PG&E Comes to Terms with 131 QFs, Assumes Contracts

Pacific Gas & Electric Co. signed five-year agreements with 131 of its qualifying facilities (QFs) last week, ensuring the utility and its customers will receive a reliable supply of electricity at an average energy price of 5.37 cents/kWh. The contracts represent nameplate capacity of 2,950 MW compared to PG&E's total QF contract nameplate capacity of 4,400 MW. On an average annual basis, the company receives 2,400 MW from all of its QFs, and the 131 QFs represent 1,600 MW of the total amount.

The terms require the PG&E Corp. utility to assume the QF contracts and pay the $740 million in pre-petition debt on the effective date of PG&E's reorganization plan. The total amount the company owed to QFs when it filed for Chapter 11 was $1 billion.

By locking into the average fixed cost, the utility will help protect its customers from the price fluctuations in the wholesale market. A recent CPUC decision (D.01-06-015) allowed QFs to enter into long-term contracts at an average energy price of 5.37 cents/kWh.

"This will help bring stability to the market and allow our customers to receive reliable power at reasonable costs," said Joe Henri, Pacific Gas and Electric Company's director of electric portfolio management.

Each of the agreements requires formal approval from the U.S bankruptcy court. Several of the agreements have already been approved, and the company will be making filings for the remainder in the near future.

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