CPUC Blocks SDG&E Power Purchase Agreements

The California Public Utilities Commission (CPUC) last week directed San Diego Gas & Electric (SDG&E) to procure up to 298 MW of local generation beginning in 2018, and authorized the utility to enter into a purchase power tolling agreement with Wellheads’ Escondido Energy Center. It declined, however, to let the utility enter into similar agreements with two gas generators, because they were bound to be delayed.

Under SDG&E’s 25-year contract with the Escondido Energy Center, operators will repower an existing 35-MW natural gas–fired facility and expand its capacity to 45 MW after completing the initial repowering. “The CPUC approved the contract due to the project’s relative low cost, small size increase, high viability, and environmental benefits resulting from a repower,” the commission said in a statement.

The CPUC declined to allow SDG&E to enter into similar purchase power tolling agreements with Apex Power Group’s planned 300-MW natural gas–fired Pio Pico Energy Center and Cogentrix Energy’s 100-MW natural gas–fired Quail Brush Generation Project. “The agreements were denied, in part, because they were scheduled to come online in 2014, but the evidence demonstrated that there is no need for incremental local capacity until 2018, four years into the 20 year terms of the contracts,” the CPUC said.

The CPUC found the timing mismatch would be “unreasonable to ratepayers.”

In order to meet the remainder of the 298 MW need, the CPUC directed SDG&E to either issue new Requests for Offers or to submit for CPUC consideration a renewed application that better matches the timing issue or demonstrates a different showing of need for either Pio Pico and/or Quail Brush.

Sources: POWERnews, CPUC