The five-member California Public Utilities Commission on Thursday split over the fate of an independent power provider's natural gas-fired generation plant, but in the end approved it and a long-delayed gas-fired peaking plant in Ventura County northwest of Los Angeles.
A resolution to authorize the state's major electric utilities to negotiate with Calpine Corp. for new power supply contracts from its gas-fired Sutter Energy Center north of Sacramento was particularly contentious, with a heavily qualified resolution being passed on a 3-2 vote. It prompted Commissioner Timothy Alan Simon to offer his thoughts on the importance of both the shale gas boom and gas-fired electric generation.
Noting that the Sutter generation plant is relatively new (built in 1999), Simon noted that it is a gas-fired, combined-cycle facility. "Those of us in the energy markets know that the price of gas at Henry Hub recently came in at about $2.20 [per Mcf] making the lowest natural gas prices we have seen in recent memory," Simon said. "By all indications from the Energy Information Agency, the Potential Gas Committee and many other experts on this, we are looking at a very long-term supply of natural gas. So I think we should be looking at the benefits of our gas-fired generation can bring to the California market, benefits that will help renewable markets too."
As he has in the past, Simon spoke of shale gas as the most "transformative development" for the U.S. energy sector in a long time. "It is going to have a immense impact, and my concern is that I don't see that dialogue enough here in California as to [shale's] impact on energy supply and its relationship to renewable generation."
Commissioner Mike Florio said the potential deal between Pacific Gas and Electric Co. (PG&E) and Calpine is not "remotely competitive with other options" the combination utility has. Florio called the proposed deal as "out-of-market as you can possibly be." Florio also cautioned against making special deals with one independent power provider, predicting other non utility generators will be coming to the state commission seeking similar treatment. "I think we throw the market into chaos when we do this sort of 'one-off' for one company," he said.
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