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Southern California Edison (SCE) has issued a request for information (RFI) on the willingness of natural gas suppliers to provide it with up to 250,000 MMBtu/d through a combination of long-term financial instruments and physical natural gas contracts to underpin new power generation load. The physical and financial deals would run from one to 10 years, with progressive start times from June 1, 2006 through Nov. 1, 2010.
Depending on the responses -- due Jan. 18, 2006 -- SoCal Edison may then issue various requests for offers (RFO). The initial RFI will allow the utility to assess the "capability and willingness of suppliers to provide natural gas products under longer-term arrangements." SCE is asking energy industry participants to identify their capabilities to provide various gas supplies, financial hedges, and products such as firm gas transportation and firm storage that provide supply flexibility and reliability.
SoCal Ed said its natural gas requirements are substantial and expected to increase because of new tolling agreements and operation of its new, state-of-the-art, 1,054 MW power plant in Redlands, CA, the Mountainview Project. The first of the plant's two generating units began commercial operation on Dec. 10 and the second is currently scheduled to begin commercial operation early in 2006.
Under the new tolling contracts for power generation SCE is contracting for the power and provides the gas to the generator. The tolling contracts are for its own power supply and for the California Department of Water Resources contracts for power managed by SCE.
Due to variation in SCE's seasonal and daily natural gas requirements, it will consider contracts for both baseload volumes and flexible volume structures. The company also is looking for information regarding both potential new-build and existing infrastructure projects, including LNG. SCE is also interested in information regarding both traditional hedging products (options, swaps, etc.) and new/alternative hedging product proposals.
SoCal Ed is soliciting responses from energy industry participants including, but not limited to, natural gas producers, natural gas marketers, natural gas local distribution companies, natural gas pipeline companies, natural gas storage entities, natural gas developers, and financial institutions. The company noted that contracts lasting five or more years require the approval of the California Public Utilities Commission.
"We want to ensure that there are sufficient and reliable natural gas supplies for our contracts and power plants that are fueled by natural gas and that our customers' exposure to volatile natural gas prices is limited," said Kevin Cini, SCE's director of energy supply and management.
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