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United States

Utility stacks bid against wind -- Fighting for fair terms in California

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The California Wind Energy Association (CalWEA) has found itself in the unusual position of opposing a request for more megawatt of renewable energy put out by Southern California Edison. It is the utility's second such request for proposals (RFP) in a year, but the first did not fostered any wind projects and the second is as stacked against wind power as the first, says CalWEA's Nancy Rader, prompting the association to press the California Public Utilities Commission to change or nullify the utility's RFP.

"The RFP is horrible for wind," says Rader. She wants to see solicitations for wind power standardised under agreed terms. "We're now in the process of developing standard contract forms and this is a good example of why we need these standardised terms," she says of the RFP.

The contract terms are being developed at the utilities commission, which is holding regulatory hearings that will help set the rules for implementing California's Senate Bill 1078. The bill, passed in September 2002, established the nation's strongest renewables portfolio standard by requiring the state's three largest electric utilities to acquire 20% of their power from renewable resources by 2017. As Southern California Edison's solicitation illustrates, getting the details right is a painful process that is far from finished. Issuing an RFP before the public utilities commission finalises the rules -- not expected until December -- is premature, says Rader.

Edison released its RFP August 28 asking for an unspecified number of megawatts. The utility's Marlon Walker says instead of a fixed volume of capacity, Edison seeks proposals that best fit with the utility's current resources and transmission system and which come in at the lowest cost. The similar solicitation released almost a year ago attracted bids from only 15% of eligible companies, according to Edison's own records.

Broader issue

The contentious topics being discussed at the California Public Utilities Commission, which are now delaying finalisation of the renewables portfolio standard rules, parallel the charges made by CalWEA against Edison. The utility wants to pay for the lesser of what the generator schedules on the transmission system or what it actually produces.

At the same time Edison retains title to the entire output and all the environmental attributes of the project, even though the generator, not Edison, pays for the imbalance energy when it fails to meet its schedule, in essence giving the utility free energy.

Edison wins both ways, enriching the utility at the hands of the renewable generator, argues CalWEA in filings with the utilities commission. While that "should be unpalatable for all technologies, it is particularly onerous for wind projects," says CalWEA.

Other complaints against Edison's RFP include a $0.003/kWh adder for integration costs for wind, something other renewable resources do not have to pay. The utility also imposes harsh performance requirements, declines to provide as-available capacity payments, requires repowering projects to be constructed within one month and subjects wind developers to "unreasonable credit requirements," which CalWEA says will discourage participation. Finally, Edison says it can terminate a power purchase agreement if approval of the contract by the public utility commission takes longer than 120 days.

Walker says Edison strongly disagrees with CalWEA's arguments and is insisting the RFP move forward as is. While there are several routes that commissioners could take when reaching a decision early this month, Rader hopes they will simply force the utility to incorporate CalWEA's suggested contract form into its RFP, the same route she hopes they will take in December when they rule on standardised terms.

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