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Edison's 10-year contract terms for new electricity supplies are considered so narrow that they are nearly impossible for third-party generators to meet and have many in the generator community wondering whether the April 22 request for offers (RFO) is bona fide. In addition to the tough parameters, Edison expects all ratepayers-not just its own customers-to pay for any such projects alleviating congestion. "Are they real RFOs?" asked one source from the generator community. That source and several others asked that their names not be used because of fears their comments could cause their companies to be disqualified from Edison's procurement process. Edison's bid criteria include requiring qualifying projects to come on line between June 2006 and August 2008-a time frame that could shut out most potential power projects. In addition, the utility hopes to spread the cost of additional facilities among all ratepayers served by the California Independent System Operator grid-even though the projects are slated for Edison customers. Edison said it was taking to heart months of warnings by CAISO and the California Energy Commission about summer supply shortages in Southern California, largely because of transmission jams south of Path 15-the major north-south transmission artery (Circuit, April 1, 2005). "Steps have to be taken," said Gil Alexander, Edison spokesperson. He said that other utilities' ratepayers should help bear the costs of newly contracted power because although about 60 percent of the juice carried on SP15 goes to Edison customers, the remaining customers on CAISO's transmission grid benefit from alleviating congestion. Furthermore, Edison seeks to spread out the financial risk because the utility says its customer base could shrink if the state Legislature were to allow a revival of direct access. "This is not a template for the future," Alexander added. The cost-allocation proposal is seen as exacerbating the Catch-22 inherent in getting new steel in the ground for power plant development. Generators are not going to commit to constructing new plants until they have a contract. At the same time, Edison won't sign a deal until it is assured it can recover its costs. The California Public Utilities Commission will have to approve Edison's unique request to spread out new procurement project costs among SP15 beneficiaries. A decision is unlikely before the end of the year, further delaying commitments on both ends. In addition, there are concerns that Edison will end up signing a sweetheart deal with an affiliate, along the lines of the Mountainview closed-door agreement. That no-bid deal was criticized for its potential costs-all of which were hidden during CPUC consideration. Other than peaking units, few projects-including those attempting to upgrade their facilities-are projected to fit into the on-line window. Some permitted projects could, however, come on line by 2008. Edison is conducting this solicitation, Alexander said, to appease state energy agency officials' concerns about supply shortages over the next few years. The solicitation is a "stopgap, interim measure" to help get new generation up and running during a "critical transition period," Alexander said. Spokespersons from a couple of independent power producers said their companies are reviewing Edison's solicitation and it is too early to make any decisions. In addition, Kent Robertson, Calpine spokesperson, said his company and others were busy responding to requests for bids from Pacific Gas & Electric due April 27. -Elizabeth McCarthy

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