The California Public Utilities Commission Thursday tookadditional action to build backfires against retail electricityprice shock by authorizing San Diego Gas and Electric to inkbilateral power supply deals outside of the state (Cal-PX)wholesale spot electricity market. In anticipation of CPUC action,SDG&E earlier had released a request for proposals, and willmost likely repeat that action, according to officials with SempraEnergy, SDG&E’s parent company.

“One of the goals of allowing SDG&E to enter into long-termcontracts is to allow (the utility) to lock-in fixed prices forsome of its energy needs,” the CPUC’s news announcement on theaction stated. “SDG&E can enter into these long-term contractswith electric generators, and is encouraged to enter into contractsthat will bring new energy supplies to California.”

The beleaguered San Diego-based utility, whose public approvalratings are below 25 %, according to its own consumer opinionpolls, can now purchase power and ancillary services and variouscapacity 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. TheCPUC was unclear on the volume limits, but if they correspond tothose in effect for future-market hedging , SDG&E currently islimited to 1,900 MW in that regard.

“I want to commend the CPUC because each time the utilities havecome to them for expanding their buying authority they have grantedit, and I think that is a big help,” Cal-PX CEO George Sladoje tolda FERC hearing in San Diego recently while noting that buyers onthe block forward markets have saved some $600 million so far in2000.

“There have been offers to sell supplies for five years in thismarketplace, but we are seeing nothing on the buy side” Sladojesaid. “No nibbles. We do have the opportunities for hedging,however.”

Pacific Gas and Electric Co. and Southern California Edisonrequested and received CPUC authority to make bilateral dealsearlier in the summer, but neither has reported any t purchasesoutside the Cal-PX. Both have done substantial trading in theblock-forward markets at the Cal-PX, something SDG&E has beencriticized for not doing since the onslaught of skyrocketingelectricity prices in June.

A PG&E electric utility spokesperson said Thursday that theutility is reviewing bilateral bids, but it hasn’t as yet signedany contracts.

One industry source who preferred not to be identified said thatSDG&E still has not done much trading, and in fact, it employsonly one person as a trader, and that person has been on vacationin recent weeks. SDG&E’s parent company, Sempra Energy,operates one of the top 15 largest energy trading operationsnationally, and reported substantial increases in profits for thefirst half of this year, mainly attributable to its electricity andgas trading in the U.S. and Europe.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.