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CONTRACTS STILL IN LIMBO, BRPU Remains Dormant

Notwithstanding the adoption of a framework for deregulation of the California electricity market, the state's Biennial Resource Plan Update (BRPU) remains in limbo and there is little news of over 1000 MW of contracts won under BRPU. After several allegations of cheating by wind bidders, the California Public Utility Commission (CPUC) put all the wind bids on hold in late 1994 while allowing other BRPU bids from independent producers to proceed. A rehearing on the BRPU was promised by the CPUC last fall, but no date has been set and no indication given of when it might be held.

The long and contentious debate over deregulation of the California electricity market might now be over, but wind companies wondering about the fate of over 1000 MW of contracts won under the state's Biennial Resource Plan Update (BRPU) still have little news to go on. Notwithstanding the adoption of a framework for deregulation by the California Public Utility Commission (Windpower Monthly, February 1996), the BRPU remains in limbo.

The CPUC still "has an obligation to move forward with a re-hearing," according to David Simpson, a San Francisco-based attorney. He is handling FloWind's protest over bidding strategies adopted by some wind companies who took part in the BRPU auction of wind power contracts in 1994. After several allegations of cheating by wind bidders, the CPUC put all the wind bids on hold in late 1994 while allowing other BRPU bids from independent producers to proceed.

A rehearing on the BRPU was promised by the CPUC last fall, but no date has been set and no indication given of when it might be held. FloWind is contending that some bids included unlikely capacity factors as high as 90% and even negative energy prices. According to Simpson, the purpose of a hearing would be to "determine which bids were appropriate, which were inappropriate, and throw out the bids that contained false information."

Despite Simpson's views, Hap Boyd of wind developer Zond Systems doubts there will be a rehearing. He feels the CPUC is waiting for utilities and wind developers to settle outside the framework of the defunct BRPU. Responding to Simpson's legal contentions, Boyd says: "Those submitting bids in the BRPU waived the right to litigate results in court." Thus any resolution to disputes would have to be done through arbitration. At this juncture, Boyd doubts that utilities would want to get involved in disputes between wind developers when their intent is to not add any new independent capacity of any kind.

Meantime, Simpson says that FloWind has been talking with other developers such as New World Power, WindMaster and Cal-Wind to present a united front on the BRPU debacle. Simpson statements notwithstanding, many of the wind projects "won" under the BRPU by other developers have already been re-negotiated or bought out. Southern California Edison, the utility which convinced the Federal Energy Regulatory Commission to rule that the BRPU violated federal laws governing solicitations for independent power, has renegotiated contracts with all BRPU bidders, including Kenetech, Zond and SeaWest, reports an industry newsletter, California Energy Markets (CEM). Zond's Boyd adds that his firm will shortly be filing its settlement with SCE for the 115 MW of nameplate capacity the developer had "won" in the BRPU.

CEM also notes in its January 12 issue that Pacific Gas & Electric and San Diego Gas & Electric have been less accommodating in reaching settlements. PG&E has offered its winning wind bidders -- Kenetech and Zond -- repayment of only the costs these firms incurred preparing bids. Kenetech has allegedly walked away from these negotiations.

Bidders claim, nevertheless, that SDG&E has been even more recalcitrant. Kenetech has reportedly made an offer to SDG&E to apply for a basic Standard Offer 1 contract for the 350 MW of nameplate capacity it "won" under the BRPU. Such contracts pay only at "as available" energy and capacity prices. In response to this offer, SDG&E asked the CPUC to place one year limits on such contracts. Other BRPU bidders, such as California Energy Company, a geothermal developer, has asked the CPUC to launch an investigation into SDG&E's failure to bargain with BRPU winners in good faith.

Aside from Zond, the BRPU wind bidders working on settlements with utilities are keeping their heads down on the issue. SeaWest refused to comment last month and Kenetech remained silent. Ironically, Simpson says that FloWind and its wind developer partners would challenge any settlements reached with utilities. He claims Kenetech, Zond and SeaWest had "no right to settle because they have no rights to any winnings."

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