Even as California’s new governor-elect and various stakeholders emphasize more electricity from renewable sources, the initial proposed power procurement plans by two of the state’s major electric utilities last week emphasized new natural gas-fired power plants. And one those plants is the controversial one that Southern California Edison Co. is attempting to develop with an unregulated affiliate owned by its parent, Edison International.

Knowing it is in for an intense regulatory fight from consumer and merchant power interests over its proposal to assume the development of a now-stalled merchant plant east of Los Angeles near Redlands, CA, the Edison utility filed extensive rebuttal testimony supporting its takeover of the Mountainview Power Project as being in its consumers’ best interests. And the utility consumer group, TURN, agreed with Edison’s conclusion that the plant is needed.

While keeping some of the bottom line figures confidential, Edison updated its cost-effectiveness analysis to address what it called “some of the issues raised” by intervenors like the California Public Utilities Commission’s independent consumer unit, the Office of Ratepayer Advocates (ORA), and the California Independent Energy Producers, representing the merchant generation sector.

The important factor in the procurement planning to consider is that Mountainview represents more than 1,000 MW of gas-fired generation, and in its filing last Tuesday to the CPUC, San Diego Gas and Electric Co. proposed some creative ways to untap two currently approved, but not constructed two new gas-fired baseload power plants in the north and south end of San Diego County. Those two plants collectively represent another 1,100 MW.

Even with their push for more renewables and receipt of several dozen bids in that sector, the collective megawatts do not add up to anything close to the three gas-fired plants’ collective capacity, or even one plant’s output.

With the politically and economically sensitive Otay Mesa plant figured in its mix, Sempra Energy’s SDG&E utility said it applied late last Tuesday with the CPUC for its plan, while Edison’s utility must now winnow through its proposals and come up with a short list of suppliers with which to hammer out contracts it can take to state regulators. A hearing on the Mountainview project is already ongoing at the CPUC.

The state’s newly crafted multi-agency “energy action plan” and the CPUC are pushing the utilities to sign up for more power from renewable sources, but Sempra Energy’s emphasis appeared to be on the two new natural gas-fired plants. Overall, SDG&E said its plan represents $600 million in capital expenditures — more than 1,100 MW from two major baseload plants; 45 MW from thermal peaking plants; 40 MW from renewables; and up to 30 MW from demand reduction programs with large industrial customers.

While previewing a 10-year deal for 570 MW with Otay Mesa’s developer, Calpine Corp., starting in 2007, SDG&E said it is proposing to the CPUC a “mix of demand response and location generation assets, including energy from renewables” as part of its electricity buying program starting in 2005. The utility is looking at a portfolio over the 2005-07 period of renewables, along with purchase of 550 MW from its affiliate, Sempra Energy Resources’ new Palomar Power Plant that received state approvals earlier this year.

The Rosemead, CA-based Edison utility announced it had received 45 contract proposals from 37 bidders, representing about 5,000 MW of power collectively. Edison said the bids represented “a broad spectrum” of sources, including biomass, geothermal, small hydro, solar and wind power.

“After evaluating proposals, we will develop a short list of least-cost projects that fit our customers’ energy needs and begin negotiations with those bidders,” an Edison utility spokesperson said Wednesday. “Any executed power purchase agreements resulting from these negotiations will be submitted to the California Public Utilities Commission.”

In a press conference in San Diego, SDG&E laid out its overall procurement plans as filed with the CPUC, but noted that “several steps” regarding the potential agreement with Calpine must be completed “before this agreement can create the full benefits for San Diego and the state.”

Among those steps are expedited approvals for corresponding electric transmission system upgrades in the southern end of SDG&E’s territory, and a state contract with the Department of Water Resources (DWR) allocated to the San Diego utility would have to be shifted to San Francisco-based Pacific Gas and Electric Co. The power in that DWR contract is generated in the PG&E utility territory, Sempra’s utility said.

Like Edison, although on a separate time schedule, SDG&E submitted a long-term resource plan to state regulators last April, followed by a request-for-proposals (RFP) for supplies last May, for bulk power starting in 2005. It received 22 bids, representing what its officials called a “variety of resource types,” including demand-reduction proposal by major power users.

“We were very pleased with the number of strong proposals we received, and we are confident that the resources we recommend today are reliable, low-cost and environmentally superior,” said Lad Lorenz, SDG&E’s vice president for electric/gas procurement. “This combination of generation assets is at least 30% more fuel-efficient than existing power plants in the region.”

As part of the state regulatory-directed process now that private sector electric utilities are back in the power-buying role that the state assumed in 2001-02, SDG&E said it subjected all of its bids to what it called “several months of analysis and negotiation to ensure that the different proposals were fairly evaluated and than an appropriate mix of resources was chosen.” A CPUC-created “procurement review group” gave review and advice to the utility during this year’s procurement process.

In addition, the San Diego utility said that “an independent third-party observer” monitored all of the utility’s negotiations with its affiliate on the Palomar Plant and with Calpine on the Otay Mesa facility.

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