Another 555 MW of new generation were officially brought online in California Monday by a now familiar pair–Gov. Gray Davis and Calpine Corp.CEO/founder Peter Cartwright–bringing to 1,400 MW the total for three new plants the governor has helped launch over the past two weeks. This one is Los Medanos Energy Center in the East San Francisco Bay industrial town of Pittsburg.

The $350 million natural gas-fired, combined-cycle plant is a cogeneration facility that will also deliver electricity and steam to USS POSCO for use in its industrial processing. The governor called the new power plant “a vital part of our summer energy solution.”

In the midst of a summer in which the threat of blackouts has loomed continuously, California’s governor and the state’s leading home-based power plant developer/operator, San Jose, CA-based Calpine, are trying to gain as much public recognition as they can for the state’s new generation capability.

Davis called the plant opening another sign of “progress toward energy independence, but only the beginning” for the state, promising another 2,600 MW by the end of September from a variety of sources, including new peaking plants, repowering of idled units, renewables and distributed generation. “At no other time in California’s history have so many new power plants been under construction and in the pipeline.”

Calling Los Medanos an example of “excellence in power generation,” Calpine’s Cartwright repeated his commitment to the California market where Calpine currently has three other power plants under construction and six others proposed as part of a $6 billion energy initiative in the state through 2005. By that time, Calpine expects to have 12,000 MW on line in California.

One of the plants now being built is an 880 MW complex in another part of Pittsburg, at a Dow Chemical facility.

While employing the most efficient and environmentally clean technology available for gas-fired generation, Calpine is making deals with the state for long-term contracts assuring five- and 10-year revenue streams for its new plants. Those contracts, however, are increasingly coming under criticism as needing renegotiation as part of settlements between power producers and the state of California.

Legislators, consumer activists and regulators have become increasingly uneasy about the state’s long-term contracts in the face of recent sharp drops in spot power and natural gas prices. Even Davis signaled last Friday that he would be open to renegotiating some of the contracts as part of ways for the state to receive “refunds” that are expected to be ordered by the Federal Energy Regulatory Commission.

But even with renegotiation and refunds, the state is facing the likelihood of additional electricity rate increases to cover the full cost of the state water resources department’s venture into buying wholesale bulk electricity since January.

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