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As California Water Levels Drop, Electric Customers Pay $2B More

February 18, 2016 By Cheryl Kaften

Hydroelectricity is considerably less expensive than other forms of energy – which is among the many reasons why, for years, California has relied upon its rivers and reservoirs for fully 18 percent of its generation mix. However, following a serious four-year drought, hydropower production in the Golden State has substantially ebbed – calculated today at just 10.5 percent of total generation – and costs have risen accordingly. In fact, the added economic cost to California ratepayers during the drought has been estimated at $2 billion by a new report.

Even more disturbing is the fact that throughout the most recent water year overall (October 1, 2014 to September 30, 2015), the state’s reservoirs and ground-water levels were nearly depleted. As a result, hydropower provided less than 7 percent of total electricity generated in-state for those 12 months.

The study, Impacts of California’s Ongoing Drought: Hydroelectricity Generation , released on February 9 by the Pacific Institute, offers a comprehensive assessment of the costs to California of lost hydroelectricity.

Under normal conditions, electricity for the state’s millions of users is produced from a blend of many sources, with natural gas and hydropower being the top two. Since the drought, natural gas has become a more prominent player. California also is buying more power from out-of-state sources, and has expanded wind and solar production. These are expensive changes.

“The impacts of the California drought – which is the driest and the hottest in 120 years of instrumental records and one of the worst in history – has had widespread impacts on all water users, including farmers, industries, cities, and natural ecosystems,” said the report’s author, Pacific Institute President Peter Gleick. “And in fact, all California ratepayers are affected by the drought as they pay for electricity that is both dirtier and more expensive than in non-drought years.”

Now, there is growing concern among climatologists that the current drought may be part of a longer trend. Indeed, when the past 15 years are reviewed, it becomes apparent, the report said, that the shortfall in hydroelectricity includes the three-year drought period beginning in 2007, with a brief respite of average or slightly above average hydroelectricity generation during 2010 and 2011.

When these longer-term water shortfalls over the past decade are taken into account, California’s electricity is becoming more expensive on average, Gleick stated, noting that, “Assuming the marginal costs for electricity during the 2007-2009 drought were approximately the same as between the 2012 and 2015 water years, the full additional costs to California electricity customers of seven years of drought were a reduction of 85,000 gigawatt hours (GWh) of hydroelectricity and an increased cost exceeding $3 billion.”

As of early 2016, the drought continues: Reservoir levels remain abnormally low, precipitation and –especially Sierra Nevada snowpack – are just marginally above normal, and hydrogeneration is expected to continue to be below average until reservoirs refill.

With no end in sight, the situation could be bleak. Indeed, Gleick concludes, “We expect costs to California ratepayers and to the environment will continue to mount.”

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