| The following article
is from local power news March 29, 2005
(see http://www.local.org)
PG&E Rushes into
$ Multi-Billion Long-Term Power Contracts & Gas-Fired
Power Plants
San Francisco Adopts Protest Resolution, Seeks to Escape "New
Energy Crisis in the Making" - Berkeley, 48 Cities Not
Far Behind
The San Francisco Board of
Supervisors unanimously adopted a letter protesting Pacific
Gas & Electric's proposed new long-term power contracts
and power plants last week, as the utility giant moves aggressively
to put its ratepayers on the hook for $ Billions in new ratepayer
obligations to finance its re-monopolization following its
bankruptcy bailout just over a year ago. The resolution announced
the intention of San Francisco ratepayers to seek an alternative
energy provider with a massive 360 MW green power infrastructure
later this year, and demanded that state regulators not approve
any utility investments or contracts that would impose new
fees on its residents and businesses. 48 California cities
and counties now seeking to implement similar plans are not
far behind.
With San Francisco now moving
to approve its Community Choice Implementation Plan so that
its residents and businesses can escape the new Exit Fees,
more and more California municipalities are becoming aware
of the significance of the utility contracts. Following San
Francisco‚s lead to get in its plan before June when
the California Public Utilities Commission (CPUC) will consider
utility plans, the City of Berkeley approved $100,000 to fund
completion of an Implementation Plan this year, and others
are now moving to submit their plans before it is too late.
Oakland-based Local Power, which drafted the state's Community
Choice law AB117, Migden) is now assisting San Francisco and
other cities get their plans in on time.
PG&E officials announced
they are seeking to sign contracts for 2,200 megawatts of
new power plants in Northern California by 2010, and to force
its ratepayers to bear the risk and cost of these power plants
for the first time since the energy crisis. PG&E officials
says it needs 2,200 megawatts of new electricity production
in Northern California by 2010 to meet growing demand and
compensate for the expected closure of obsolete power plants.
PG&E had sought to own at least one, and maybe more, new
power plants in its territory and has said it plans to make
its own bid to own and operate a 500-to-600-megawatt power
plant. PG&E is now looking for up to 1,000 megawatts of
new generation by 2008 and another 1,200 megawatts by 2010.
Bids can be for plants that supply anywhere from 25 megawatts
to 2,200 megawatts. With a few exceptions for renewable or
experimental electricity generation projects, all electricity
must come from newly built plants.
The rush to lock in ratepayers
is a statewide phenomenon, including Edison and SDG&E.
Locking customers into the new contracts and power plants
will rate base the investments for the first time since the
Energy Crisis, creating a new round of Exit Fees for all ratepayers.
Critics criticize the rush as a bald faced effort to block
their customers from their legal right to find alternative
energy providers as over 48 California cities and counties,
including some of the largest metro areas in the state, are
now seeking to escape their utilities‚ procurement obligations
- a Second Energy Crisis. As San Francisco, Marin, Oakland,
Berkeley, and many other California cities are now seeking
to escape utility power contracts to switch to green power,
PG&E, Edison and SDG&E are also rushing into power
contracts that could block their customers from going green,
with local officials from San Francisco to Chula Vista protesting
monopolistic abuses by the energy corporations to state regulators
at the California Public Utilities Commission.
PG&E had sought to build
and own at least one new power plant in its territory and
has said it plans to make its own bid to own and operate a
500-to-600-megawatt power plant at its ratepayers‚ risk
and expense. PG&E is now looking for up to 1,000 megawatts
of new generation by 2008 and another 1,200 megawatts by 2010
- enough to power a million homes.
Bids can be for plants that
supply anywhere from 25 megawatts to 2,200 megawatts. With
a few exceptions for renewable or experimental electricity
generation projects, all electricity must come from newly
built gas-fired power plants, such that the investments will
create new demand for natural gas that does not now exist,
and put further pressure on California to make its power grid
dependent on imported foreign Liquefied Natural Gas to keep
the lights on. California already depends on gas to power
37% of all electricity generated here - an overdependence
which state agencies blame for the major causes of the 2000-1
Energy Crisis.
The rush into new contracts
and gas-fired power plants has severe environmental and geopolitical
security implications, because building the plants will require
a new fuel supply from overseas. Unlike pipeline natural gas,
which has fueled the state‚s past power plants, the
new ones will depend on LNG for fuel. Supercooled into liquid
form for tanker transport from Afghanistan, the Middle East,
Africa and Asia, LNG leaks at a 2.5% rate, and is 18 times
as reactive a greenhouse gas as C02, making LNG-fired power
plants only nominally cleaner than coal plants in terms of
their massive impact on climate change. As LNG is marketed
by Governor Schwarzenegger and Democratic Leaders as a clean
and necessary fuel, it is neither clean nor necessary - state
agencies have observed that increased dependence on gas-fired
generation will only make the state more vulnerable to price
volatility (gas is among the most unstable commodities), as
well as manipulation of supply - not to mention terrorist
attacks.
On March 21 PG&E issued
an updated Request for Offers (RFO) for long-term electric
supply, as part of the resumption of its long-term procurement
process which was temporarily delayed in January. The submission
deadline for initial offers is April 27. The RFO solicits
offers for both Facility Ownership and Power Purchase alternatives.
The rush into power plants
and contracts signals a Brave New World in California energy
politics - a rubber-stamp regulatory process in which ratepayers
exploited as a captive pool of finance capital. Under rules
developed by the California Public Utilities Commission, an
independent "evaluator" will judge all bids -- including
the one from PG&E -- and decide which company or companies
should receive contracts to build power plants. PG&E had
sought to make the determination itself. Under the CPUC‚s
new regulatory framework, the Commission no longer has the
ability to review utility contracts, but has delegated this
critical authority to a Procurement Review Committee, making
many fear the immediate prospect of unregulated electric monopolies
in California.
PG&E has created a new
review process for its plans to satisfy requirements of the
California Public Utilities Commission (CPUC) long-term procurement
decision, issued on December 16, 2004 - the same day the Commission
approved rules for Community Choice Aggregation in California
cities and counties. Most of the changes to PG&E‚s
RFO result from the CPUC decision, and PG&E's specific
request for offers to replace generation from its Humboldt
Bay Power Plant in Eureka, California. As part of the resumed
RFO process, PG&E is looking for offers to replace the
135 megawatt fossil fueled generation facilities at the Humboldt
plant.
Duke Energy of North Carolina
and Texas-based Reliant Energy Inc say they are interested,
but because of the long-lead time in getting a state power
plant permit processed and approved, those with existing permits
-- like Calpine -- would seem to have an advantage. With permits
for 3,352 megawatts worth of power plants issued by former
Gov. Davis‚ advisor, now CPUC Commissioner Susan Kennedy,
their projects have been on hold because the company hasn't
been able to find financing, and has $18 Billion in debt.
Those permits include a 600-megawatt Russell City Energy Center
in Hayward, a 1,200-megawatt plant in eastern Alameda County
and a 600-megawatt plant in San Joaquin County.
PG&E's move to build power
plants follows several months of frenetic contract negotiations.
PG&E announced in February that it had entered into a
power purchase agreement with Duke Energy Marketing Americas
(DEMA) providing PG&E with exclusive rights to dispatch
Morro Bay Units 3 and 4, each 325 megawatts, to meet PG&E's
capacity and energy needs for the period 2005-2007, adding
a new contract to a growing list of agreements that, if approved
as early as April, will put California ratepayers on the hook
for new long term power contracts.
PG&E filed an Advice Letter
with the California Public Utilities Commission (CPUC) seeking
regulatory review and approval of this power purchase agreement
with DEMA. PG&E has requested CPUC approval by April 4,
2005. The purchase is part of PG&E's overall procurement
plan to sign power contracts in northern and central California
in both the near- and long-term. In addition to entering this
agreement, PG&E is currently conducting competitive solicitations
for not only near-term supply but also long-term supply and
generating capacity, which can put ratepayers on the hook
for decades.
PG&E , Edison, and SDG&E
are all rushing to sign power contracts in a race against
the Community Choice movement, which now includes 48 California
cities and counties. In January, PG&E announced a settlement
agreement with Mirant to obtain the rights to dispatch some
of the power from Mirant's Contra Costa and Pittsburg Power
Plants, as well as the opportunity to complete construction
of and operate Contra Costa Unit 8, a 530-megawatt facility.
The power purchase agreement will allow PG&E to use Morro
Bay Units 3 and 4 to meet load requirements and respond to
hourly and daily variations to load as necessary.
Some national energy giants
have expressed interest, including Duke Energy of North Carolina
and Texas-based Reliant Energy Inc. But because of the long-lead
time in getting a state power plant permit processed and approved,
those with existing permits -- like Calpine -- would seem
to have an advantage.
Calpine has state permits for
3,352 megawatts worth of power plants, but their projects
have been on hold because the company hasn't been able to
find financing. Those projects include the 600-megawatt Russell
City Energy Center in Hayward, a 1,200-megawatt plant in eastern
Alameda County and a 600-megawatt plant in San Joaquin County.
For more info, visit http://www.local.org |
