SDG&E Pulls Back from New Deals Despite Expanded Authority
Even in the wake of the summer's power crisis and emergency
measures, San Diego Gas and Electric can't find any long-term power
purchase deals to its liking, and, in fact, it has pulled back a
request-for-proposal it had outstanding, soliciting longer-term,
fixed price contracts.
"We have no bilateral deals and we are not considering any right
now," said a spokesperson for the utility's holding company, San
Diego-based Sempra Energy.
The California Public Utilities Commission last month on an
expedited basis authorized SDG&E to ink bilateral power supply
deals outside of the state wholesale spot electricity market
(Cal-PX). In anticipation of CPUC action, SDG&E earlier had
released a request for proposals.
When questioned about nearly two dozen deals that have been
offered, Sempra's CEO Steve Baum in the media has said the
five-year duration of the offers was too long, noting that the
generators would like to get California utilities to panic and get
locked into those deals, which in the later years are likely to be
Baum also has appeared to reject hedging in the Cal-PX
block-forward markets, which the CPUC has authorized the utility
do, noting that he thinks trading is not something utilities can do
very well. The utilities' focus, Baum said, should be on delivering
energy. (A Sempra energy trading subsidiary is doing quite well in
recent quarters, but Baum pointed out, that part of the Sempra
companies is prohibited from interfacing with the utility under the
state's strict affiliate transaction rules.)
SDG&E is "hopeful" eventually of getting some attractive
offers," the Sempra spokesperson said.
Under the CPUC authorization, the utility can now purchase power
and ancillary services and various capacity products in the
bilateral market. The deals must be "limited" in their volumes and
must expire no later than Dec. 31, 2005, so they are limited to no
longer than five-year deals. The CPUC was unclear on the volume
limits, but if they correspond to those in effect for future-market
hedging , SDG&E currently is limited to 1,900 MW in that
Richard Nemec, Los Angeles
©Copyright 2000 Intelligence Press, Inc. All rights
reserved. The preceding news report may not be republished or
redistributed in whole or in part without prior written consent of
Intelligence Press, Inc.