Pacific Gas & Electric is warning regulators that the financial crisis threatens completion of \u201cnon-utility projects.\u201d However, the utility pulled the plug on its proposed Tesla power plant in the face of a proposed California Public Utilities Commission decision to deny the project. Independent power generators attacked the project on grounds it undermined the state\u2019s hybrid market, which is suppose to include a mix of utility-owned and independent power projects. In an October 14 letter to California Public Utilities Commission president Mike Peevey, PG&E chair and chief executive officer Peter Darbee noted the utility already discovered that two independent projects being built under its 2004 long-term procurement plan have been terminated due to the financial crisis. Another power plant is jeopardized by permitting problems, Darbee told the state\u2019s chief utility regulator, The two terminated projects, a company spokesperson said, are the 600 MW Russell Energy project and the smaller Eastshore project, both of which had been slated for construction in Alameda County. \u201cShould capital not be available to build out such [independently owned] projects,\u201d concluded Darbee, \u201cit is imperative that we devise an alternative plan to fill the resulting gap in the most expeditious manner.\u201d Darbee\u2019s letter related to further pursuit of the 560 MW Tesla project. It was responding to a proposed decision by a CPUC administrative law judge late last month. That decision said that the utility should have gone through a competitive bidding process to fill its need for power. In comments filed with the CPUC on the proposed decision October 14, PG&E attorneys said the utility plans to recover the money it has spent so far on the project. \u201cThe costs incurred by PG&E to date are reasonable,\u201d they wrote. So the utility plans to seek their recovery either through \u201ca separate application\u201d or in the company\u2019s next general rate case filing. Utility attorneys maintained there was no way PG&E could have met its power needs under a competitive bidding process, since new power is needed by 2012. Getting power under the bidding process takes more than four years, they said. Ratepayers could be on the hook for $59 million in project termination costs, wrote Dan Douglass, attorney for the Western Power Trading Forum and Alliance for Retail Energy Markets in an October 14 filing with the commission. Even then, The Utility Reform Network senior attorney Mike Florio maintained \u201cwe will look back at the Tesla proposed decision as a lost opportunity for ratepayers who now will likely be forced to pay even more for new generation.\u201d Independent power producers that rely on utility contracts for their business continue to question PG&E\u2019s contention it would need a new source of power by 2012. PG&E would have a minimum power capacity reserve of 15.5 percent in 2012, even if its 180 MW San Francisco Reliability Project is delayed, wrote Brian Cragg, an attorney for the Independent Energy Producers Association October 14 in a filing with the commission. Since a 15 to 17 percent reserve is adequate under state policy, PG&E can afford the time to go through the normal competitive bidding process, according to the association. PG&E acquired development rights to the Tesla Project from Midway Power LLC earlier this year. Midway won approval from the California Energy Commission in 2004 to build the new power plant in eastern Alameda County. However, it never completed the plant due to its inability to obtain a long-term power purchase contract. PG&E planned to complete the facility and own and operate it by the end of 2011. The CPUC is expected to act on the proposed decision soon.