It is California's biggest power auction ever and could lead to a massive amount of renewables projects. Specifically, the preliminary results initially suggested that it could result in the California wind market, the world's largest, almost doubling over the next six years.
The two utilities have given preliminary approval to a total of 930 MW nameplate capacity of wind projects. But if they get their way when the CPUC meets on October 12, SCE will not have to build its 495 MW in wind contracts won under BRPU, whereas SDG&E will have the auction's pricing provisions revised -- and prices offered bid winners will be lower.
SCE also has a preliminary agreement with Kenetech Windpower for 495 MW of installations, which the utility hopes to fulfil instead of its BRPU obligations. It would pay less for the Kenetech capacity, it would be phased in more slowly and its construction would also depend in part upon voters agreeing to pay more for "green power."
The San Francisco Chronicle recently quoted SCE independent power manager Don Fellows as saying, despite the agreement with Kenetech, "We have made no commitments. If it's strictly up to us, we wouldn't buy anything." But he now stresses that SCE is continuing negotiations with Kenetech, and expects to do so for another month or two before a more final agreement is reached. SCE has argued it does not need the capacity mandated under the BRPU and that it is too expensive. SDG&E argues that the BRPU does not take account of all the sources of energy available to the utility in setting its avoided costs.
Indeed, Tom Page, chairman of SDG&E, told the San Diego Union newspaper in September that low-cost power is a priority. He said that with today's cheaper oil costs, "It is difficult to make any long-term commitment into nuclear power or geothermal or wind or these sorts of things that in their nature tend to be more expensive."
In another sign of the increasing competitive pressure on utilities, PG&E will axe 3000 jobs in the second major cut in as many years. The utility will be left with some 20,000 jobs. Some 800 jobs in the power generation section will be shed next year, says the utility, which announced the job cutting at the end of August.