San Diego Gas & Electric announced one deal this week that made Calpine?s day and another that worries the generator, as well as other merchant plant owners. The first is an arrangement that will help Calpine secure financing to complete its barely begun Otay Mesa plant. SDG&E pledged October 8 that it would buy 570 MW of power from the plant beginning in 2007 at rates set by the California Public Utilities Commission. ?It provides for project financing, but we?re not committed to any financing to date,? Kent Robertson, Calpine spokesperson, said. He would not divulge how much financing the company is looking for. The financially strapped company has been in major refinancing mode for the last few months. Of the $2.3 billion Calpine identified for cash liquidity, the company has arranged or completed deals for $2 billion. In addition, the company refinanced $4.55 billion with junk-bond-level securities. SDG&E?s plan also includes buying the Palomar plant, developed utility affiliate Sempra Energy Resources. The 550 MW plant is supposed to be completed in 2006. Such ownership is problematic for many generators that own merchant plants. ?We say it?s an abuse of the affiliate-transaction rules,? said Gary Ackerman, director of the Western Power Trading Forum. Members of the WPTF, which include Calpine, are also concerned about affiliate-transaction rules in a similar case where Southern California Edison is attempting to purchase outright a new generation plant, Mountainview, and treat it as a special affiliate of the utility. SDG&E?s power-purchase proposals were part of a filing with the California Public Utilities Commission to help ensure the utility?s local generation sources and grid reliability, according to SDG&E spokesperson Stephanie Donovan. ?We estimated we?d be short by as much as 70 MW as soon as 2005 and that would grow by about 100 MW per year,? Donovan said. She added that the utility first looked at demand response and efficiency, and then renewable energy resources. ?We didn?t go out and say we were looking for a certain number of megawatts.? The demand-response program is estimated to avoid the use of 30 MW by 2007. The utility plans to buy 40 MW of biomass. On the fossil-fuel side, it plans to buy a 45 MW turbine. SDG&E expects the ventures will total $600 million. The utility hopes for a CPUC decision by the first quarter of next year.