After being found deficient because of over-dependence on fossil-fueled power projects, the three major California utilities’ long-term procurement plans were approved by regulators this week. The California Public Utilities Commission unanimously approved the 10-year blueprints in spite of several regulatory concerns December 20. “This is not a blank check to go out and buy fossil-fueled projects,” warned Mike Peevey CPUC president. The utilities were ordered to file “conformed 2006” plans within 90 days. The investor-owned utilities are to “meet and exceed the high standards Californians expect as pacesetters on energy and environment issues,” the approved decision states. The power procurement frameworks are required to incorporate the energy agencies’ “loading order.” That regulation gives top billing to efficiency, renewables and demand response before the state is willing to allow utilities to build or pay for traditional power plants. The problem with long-term the power buying plans is “the absence of any scenario analysis regarding what types of resources key the [investor-owned utilities] should use to fill their net short positions to best transition to the inevitably greenhouse gas-constrained world we are moving towards,” states the ruling. “Net short” means the difference between what regulators require and what utilities are producing. The commission and a number of stakeholders worry that adding conventional projects to utility portfolios to fill rising power demand will foreclose renewable supply options. It was estimated that Pacific Gas & Electric will need between 800 MW and 1,200 MW of new supplies or efficiency by 2015. Southern California Edison was estimated to need between 1,200 MW and 1,700 MW over the next seven years. San Diego Gas & Electric needs is 530 MW of local capacity and 130 MW of peaking power. What supply and/or conservation is really needed is a “black box,” according to commissioner Dian Grueneich. She pointed out disparities between the California Energy Commission and CPUC forecasts. The issue is expected to be addressed next year. Complicating regulation for new supplies is climate change. The commission’s approval includes requiring investor-owned utilities to estimate projects’ greenhouse gas emissions and the cost of carbon allowances of their chosen supplies. In approving the plans, the commission reiterated its support of a hybrid market--that is, with independent power producers allowed a slice of energy sales, along with the traditional regulated utility sales. The decision calls for continued closed-door review of power purchase deals with third party generators by the CPUC Procurement Review Group and use of independent evaluators to assess competitive power bids. At the same time, regulators called for greater public access to information in the deals, particularly the details of the winning bids. In energy agreements between utilities and their affiliates, neither Edison, PG&E, nor SDG&E are allowed to recoup bid development costs. Other issues of concern discussed in the decision include the utilities’: -“Protracted” request for offer process; -Failure to use the California Energy Commission’s load forecast; and, -Lack of scrutiny of power project contract viability.
