CPUC Promotes Renewables Up to 20 MW

By Published On: December 17, 2010

Renewable energy projects up to 20 MW in size are now eligible to bid for power sales agreements with the state’s investor-owned utilities through a competitive process. A California Public Utilities Commission decision, approved Dec. 16, orders utilities to hold competitive auctions twice a year until they have purchased a statewide total of 1,000 MW of power capacity from the small renewable energy project developers. “Projects in this size range can play an important role in the renewables portfolio standard program,” said CPUC president Mike Peevey. They can be built on brownfields and other sites within utility service areas, he said, to reduce the need for “massive transmission projects.” Under the so-called renewable auction mechanism decision, utilities are to reach 25 percent of their assigned total capacities in each auction, entering contracts with the lowest bidders. Projects must qualify under the state’s renewables portfolio standard. In the auction, small renewables developers must agree to specifics, including forfeitable performance deposits and an 18-month period in which to complete construction and begin delivering power. They also cannot seek to reopen contracts to negotiate higher payments for their energy output once deals are closed. Commissioner Tim Simon praised the provisions, saying they would bring “much needed market discipline into the process” in the state’s sometimes “religious pursuit” of renewable energy at any cost. The CPUC’s decision calls on Southern California Edison to procure 498 MW of power through the auction process, Pacific Gas & Electric 421 MW, and San Diego Gas & Electric 81 MW. Except for the price utilities pay, contracts for the power are to have generally standard terms. Regulators’ decision follows an earlier order in 2007 calling for tariffs and standard contracts aimed at getting utilities to enter power purchase agreements with developers of projects with capacities of up to 1.5 MW under the state’s renewables portfolio standard program.

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