Sempra Energy’s San Diego Gas and Electric Co. (SDG&E) was directed by state regulators Thursday to develop more locally based electricity generation, including some natural gas-fired plants and repowering. SDG&E now seeks to have nearly 300 MW of additional power under contract by 2018.

In giving a green light with limits to the combination utility, the California Public Utilities Commission (CPUC) turned down a couple of power tolling agreements involving gas-fired generation because the 25-year deals started several years too soon.

The CPUC did approve a 25-year contract with the 35 MW gas-fired Escondido Energy Center that is undergoing a repowering that will boost its capacity to 45 MW. State regulators approved it “due to the project’s relative low cost, small size increase, high viability and environmental benefits from the repowering,” the CPUC said.

In contrast, the 100 MW each Pio Pico and Quail Brush contracts were scheduled to be online next year — four years before the projected added 298 MW of local generation is expected to be needed. “The CPUC found the timing mismatch ultimately to be unreasonable to ratepayers,” the CPUC said.

Instead, for meeting the rest of the 298 MW in 2018, the CPUC, holding its business meeting in San Diego for the first time in years, directed SDG&E to either issue new requests for proposals (RFP) or submit new applications to the CPUC for the Pio Pico and Quail Brush projects that “better matches the timing issue or demonstrates a different showing of need for either of the projects.”

Commissioner Mark Ferron, who had the lead on the applications, said his goal is to “ensure SDG&E can best meet the future needs of its customers while avoiding a situation where ratepayers pay needlessly for new generation.” Ferron said he did not want to run the risk of “paying twice.”

CPUC member Mike Florio said evidence supporting the two gas-fired projects currently is “inconclusive.”

CPUC President Michael Peevey said the five-member regulatory body will reconsider the two projects if SDG&E decides to resubmit them.

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