Otay Mesa Reconsideration Urged

Consumer advocates urged the California Public Utilities Commission to reject San Diego Gas & Electric?s proposed 573 MW Otay Mesa 10-year power project deal. They claim it is too costly and cleaner resources should have been considered. The Office of Ratepayer Advocates and the Utility Consumers? Action Network filed testimony with the CPUC to convince it to reverse its approval of the contract, which has the financially shaky Calpine building the plant for power deliveries to SDG&E. The matter is expected to be reheard next month. "SDG&E grossly overstates the potential benefits to ratepayers," stated ORA in its October 14 filing. "Reasonable modifications to SDG&E's assumptions show that benefits to ratepayers disappear, and in fact become negative net present value $28.7 million," it added. SDG&E claims that the deal involves one of the few sources of new generation in its service territory. It estimates ratepayer benefits provided by the project to be $86.5 million. That figure rises to $119 million when factoring in associated transmission upgrades that would relieve grid congestion. Utility Consumers' Action Network testimony by Kevin Woodruff asserted that the project would "harm ratepayers, imposing upon them costs that substantially exceed gross benefits." The group urged the commission to compare the power-purchase agreement to a project pitched to SDG&E by Enpex and to renewables options in San Diego County. "I have reason to believe that SDG&E is preparing to develop the capacity of building its own power plants, as confirmed by an internal Sempra Energy document outlining their new 'team' to develop power plants in the utility service area," added Michael Shames, UCAN executive director, in testimony filed October 17. The project was expected to come on line in 2008. SDG&E and Calpine insist that will happen, but some doubt that date will be met. "I don't know enough to speculate, but the situation clearly demands careful monitoring," said John Geesman, California Energy Commission member, who was on the siting certification committee. The CPUC approved the Otay Mesa contract in June 2004. UCAN and The Utility Reform Network appealed the decision. Last July, the commission agreed to reconsider the matter, but on a limited basis. The ruling concluded that the Otay Mesa contract should not have been evaluated as a competitive solicitation that was part of SDG&E's request for projects, which would be on line by 2008. Instead, its reasonableness should be assessed within the parameters of a bilateral contract, which is not limited by the utility's RFP criteria. "Although we did not use the appropriate procedure to approve the Otay Mesa power purchase agreement, we do not believe it is necessary to reject the PPA outright," the CPUC stated in its July 5 ruling granting reconsideration.

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Otay Mesa Reconsideration Urged

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