Governor Arnold Schwarzenegger insists there must be more private investment in power plants. The California Independent System Operator expects electricity shortages in 2006. Merchant plant owners have been suffering financial troubles in the last year. Yet, while those political and economic issues are in search of a d?nouement, there is no shortage of power plant investments by public power agencies. Of the more than a dozen viable generation facilities that have known on-line dates or are expected to be permitted by the California Energy Commission, eight are local power agency projects. The munis? plants are expected to produce more than 1,700 new megawatts. In addition, two other proposals in the works involve projects by, or a contract with, a public entity. ?The financial markets recognized that management and munis have not had any trouble financing projects,? said Jerry Jordan, director of the California Municipal Power Association (CMUA). ?Added to that is the fact that the obligation to serve has not been fully restored to the investor-owned utilities and rules of procurement have not been set yet? by the California Public Utilities Commission, he said. Munis are able to get financing for their plants because the output goes to their customers. Lenders don?t fret, because the agency?s ratepayers provide a stable revenue stream. Projects by merchant generators, on the other hand, cannot get needed financing without a long-term contract in hand. And the bulk of the power buyers these days are the three investor-owned utilities. The governor has invited more private investment. ?I think that the most important thing is that we open up the market and create more reserves,? he said January 27. However, only a few private projects look viable, including two by Calpine, which are more than two years behind schedule, and one by FPL Energy. Another generator, which has a long-term contract with the Imperial Irrigation District, is a CalEnergy affiliate. The project is a 180 MW geothermal plant. ?In order to develop a plant of this magnitude, we needed to have an off-take contract,? said Vincent Signorotti, CalEnergy asset manager. According to Steven Kelly, Independent Energy Producers policy director, ?The $100 million in project investments is slowly withering away on the vine because the utilities do not have open, competitive bidding.? Efforts to reregulate the state?s energy industry are far from reassuring to the independent power producers. While the merchant generators and investor-owned utilities squabble over contract rights and affiliate transaction rules at the legislature, the CPUC, and the Federal Energy Regulatory Commission, several public power agencies are taking steps to boost their supplies. The new plants will replace energy they buy on the market and\/or will be used to meet growing demand. The projects include:<ul><li>City of Roseville?s pending 160 MW project.<\/li> <li>City of Vernon?s 134 MW plant (under construction).<\/li> <li>City of Riverside Public Utilities? 100 MW Acorn peaker (under review).<\/li> <li>Modesto Irrigation District?s just-approved 95 MW Ripon project.<\/li><li>Sacramento Municipal Utility District?s permitted 500 MW facility.<\/li> <li>Silicon Valley Power?s 147 MW approved Pico project.<\/li> <li>Southern California Public Power Authority?s 328 MW Magnolia plant (under construction).<\/li> <li>Turlock Irrigation District?s 250 MW Walnut Energy project (under review).<\/li><\/ul>Another facility in the pipeline, which is not a local power utility but a public entity project, is the proposed Kings River Conservation District 97 MW peaker unit. Given these new projects, some question CAISO?s supply shortage predictions, which do not factor in most of the public power agencies? generation facilities. In addition, the CEC does not foresee a supply problem in 2006, unlike CAISO. As with many energy issues, capacity predictions are tricky and fraught with political implications and sensitive turf issues. The grid manager looks at load only in its control area, which includes few munis. Most of the power agencies? ?impact on the system is no different than if they were located out of state,? said CAISO spokesperson Gregg Fishman. The grid operator has urged the munis to come into its transmission system, but like a skittish paramour, munis are not easily wooed. Cost and independence issues have kept them unhitched. CPUC president Michael Peevey has hammered the munis for remaining outside the CAISO area because it hampers reliability of the state system, he contends. CMUA is quick to point out its members? investments in power plants. ?We have an obligation to serve real customers rain or shine,? said Larry Owens, Silicon Valley?s customer manager.