They were looking at the possibility of California blackouts and brownouts and energy shortages and that being the case, it would affect the market.”

California was at the center of a perfect storm for power interruption, Carlson said.

“Now California had other issues going on, a very hot summer, they had scuttled a lot of their generation resources and they had a whole bunch of fires,” Carlson said. “If you have a lot of excess resources, the prices go down, if you have scarce resources the prices go up.  We know we’d been seeing some really high prices and, during this scarcity time period where they were talking about an energy emergency where energy will be scarce, we were going to see high prices.” 

How does it work?

California Independent System Operator operates a competitive wholesale electricity market for companies looking to buy and sell power, and coordinates dispatching generation and the movement of wholesale electricity in California and Nevada. CAISO also operates the Energy Imbalance Market, which serves parts of seven states, including Arizona.

To help members visualize how power is delivered, Carlson used a water analogy.

“Think of all the wires connected up as a river,” Carlson said. “If you were able to put a gallon of water at the headway of the dam and then go down below Fort Mohave where you’re able to pull a gallon of water out — the river system (electrical grid) would be fine. There’s a little technical issue with leakage and evaporation but you can calculate that. You can put one gallon and two ounces in up here and pull out a gallon down here and all things then would be in balance. You’ve put in a gallon and taken out a gallon and you’re accounting for evaporation and leakage. The electrical system works very similar to that.” 

In the normal course of supplying power, energy resources — power generated — is put on the system (the grid) — and power suppliers schedule taking enough energy off the system to meet their needs, Carlson said.

“To the extent or if it ever doesn’t match, then you end up being on the market and you end up paying a penalty,” Carlson said. “Those penalties are really rough to pay — they’re multiples of the actual cost of the electricity.”

MEC’s power sources

MEC, a nonprofit member-owned utility, incorporated in 1946, partnered years ago with other rural Arizona cooperatives to invest in generation.

“Our generation primarily comes from down in Benson and (we) also have rights to resources like Davis Dam and access to some Hoover,” Carlson said. “We’re in pretty good shape, we have the hydro systems along here so from a reliability standpoint, we have good sources right here — if you add all of what we have access to it almost completely meets our load. In fact it meets our load 99 percent of the time; the small amount of time that it doesn’t, then comes the economics: do you just buy it off the market or do you try to add more resources that sit idle 99 percent of the time.” 

When MEC’s usual resources don’t meet the load required, the utility looks to the market to purchase power.

“Last year what we bought on the market was about $80 per megawatt hour — about 8 cents at the meter, roughly double what we would normally pay,” Carlson said. “But you’re not buying a lot of it and it’s not incredibly expensive — well this year it’s very unusual; we’ve paid anywhere from $325 per megawatt hour to $625 per megawatt hour. Anywhere from between five and 10 times what we paid last year. So that’s what we were experiencing before we hit the energy emergency. If you could imagine we’re seeing prices on the market being driven because of California scarcity.”

Renewable resources and economics

The problem is exacerbated by politics dictating policy, Carlson said. Over the years, California increasingly has turned to renewables for its primary generating power. Wind and solar production can’t be increased or decreased to meet demand and prices have gone up 160 percent.

“They’re paying on their higher tiers, 30 cents — we’re paying 11 cents,” Carlson said. “Their lowest tier is higher than our highest tier. Can you imagine your electric bill and paying anywhere from 15 cents to 35 cents depending on how much you use during the summer — (it’s) about three times the amount.”

California’s current renewable portfolio standard is to be at 50 percent by 2030. Arizona’s Proposition 127, on the ballot this November, would require electric utilities in Arizona to acquire electricity from a certain percentage of renewable resources each year, with the percentage increasing annually from 12 percent in 2020 to 50 percent in 2030.

“I don’t want you to think at all that I have any issue with renewable generation,” Carlson said. “It is a great power source provided that you consider that it is one of a number of sources. The moment you focus on any given fuel or any given technology as your primary or only source of power you are at risk.”