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STILL PICKING UP THE PIECES

The debate over restructuring California's electric utility industry has left the state's disallowed auction of renewables contracts under the Biennial Resource Plan Update (BRPU) wallowing in the unknown. Over 1300 MW of nameplate wind power capacity is caught up in the mess. While the California Public Utilities Commission (CPUC) has not made any solid moves, utilities continue to try and negotiate separate settlements with winning BRPU bidders.

The latest development on this front comes from San Diego Gas & Electric (SDG&E) which has established a $10 million incentive pool to secure contract buy outs or option arrangements with Kenetech, SeaWest and others on a pro-rata basis according to projected amounts of energy. In the auction Kenetech won approximately 52.5 MW and SeaWest 16 MW of effective capacity. Under the proposal, SDG&E would have the sole discretion to buy power between June 1, 1998 and June 1, 2002 at a "fixed priceƉwith later conversion to market price."

SeaWest Energy has made an alternative offer: an 85 MW firm renewable capacity power purchase agreement with annual energy deliveries of 750,000,000 kilowatt hours with prices starting at $0.0585/kWh. The power prices would escalate at 3.5% annually for 20 years; SDG&E would have the option of extending the purchase another 30 years at a discount price to be negotiated.

Meanwhile, Pacific Gas & Electric has also been talking to SeaWest, which has made a similar "buy or buy out" offer to the utility. SeaWest won approximately 163 MW (33 MW effective). Talks continue with Kenetech, too, which won a contract for 20 MW effective capacity, and have been initiated with Zond Systems (8 MW effective). Zond's Hap Boyd notes that "our bottom line is that winning bidders should recover their sunk costs," referring to bid preparation, permitting, land purchase and other costs.

Southern California Edison has already negotiated such settlements, covering about 95% of the projects it would have been required to purchase power from under the BRPU. Kenetech remains the only wind developer to have secured an option arrangement for 37.5 MW of new wind capacity with options to build as much as 450 MW of nameplate capacity.

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