LADWP is proposing to spend $3 billion on a pumped storage facility at the Hoover Dam on the Colorado River. Yet, LADWP has not been using extensively its aging 1,247 MW Castaic pumped storage plant on the State Water Project in the pumping recovery mode. Instead, LADWP runs it more like a standard hydropower plant, and uses pumping to supplement and extend the peak power generation, rather than using it to store excess day time power. And the SWP’s 759 MW pumped storage plant at the Hyatt-Thermalito powerhouse at Lake Oroville has been not been used effectively for decades.

The more prudent course would seem to be to focus on refurbishing and updating existing facilities, with variable speed pumps for example, to deliver utility scale storage that can capture excess renewable energy generation nearer large load centers. The State Water Contractors should be incented to upgrade these facilities through contracts with the state’s electric utilities. Unfortunately, no direct market mechanism exists to provide a true value for these resources so long at the California Public Utilities Commission and the California Independent System Operator avoid developing full pricing. As it stands, the current pricing scheme socializes and subsidizes a number of electricity services such as transmission, unit commitment decisions, and reliability services.