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The California Public Utilities Commission approved more than $6 billion in cost recovery for above-market renewable energy deals signed behind closed doors, according to a report by the Division of Ratepayer Advocates. The $6 billion-plus in ratepayer funds spent on these agreements between private utilities and renewable developers since 2002 is far above the $770 million allocated for contracts costing more than the regulators' price benchmark. This pot of supplemental funds was authorized in 2002. DRA "is concerned that the perceived urgency to comply with the [renewable portfolio standard] and continuing CPUC approval of high-priced contracts has created inelastic demand," states the report, Green Rush, released Feb. 15. "More than half of all renewables contracts to date have prices in excess" of the CPUC's market price referent, it found. The price referent, which uses a natural gas-fired plant as a proxy, is regulators' benchmark for assessing the reasonableness of renewable contract prices. The report "should serve as a cautionary tale for the incoming Brown-appointed commissioners," said Michael Shames, Utility Consumers' Action Network executive director. Information in the report was gleaned from utility compliance fillings and confidential reports, according on DRA's Yuliya Shmidt, a report coauthor. The secret price and other contract terms of the alternative power deals before regulators are reviewed by a group of stakeholders behind closed doors. The CPUC-approved procurement review group included a DRA representative. There have been repeated calls for renewable contract transparency, including from independent generators, politicians and DRA. Utilities have insisted that disclosing the terms of alternative power deals will skew prices. "Transparency in markets is very important," said Jan Smutny-Jones, Independent Energy Producers executive director. "Ratepayers need to know what they are getting and what they paid for." A bill by Senator Alex Padilla (D-Pacoima) directs the CPUC to provide information to the Legislature on alternative energy contract prices in periodic intervals. As of press time, the bill was not yet numbered. The 12-page DRA report looks at 184 contracts signed since 2002--all but two of which were approved by regulators. The utility deals are, on average, 15 percent higher than the market referent price, it states. The ratepayer advocate concluded that 77 percent of Pacific Gas & Electric's bilateral renewable deals or ones signed following a utility solicitation are above regulator's benchmark. Of Southern California Edison's deals, 41 percent exceed the market price referent. At San Diego Gas & Electric 47 percent are on the high side. Edison spokesperson Vanessa McGrady said the utility had not reviewed the report. She added the utility "works hard to secure the best deals for its customers." "[W]e are buying green resources at the lowest cost to our customers," said SDG&E spokesperson Jennifer Ramp. Pacific Gas & Electric did not respond to requests for comments before press time. A capitol source noted that some of the utility renewable deals, especially solar, were expected to be above market costs. Supplemental ratepayer funds were provided to cover the higher costs, she added. The CPUC's price comparison referent benchmark varies, taking into account contract lengths and start dates. The one used to measure PG&E deals was $123.46/MWh; on the low end was the benchmark used for Edison contracts at $92.27/MWh. The referent is considered by many an outmoded benchmark. The prices of competing solar, wind, and other alternative projects are compared in practice with similar deals not fossil fuel-fired projects (Current, Feb. 4, 2011).

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