Study: State too dependent on natural gas

By Jennifer Coleman Associated Press Writer
Thursday September 27, 2001

SACRAMENTO (AP) — California could face another energy crisis by relying too heavily on new natural gas-fired plants to boost electricity production, said the author of a study released Wednesday. 

After a year of volatile natural gas prices, the state should not depend too much on gas and should instead invest more in renewable energy, according to “Predictably Unpredictable,” a study by the California Public Interest Research Group. 

“By putting all of our eggs in one basket, California is setting itself up for another energy crisis,” said Susanna Churchill of CalPIRG. 

Even before the start of California’s energy crisis, the state depended on natural gas for more than one-third of its energy needs, the report said. Eighty-five percent of that gas came from out of state. 

“Because the state is so dependent on this one fuel source, the price spikes had a tremendous impact on our energy markets,” the report says. 

Increasing that dependence will only cause future price spikes, said Brad Heavner, a CalPIRG policy analyst and author of the report. about 95 percent of the plants that have been built or are under construction are fired by natural gas. 

Natural gas “is being treated as a magic bullet in this state and around the country,” Heavner said. 

Natural gas is cleaner than coal, less expensive than nuclear and the state’s new fleet of peaker plants — small gas-fired power plants that come online when demand is highest — can be built quickly. 

But Heavner said California’s demand for natural gas is rising faster than the federal Department of Energy forecast that calls for a 2.3 percent annual increase in the next 20 years. 

“This just means California is particularly vulnerable to any supply disruptions nationwide,” Heavner said. 

As demand is rising, natural gas production is waning, he said. There are 2 1/2 times the number of natural gas wells nationwide as there were in 1973, but each well produces a third as much gas, Heavner said. 

To stabilize the state’s energy supply, CalPIRG recommends that officials encourage a broader mix of fuels by requiring utilities to buy 20 percent of their power from renewable resources. 

The new California Consumer Power and Conservation Financing Authority has set a goal of increasing the state’s renewable energy output to 20 percent by 2006, said Amber Pasricha, spokeswoman for the authority. 

The authority has signed 14 letters of intent for new renewable power plant projects, including 12 wind and two bio-fuel projects, she said. 

CalPIRG also recommends that state energy regulators deny any pending applications for natural gas-fired plants and offer government subsidies to renewable power providers and customers. 

The report also recommends the state review all contracts that the Department of Water Resources has signed with natural gas-fired power producers and explore canceling contracts that involve the construction of new gas-fired plants.