PG&E’s $230M Generation Plan Reviewed

By Published On: December 4, 2009

A proposal to add new fossil fuel generation to Pacific Gas & Electric’s portfolio--the total cost of which would not be reviewed for reasonableness--was put under a more detailed filter December 2 following protests by half-a-dozen groups. PG&E’s proposal to the California Public Utilities Commission would encompass several power plants, with a total of 1,305 MW. The primary note of contention is the 674 MW Contra Costa project. PG&E intends to commit $223.9 million for the project. The utility requests that if the cost of the facility comes in less than projected, PG&E would not be subject to a regulatory “reasonableness review.” That process evaluates whether utility spending is appropriate. The proposal to have no reasonableness review is becoming a reoccurring theme at the CPUC. Historically, regulators watched over utility spending and would sometimes call for a “disallowance.” A disallowance was deemed--basically taking back money that a utility invested in a project--after exhaustive regulatory hearings. In the last decade, the commission began to embrace the concept of a cap on utility investments--and if the project comes in under that cap, then utilities would not be subject to spending review. Consumer groups complain that such methods lead to overstating project costs, with no oversight after-the-fact. The other projects in PG&E’s proposal include a contract with Mirant’s Marsh Landing facility for 719 MW beginning May 2103, and a contract for Midway Sunset cogeneration for part of its output (129 MW) for peaking summer power. According to PG&E, the projects would add about 43 cents/month to an average customer bill.

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