November 29, 2010

A quest by Pacific Gas & Electric to win approval from the California PUC for a new gas generator it wants to build sparked debate last week.

          The PUC should reject this second attempt for the Oakley Project, said the Western Power Trading Forum (WPTF), the Alliance for Retail Markets (AREM) and the Utility Reform Network (TURN).  PG&E previously asked the PUC to OK its purchase of the natural gas combined-cycle facility that was expected to come online in 2014.

          The PUC rejected that idea but approved a series of other supply deals before the utility came back and asked for approval of the Oakley Project to come online in 2016.  The utility argued that by then, a generation shortfall would make it needed.

          Letting PG&E buy the 586 MW plant would make "a mockery" of the procurement process and existing policies designed to promote competition and limit the approval of utility ownership of new resources.

          Much of the reasoning for the approval in the alternate rests on a procedural delay for the long-term procurement process for 2016 and the two pro-competition groups argued if approved, it would encourage more delays by utilities wanting to self build.

          "The commission should not throw up its hands and acquiesce to this latest attempt by PG&E to badger this commission into undermining its own policies in favor of competition and choice," said WPTF and AREM.

          PG&E told the PUC that the ongoing turbulence in the economy continues to threaten the ability to develop new resources in California.  The Oakley Project is highly viable and presents a unique chance to develop a generator that is needed in the state.

          The 2016 timeframe is outside the scope of the original decision, said TURN, and PG&E and the alternate failed to make the case that the generator was needed by then.  The alternate decision said reserve margins could decline to 10.9%, a shortfall of 909 MW, but it fails to incorporate the 973 MW of other supply the PUC approved when it denied the Oakley Project, it added.