California repeatedly warned about spiking gas prices, fragile supply. But fixes never came
California’s energy regulators have an idea for how to fight future spikes: Buy more oil and natural gas.
The state’s Air Resources Board says it’s ready to use a new $2.2 billion emergency program to pump hundreds of millions of dollars more state taxpayer dollars into the gas and electricity markets to compensate firms for any disruption.
The proposal comes after California’s energy regulators slashed prices last year and the Golden State’s largest utility, Pacific Gas & Electric, stopped buying new power from wind and solar producers.
In a letter to state lawmakers, regulators expressed optimism that the state would get through a potentially crippling winter with oil prices near $100 a barrel, and urged lawmakers to approve the request next week.
“If we don’t get enough production, prices will go up. Our generators can’t operate profitably if they can’t get the money they’re owed to do so,” said Tom Fanning, the AB32 air board’s executive director. “We believe the gas-fired generators are very viable generators and we are willing to work with them and give them an opportunity to operate during a price shock.”
So far, though, no other major player is proposing the same thing.
The proposal is largely a response to the fact that the average price of natural gas has jumped more than 50 percent since last year.
The Air Resources Board has a backup plan: Buy more oil. The state legislature has considered at least nine bills aimed at restoring natural gas prices, and it appears to favor the proposal, or some variation of it, as an alternative to buying more gas at a time when prices are spiking. The legislature has to approve the plan, and it would be up to Gov. Jerry Brown’s administration to fund the purchase.
The state’s air resources board and the governor are using the same emergency program, a tool the California Legislature created in 2015 to help