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PG&E Seeks Additional Summer Power from IPPs

PG&E Seeks Additional Summer Power from IPPs

Pacific Gas and Electric Co. and California's independent power producers with qualifying facility (QF) contracts have cut a deal to free up excess power from the merchant generators to help handle demand spikes anticipated during this summer's heat waves. The California Independent Energy Producers (IEP) expect to have an advice letter filing with state regulators by the end or April to free up as much as 1,000 MW of power in the summer. Thin ancillary services supplies last summer caused record price spikes.

Under an enabling agreement approved in mid-April, the IEP members will be free to sell surplus electricity above their contract commitments to PG&E's utility to third parties, including the nonprofit, state-chartered Independent System Operator running the transmission grid.

"We're pretty excited about it," said IEP executive director Jan Smutny-Jones. "We think it is a good first step and we are hoping this will get everyone more familiar with QFs going into the market. It is a pretty significant development."

Smutny-Jones noted that the utility and power producers hope the extra electricity helps the ancillary services market, compared to last year. He calls it a "market means" of creating more depth in those markets. The 1,000 MW surplus estimate is a maximum figure, he said, noting it should at minimum provide several hundred megawatts of extra power. The generally smaller QF producers operate a variety of power plants, using natural gas, cogeneration, biomass, geothermal, solar and wind.

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