CPUC Allows High PG&E Renewables Contract

By Published On: April 25, 2008

A contract between Pacific Gas & Electric and Calpine to extend their current geothermal deal, and adding another 50 MW of capacity, received California Public Utilities Commission approval April 24. However, a majority of the regulators said they were unhappy with the terms of the contract because its power cost is about $35 million over the current renewables market price benchmark. “It’s avoiding higher costs down the road,” countered CPUC president Mike Peevey. The proposed commission decision found that while the contract contributes to the utility’s mandate for 20 percent renewables in its portfolio by 2010, it should not cost more than the commission’s “market price referent.” PG&E disagreed, contending the higher social good is to commit to the portfolio at the higher price. “We have changed the negotiation balance,” worried commissioner John Bohn. He added that the commission is abandoning its market price benchmark with the decision. “Not surprisingly prices will go up.” Commissioner Chong disagreed that regulators are abandoning the market price referent or making a precedent out of the contract. In spite of objections, all commissioners voted for the contract. In other CPUC news, some state money is not being used. Regulators concluded that when approving an increase in the facility size for the self-generation incentive program from 1 MW to 3 MW. About $96 million in the fund has languished, according to Peevey. The change is expected to drive more distributed generation. It had been constricted to 1 MW because regulators feared that the subsidies would be dominated by a few corporations that elbow out smaller competitors.

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