Regulatory Judges Whack PG&E Distribution, Procurement Plans

By Published On: May 28, 2010

A California Public Utilities Commission proposed decision reduces Pacific Gas & Electric’s planned investment in its distribution infrastructure from a requested $1.9 billion in capital and $59 million in expenses, down to $357 million in capital and $9.2 million in expenses. The May 25 proposal by administrative law judge David Fukutome also cuts the investment time line for PG&E from six to three years. Under the tentative ruling the investment period would run from 2010 to 2013, instead of to 2016. “Still, through this reduced program, it is estimated that up to 68 percent of the quantifiable reliability improvement benefits identified in PG&E’s [proposal] can be achieved for the approximate 18 percent of the requested costs,” noted Fukutome. The utility maintains the investment is required, in part, to service the expected growth of electric vehicles. That includes, according to the commission, adding substation transformers, doing increased interconnectivity work between distribution circuits, installing distribution automation on more distribution circuits, and improving rural reliability. Another proposed decision shaves up to 600 MW off PG&E’s plan to procure more electricity through third party power purchase agreements. This May 25 decision, advanced by administrative law judge Darwin Farrar, allows most, but not all, of the power purchase agreements proposed by the utility. At the core of the decision is the state’s definition, or lack thereof, of the “need” for new power plants. There’s a reduced forecast need “not anticipated to reach 2006 demand levels within the next five years,” noted Farrar. Although under a 2007 commission decision PG&E is allowed 928 MW to 1,328 MW by 2015, the judge clarified that the state’s economic recession has decreased projected electricity use. He noted the utility should be allowed to procure no more than 1,000 MW of what was previously approved. “PG&E fails to identify any authority that allows it to procure MW in excess of those allotted in its [long-term procurement plan],” states the proposed decision. The utility maintains increased utility-owned or -managed new generation is necessary to meet expected electricity demand. The California Independent System Operator agrees that as older, thermally inefficient, and water-wasteful plants retire, new generation plants fit into the post-deregulation electricity era (see desalination story below). Consumer advocates say the new capacity PG&E seeks is overkill and that ratepayers should not be billed for unneeded power plants. Some independent producers state they are being crowded out of a potential market by the utility’s own plans. Purchase agreements slated to proceed if the full commission approves Farrar’s proposed decision are: -Oakley--586 MW of fossil power for PG&E to own after it’s built; -Marsh Landing--Agreement between Mirant and PG&E for 719 MW fueled by natural gas; and, -Midway Sunset--Cogeneration for 129 MW peaking capacity for five years. PG&E also is proposing these new generation facilities excluded from Farrar’s proposed decision: -Manzana--246 MW of wind, with the project to be bought by PG&E after development; -Los Esteros Critical Energy Facility--Partnership with Calpine that increases capacity by 109 MW; -Tracy--Repower project with GWF adding 145 MW under contract to PG&E; and -Mariposa Energy Center--184 MW.

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