California Utility Seeks Renewable Energy Projects

Southern California Edison (SCE), the nation’s largest purchaser of renewable energy, this week launched its fourth solicitation for renewable power contracts since 2002.

California’s investor-owned electric utilities are required by law to gradually ramp up their use of renewable energy, the principle driving force behind these contract solicitations. SCE is soliciting 10-, 15-, or 20-year contracts from all interested developers of renewable energy projects — those using solar, wind, biomass, geothermal, and small hydro energy. Proposals will be due to SCE by Friday, September 22, 2006. Interested parties can download details of the request for offers at the link following this story. To answer bidders’ questions, SCE will host a proposal conference on August 10, 2006, at a location to be announced. “To meet our customers’ future energy needs, we are again in the market offering long-term contracts to companies developing cost-effective, renewable power projects,” said Pedro Pizarro, SCE senior vice president of power procurement. “This solicitation reflects our continuing commitment to environmental stewardship, to reduced reliance on fossil fuels and to hedging against volatile natural gas prices.” While continuing to pursue new renewable energy sources, SCE is also working with state officials to remove barriers faced by renewable project owners in developing their projects. SCE believes a recent California Public Utilities Commission (CPUC) decision represents an important step in linking new projects to California’s electrical grid. The new policy state regulators adopted at their June 15 meeting addresses one of the most significant obstacles to renewable project development in California — how to pay for expensive connections between new major renewable resource areas and distant utility high-voltage power grids. Current transmission cost recovery rules, established by the Federal Energy Regulatory Commission (FERC), require renewable project developers to pay fully for transmission connections to utility high-voltage grids, even if theirs is the first of several projects that eventually will use such connections. As a result, many smaller projects remain on the drawing boards waiting for others to fund the transmission projects. The new CPUC decision authorizes utilities to initially pay for the needed transmission projects, charge renewable generators for transmission service for their share of the costs under rates approved by FERC, and recover the reasonable remaining costs from customers. There is concern among some consumer interest groups that the cost for these transmission upgrades will be passed on to the consumer. “While some of the details of this new policy remain to be worked out, we believe it is a step in the right direction,” said SCE Senior Vice President of Transmission and Distribution Ron Litzinger. “This decision will help resolve transmission funding issues and remove a major impediment to the interconnection of renewable generators to the grid.”
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