Regulators Approve High-Cost Solar Deals

By Published On: May 25, 2012

State utility regulators approved 24 solar contracts in two decisions May 24. The approvals pit unknown future state parameters of renewable energy contract cost containment against spiraling rates. “Cost containment needs to be set on rules established up front. That sends the cleanest and fairest signal to the market,” California Public Utility Commission member Mark Ferron said. Ferron implied that contracts initiated under commission intentions at one point in time should be honored when circumstances change at another point even if it costs ratepayers more today. Most commissioners agreed. In the first case, negotiations related to three contracts with Southern California Edison began in 2009. In the second case, 21 contracts with San Diego Gas & Electric dated from 2010. It’s a “2009 price in a 2012 decision,” commissioner Tim Simon noted. In 2012 terms, the price of the contracts is high. The price is “not remotely close to other contracts,” commissioner Mike Florio complained. He said that if the commission continues to approve expensive contracts while waiting to implement cost containment rules, then all the costs could be too high. “We need to take a pause,” he said. “There is a rate bomb lingering on the horizon.” The three Edison projects to be developed by SunEdison subsidiary Fotowatio Renewable Ventures total 100 MW. The 60 MW Regulus project is destined for Lamont; the 20 MW Adobe development is set for Arvin; and the 20 MW Mojave facility is to be located in Lancaster. The vote on the Edison contracts was 4-1, with Florio opposing. SDG&E’s 21 projects are being developed by Sol Orchard. They run from 4.5-10 MW located in remote parts of the San Diego area to total 50 MW. Because they are not close to load centers, the commission has some concern that extra costs may be incurred for transmission upgrades to transfer the energy to where it would be consumed. Because of that, the decision caps transmission and distribution-associated costs at $13.5 million. The measure was on consent calendar, so approved without a vote.

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