Load Center Power Generation in Burbank, Glendale, and Pasadena

Potential Benefits for the Cities and for California

by Mark A. Bernstein, Paul Dreyer, Mark Alan Hanson, Jonathan Kulick

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California's deregulated electricity sector seemed to work as intended until the summer of 2000 when prices on the spot market for electricity spiked, the cost of power increased tenfold, and power shortages occurred, culminating in rolling blackouts the following winter. This issue paper examines the municipal utilities in Burbank, Glendale, and Pasadena and their pursuit of a broad-based portfolio of energy generating resources including a "load-centered generation" (LCG) strategy that would make them less vulnerable to market upheavals, help them to meet their own energy needs, and enable them to sell power out of their service territory, thus adding capacity to the state system. Although not all the benefits associated with load-centered generation are quantified in the paper, the literature gives some understanding of the benefits LCG offers and suggests that it will become an increasingly important part of California's energy portfolio. To encourage the development of LCG, the authors find that California can streamline the approvals process to bring new generation online more rapidly; provide financial incentives such as low-interest loans, state-backed bonds, and long-term state contracts or investments; provide greater flexibility on emissions credits; and guarantee the purchase of excess capacity.

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