Green Generator Gets Legal Right to Suspend Delivery

A California court has ruled that a geothermal energy supplier can sell its green power on the state’s open market because a major utility has breached its long-term contract.

EL CENTRO, California, US, 2001-03-26 <> CalEnergy Operating Corp operates a number of geothermal plants near the Salton Sea in Imperial County. Last month, the company filed a suit in Superior Court to seek back payment from Southern California Edison and authorization to suspend their contracts with the utility and to sell its green power elsewhere in the state. CalEnergy claims that Edison has not paid for any generation since last November, and wanted the right to sell its output elsewhere until Edison can pay for the power. CalEnergy is one of ten members of the Renewable Energy Creditors Committee, a group of green power suppliers who grouped together last month to explore options to collect back payments from Edison. Together, the group claims to be owed more than $300 million by Edison. “We applaud this short-term solution that will provide us with a revenue lifeline and keep our clean, renewable power flowing to Californians,” says CalEnergy chairman David Sokol. “It is unfortunate that it took court action to provide us some relief from an intolerable situation.” The ruling does not assure that the plants will collect $140 million that Edison owes them for power generated since last November, and he says the geothermal plants will continue to pursue legal and legislative remedies to receive back payment. “That debt will continue to place a great strain on our operation,” and he notes that Edison has collected tens of millions daily from ratepayers and has amassed $2 billion in cash. On the spot market in California, the geothermal plants will receive higher prices than they agreed to accept in negotiations with the state, Edison and PG&E. The lower price was incorporated in Senate Bill 47X, which stalled in the state legislature after Edison withdrew its support, and has been incorporated in the California Public Utility Commission’s proposed order. California taxpayers will pay the difference, because the state is buying electricity on the open market on behalf of Edison and PG&E. “It is unfortunate that taxpayers will now be paying more for our electricity,” explains Sokol. “That is the result of inaction by the state and bad faith by Edison.” “We negotiated with the full blessing and knowledge of the governor and the legislature to arrive at long-term pricing that would assure reliable supply and save taxpayers billions,” he says. “This pricing for our clean, renewable energy was less than the state is paying out-of-state fossil-fuel energy providers in long-term contracts, and less than half what we are allowed under federal law.” Sokol is encouraged by the Governor’s announcement last week to propose legislation and action by the PUC that would require Edison and PG&E to begin paying current bills for electricity received from qualifying facilities such as CalEnergy. “While we are hopeful that this legislative and regulatory action can move forward quickly, there are many details to be worked out in the Governor’s proposal,” he cautioned. “Even with quick action, there is a serious question whether Edison is willing to pay any of its current bills from qualifying facilities.” CalEnergy’s geothermal complex employs 200 workers and generates 268 MW. Renewable energy facilities provide 12 percent of California’s electricity, enough for five million homes. Geothermal plants produce electricity from wells that tap superheated water up to 10,000 feet underground, which is converted to steam to drive turbines that produce electricity. The plants then return the cooled water to the subterranean reservoir for reheating.

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