Calpine Corp. has signed short-term resource adequacy (RA) power supply contracts with California's three major electric utilities to ensure that the natural gas-fired Sutter Energy Center isn't shut down -- at least for now.
In March the California Public Utilities Commission (CPUC) directed Pacific Gas and Electric Co., Southern California Edison Co. and San Diego Gas and Electric Co. to negotiate with Calpine for new contracts from Sutter (see Daily GPI, March 26). Sutter is a gas-fired combined-cycle facility, which Commissioner Timothy Alan Simon said in March would benefit the state in the long run because of the abundance of the domestic gas.
Calpine submitted the contracts to the CPUC for approval and touted the 576 MW combined-cycle plant. It has been in operation since 2001 and has generated more than $2.6 million in property tax revenue, employing 26 people with an annual payroll of $3 million. While the new contracts to keep Sutter alive have drawn strong state support, CPUC's Mike Florio opposed the resolution in March. He questioned whether the contracts were an example of state regulators participating in "crony capitalism" (see Daily GPI, Feb. 21).
However, other commissioners supported the resolution. Without the contracts, the California Independent System Operator and the utilities indicated that the plant could be idled and they would have to rely on older, less-efficient gas-fired plants in the state. Longer-term contracts still would have to be negotiated.
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