CPUC’s Bohn Criticizes PG&E’s High-Cost Solar Deal

By Published On: August 13, 2010

The California Public Utilities Commission approved a Pacific Gas & Electric utility-scale photovoltaic energy power purchase agreement despite concerns about its high cost. Most commissioners backed the deal August 12 because the plants involved can be built quickly to help meet the state’s renewable energy and greenhouse gas reduction goals. “In essence, we’re paying a premium for certainty,” said CPUC president Mike Peevey. He noted that unless the three projects covered by the deal are up and running by next year the agreement will become “null and void.” Commissioner John Bohn adamantly dissented. He said the agreement has “the highest price” of any renewable energy deal the commission has ever approved. It was negotiated privately between the utility and the developer, Eurus Energy America, rather than being subjected to competitive bidding. The cost, Bohn said, was more than double the commission’s “market price referent,” a benchmark for judging whether the cost of a renewable energy project is reasonable. The referent stands at 9.7 cents/kWh for projects with a lifetime of 20 years. “Renewables at any price, is that really our goal?” asked Bohn. But the commission brushed aside his concern and approved the deal by a 4-1 vote. With approval in hand, the deal to build three separate facilities with a combined capacity of 48 MW can go forward. Erus Energy America plans to build the three separate facilities in Avenal: one with 9 MW of capacity, another with 20 MW, and a third with 19 MW. All are supposed to be operating in less than a year. Avenal is near the major Path 15 transmission line linking Northern and Southern California along Interstate 5. In other action, the commission told San Diego Gas & Electric to refund its customers $120 million in over-collections for the utility’s energy resource recovery account. The utility collects funds for the account to cover fuel and purchased energy costs. The commission noted that the refunds stem from lower-than-expected fuel and energy costs, as well as higher-than-expected refunds allowed by the Federal Energy Regulatory Commission related to transmission charges. The over-collections occurred largely in 2009. The average one-time bill credit is to range from $15 to $25, according to the commission. In other action related to the San Diego utility, regulators approved a 52 MW photovoltaic energy program for SDG&E. It is similar to previously authorized programs for the state’s other investor-owned utilities. Under the approval, SDG&E may build and operate half of the capacity itself, but must contract for the other half. The commission capped SDG&E expenditures on utility-owned capacity at $100.1 million based on an installed cost of $3.50/watt. Commissioners capped the cost of contract deals at $235/MWh. Finally, the commission okayed a staff plan to file comments on FERC’s proposal to allow greater cost-sharing of new transmission lines among multiple utilities and their customers—or even among whole geographic regions—when they benefit from facilities. The comments are expected to emphasize that any final FERC rule should preserve a process the California Independent System Operator has set up to allow cost-sharing among those who benefit from new lines. They also are expected to ask FERC to carve out a role for merchant transmission projects, which are funded by subscriptions rather than rolling the cost into utility rates. In a separate development, the commission issued a progress report earlier this month on its single-family affordable solar homes program, which is part of the California Solar Initiative. It showed that rooftop solar systems have been installed on 169 “affordable” homes statewide, plus that another 83 homes have been approved. Recently, the report noted, applications for funding under the program have picked up, with 196 projects under review.

Share this story

Not a member yet?

Subscribe Now