NGI The Weekly Gas Market Report
Even in the wake of the summer’s power crisis and emergencymeasures, San Diego Gas and Electric can’t find any long-term powerpurchase deals to its liking, and, in fact, it has pulled back arequest-for-proposal it had outstanding, soliciting longer-term,fixed price contracts.
“We have no bilateral deals and we are not considering any rightnow,” said a spokesperson for the utility’s holding company, SanDiego-based Sempra Energy.
The California Public Utilities Commission last month on anexpedited basis authorized SDG&E to ink bilateral power supplydeals outside of the state wholesale spot electricity market(Cal-PX). In anticipation of CPUC action, SDG&E earlier hadreleased a request for proposals.
When questioned about nearly two dozen deals that have beenoffered, Sempra’s CEO Steve Baum in the media has said thefive-year duration of the offers was too long, noting that thegenerators would like to get California utilities to panic and getlocked into those deals, which in the later years are likely to beabove-market.
Baum also has appeared to reject hedging in the Cal-PXblock-forward markets, which the CPUC has authorized the utilitydo, noting that he thinks trading is not something utilities can dovery well. The utilities’ focus, Baum said, should be on deliveringenergy. (A Sempra energy trading subsidiary is doing quite well inrecent quarters, but Baum pointed out, that part of the Sempracompanies is prohibited from interfacing with the utility under thestate’s strict affiliate transaction rules.)
SDG&E is “hopeful” eventually of getting some attractiveoffers,” the Sempra spokesperson said.
Under the CPUC authorization, the utility can now purchase powerand ancillary services and various capacity products in thebilateral market. The deals must be “limited” in their volumes andmust expire no later than Dec. 31, 2005, so they are limited to nolonger than five-year deals. The CPUC was unclear on the volumelimits, but if they correspond to those in effect for future-markethedging , SDG&E currently is limited to 1,900 MW in thatregard.
Richard Nemec, Los Angeles
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