CPUC OKs Major PG&E-Sponsored Electric Generation

More than 2,200 MW of new long-term power deals signed by Pacific Gas & Electric were unanimously approved by the California Public Utilities Commission November 30. Regulators also voted to expand investor-owned utilities' demand-response programs and support a West Coast governors' pledge to work together to ameliorate global warming gases. Two of the seven PG&E contracts that the commission approved are for new utility-owned projects at Humboldt Bay and Colusa. The commission also approved cost-recovery mechanisms for the seven projects, totaling 2,250 MW. The third-party contracts are between 10 and 20 years in length and are expected to come on line in 2009 and 2010. "This is a major amount of new generation - equivalent to the size of the Diablo nuclear power plant," noted commissioner Dian Grueneich. "I enthusiastically support the contracts before us," she said. CPUC president Mike Peevey also applauded the agreements. He made a dig, however, at Southern California Edison, noting that it delayed its long-term solicitation and is "considerably behind PG&E." Consumer advocates objected to many parts of the approved deals. They highlighted cost-recovery aspects, arguing that some were too generous to the utility. They also noted that PG&E's new supply contracts exceed projected long-term needs. They are 50 MW to 580 MW over the CPUC mandate, depending on what capacity is counted. In addition, the Independent Energy Producers took issue with the lack of an open, competitive bidding process across the board. In 2004, the CPUC determined that PG&E needed 2,200 MW of new power supplies by 2010 and ordered it to put out a request for bids. The utility solicited bids and recently requested an expedited review of its list of selected projects. The CPUC had no qualms about approving 50 MW of new power above the amount of projected need. Regulators concluded that it represents a small amount of power and it was unreasonable to expect the utility to exactly match the amount of power needed with the offers. Not counted in the new bids, however, is the 530 MW Contra Costa unit 8 project that PG&E took over with the blessing of the CPUC. The Division of Ratepayer Advocates argued that adding this results in the utility signing up for more than 580 MW over projected need, "undermining the integrity of the long-term planning process." The commission, however, considers this a separate deal, which was previously approved. Independent producers took issue with the CPUC's deviation from its stated preference for competitive solicitations for new supplies with the approval of PG&E's purchase of Mirant's Contra Costa unit. Mirant, which was in bankruptcy protection, offered to sell it to PG&E to cut its debt. The Aglet Consumer Alliance raised concerns about PG&E's agreement with Calpine for its 601 MW Hayward project because the financially struggling generator may be unable to honor the deal. The approved contracts also include the 399 MW EIF Firebaugh project, the 196 MW EIF Fresno unit, the 188 MW Starwood Firebaugh project, and the 166 MW Black Hills project. Also being added to the fleet will be PG&E's 657 MW plant in Colusa and its repowered 163 MW unit at Humboldt Bay. Also receiving a 5-0 vote were expanded and new utility demand-response programs that aim to create nearly 300 MW of additional electricity savings by next summer. The existing demand-response programs need to do better to alleviate strains on the grid and help lower energy costs, said commissioner Rachelle Chong. This decision will provide about 270 additional negawatts for summer 2007 and 297 (n)MW for 2008, via utilities' existing three-year demand-response budgets. Chong also urged the utilities to work with third-party aggregators to boost the level of negawatts. She said the outside aggregators "can pool resources and reach hard-to-reach customers." Lastly, the five commissioners threw their support behind the West Coast public utilities commissions' Joint Action Framework on Climate Change. The governors of California, Washington, and Oregon agreed in 2003 to work together to achieve greenhouse gas reduction strategies. The West Coast state commission's framework aims to advance the governors' agreement, which includes developing and implementing CO2 standards for long-term power supplies. Earlier this week, New Mexico also signed on to the pact. "There is strength in numbers and it will take every one of us to tackle global warming," Grueneich said. - Elizabeth McCarthy

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CPUC OKs Major PG&E-Sponsored Electric Generation

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