News Article

January 4, 2008
Energy outlook variable on plans
By Gabriel Dillard, Michael Sullivan, Tainese Arceneaux and Steve Sinovic / The Business Journal

According to a California Energy Commission forecast, the state's two major public utilities will need to provide 46,685 gigawatts of electricity in 2008. This is an increase of nearly 8 percent from 2005.

To meet that demand, the Pacific Gas & Electric Company and Southern California Edison are scrambling to add energy from renewable sources to their portfolios. A state law requires utilities to have 20 percent of their energy in renewables by 2010.

Both utilities have acknowledged they will probably miss that mark by a couple of years, but the ensuing rush should mean opportunity to renewable energy firms in the New Year.

"It will be a challenge to get to 20 percent, but it will drive significant investment," said Scott Cunningham, vice president of investor relations for Edison International.

PG&E currently has about 12 percent renewable energy, while Edison has about 17 percent.

On the non-renewable front, 2008 should see movement on a variety of power projects. The California Energy Commission will take a final vote to approve the license for the 120-megawatt Starwood Power Project near Mendota on Jan. 16.

In addition, the bulk of the review process for the Kings River Conservation District 500-megawatt Community Power Plant near Parlier will take place in 2008. The natural gas-fired plant will provide energy for the San Joaquin Valley Power Authority -- a consortium of cities and agencies opting out of purchasing energy from PG&E and Edison.

According to PG&E, the plan will introduce energy instability for energy users involved. The plan is to switch all energy loads from PG&E to KRCD in 2008. KRCD is currently negotiating a power purchase agreement with CitiGroup Energy to provide this electricity from the open market.

According to Jeff Smith, a PG&E spokesperson, there are still questions as to whether the power authority can pull this off.

"It's really asking customers to take a leap of faith on rates by not answering these questions," Smith said. "We don't have a financial stake in terms of the bottom line, but we think this may not be the best deal for customers."

According to David Orth, general manager for KRCD, the utility is attempting to sabotage the plan that promises its customers energy discounts over PG&E.

"It's an unnecessary distraction that won't go away," Orth said last month.

While these energy variables play out in 2008, PG&E is warning customers that their natural gas bills are likely to go up 5 percent this winter compared to last year. According to PG&E, average gas bills for December are expected to be $80.18. The increase is driven by a 14.5-percent higher cost of purchasing natural gas.