in Up Front
print the content item



Some public power agencies in California could be financially pressured this year by the drought's impact on hydropower production, Fitch Ratings says.

Fitch reports that while the financial impact is expected to be manageable, utilities with a greater reliance on hydroelectric generation may be forced to use more expensive generation and purchased power to replace the potential shortfall in hydropower output for the third year in a row. Eight of the 14 Fitch-rated public power issuers receive between 10% and 32% of their power supply from hydroelectric resources, according to "California Public Power Agencies," a Fitch report from July 2013.

The rating agency says that the fuel mix for in-state electricity generation in California has generally shifted away from lower-cost hydropower toward natural gas-fired resources during below-average water years.

In 2011, hydropower accounted for an above-average 21.3% of in-state electricity generation, Fitch notes. In 2012, hydropower production decreased to just 13.8% under drier conditions. This corresponded with an increase in natural gas-fired generation, which rose from 45.4% in 2011 to 61.1% in 2012. While figures are not yet available for 2013, Fitch says the contribution from hydropower is expected to remain relatively low based on observed water levels.

According to Fitch, public power utilities in California have experienced prolonged periods of dry-water conditions before the current cycle and have undertaken measures to reduce their vulnerability. These measures include improved rate design, broader use of automatic-recovery mechanisms, collection and use of rate-stabilization funds, and more conservative budgeting.

Although sufficient time remains for water conditions to return to more normal levels this year - which has occurred in about half of water years that experienced dry first quarters, according to the California Department of Water Resources - Fitch adds that the state is currently experiencing record low-water conditions with almost one-third of the water year (Oct. 1 - Sept. 30) having passed.

Hybrid Energy Innovations

Hybrid Energy Innovations 2015
Latest Top Stories

To Help Combat Costly Electricity Theft, Emerging Markets Turn To Smart Grid Infrastructure

According to a new report, the world loses a whopping $89.3 billion to electricity theft annually, and emerging country markets are feeling a majority of the pain.


Report: Utilities Face Big Revenue Cuts From Distributed Energy Resources

According to a new report from Accenture, the growth of solar and other resources, such as energy storage, could mean significant losses for utilities.


NextEra To Acquire Hawaiian Electric In $4.3 Billion Merger Deal

If approved, the agreement between the two energy companies would produce one of North America's largest renewable energy players.


EPA Racks Up Over 1.6 Million Comments On Carbon Pollution Plan

Months after the U.S. Environmental Protection Agency released its Clean Power Plan, which will create new regulations for existing power plants, the agency says it has received loads of feedback to consider.


Smart Grid Interest Continues To Spread Among U.S. Rural Utilities

A new survey gauges rural smart grid efforts across the country and offers key findings, one of which is that nearly all utilities polled are doing something to modernize their systems.

S&C Electric_id176
edf_id180