In an effort to attract new electricity generation to the southern part of the state, Southern California Edison (SCE) is considering issuing a competitive request for offers (RFO). If released, the RFO would solicit bids for power contracts lasting up to 10 years for new generation facilities that could be online between June 1, 2006, and August 1, 2008.
Due to a technical error, a test SCE Web page containing draft RFO documents was briefly accessible by the public earlier this month, making it possible for some interested parties to review SCE's draft plan. To ensure an open, fair, and transparent competitive solicitation if SCE decides to proceed with the RFO, the utility is making the draft documents public at www.sce.com/NewGenRFO.
The plan that SCE is considering would call for contracts that benefit all customers served from the California Independent System Operator (CAISO) transmission grid in the area known as "SP-15" (Southern California). SCE anticipates limiting the maximum volume contracted under this potential RFO to 1,500 MW and would reserve the right to sign no contracts if no bids were satisfactory.
"There are growing concerns that this part of the state may not have adequate generating capacity in coming years," said Alan Fohrer, SCE's chief executive officer. "We believe an RFO of this type could be an effective transitional measure to help bring new generation to Southern California while state policymakers continue work on a market structure that encourages new plant construction."
Some recent assessments by state agencies such as the California Energy Commission and CAISO indicate that supplies may be tight this summer if extreme conditions develop in the SP-15 area.
These studies predict that supply-and-demand conditions will continue to tighten in the future. In addition to measures already in place or planned -- transmission upgrades and customer conservation, energy efficiency and "demand-response" programs -- new generating resources will be needed to maintain system reliability. Because the design, siting, permitting, and construction of new power plants can take years, SCE believes it is imperative that steps be taken now to ensure adequate supplies for 2006 and beyond.
As a part of SCE's draft RFO plan, the utility would ask the California Public Utilities Commission to support appropriate allocation of new generation costs among SP-15 customers who would benefit from such projects.
Additionally, in the near future SCE expects to release a separate RFO for contracts lasting up to five years for existing generation sources to meet the future needs of customers to whom the utility supplies power. SCE currently supplies approximately 60% of the customer load in SP-15.
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