News Article

April 30, 2008
Contractor free to seek power-generating contracts
By Marc Benjamin / The Fresno Bee

A public agency that hopes to sell electricity to residents of 12 Valley communities gave the go-ahead Tuesday for its key contractor to shop for power-generating contracts.

The agreement approved by the San Joaquin Valley Power Authority's executive committee gives CitiGroup Energy Inc. six months to secure energy contracts, although the Oct. 15 deadline could be extended.

Under the power supply agreement, CitiGroup Energy must be able to sell electricity to the authority at a rate 5% lower that Pacific Gas & Electric's rates for generation.

Without the 5% discount, the San Joaquin Valley Power Authority will not proceed with its plans, authority officials say.

Generation represents about a third of an average electricity bill. If the authority approves rates 5% less than PG&E, an average household would see about $3.50 savings per month.

Kings River Conservation District administers the program for the power authority and will develop and supply energy for the program.

The authority intends to create rate stability for customers by ensuring electricity costs will not rise more than 2% per year through 2015.

Following Tuesday's meeting, Pacific Gas & Electric officials said they believe the power authority is depicting the utility's rates for generation higher than they may actually be.

"We don't agree that their representation of our rate is accurate," said Jeff Smith, a PG&E spokesman in Fresno.

Another concern for PG&E is a state Public Utilities Commission provision that makes all residents and businesses in communities participating in Community Choice programs power authority customers.

Those customers who want to remain with PG&E for generation are required to opt out of the power authority's service. Customers will get four opportunities to opt out free of charge before being enrolled.

Those choosing to opt out afterward will have to pay a fee that is not yet determined.

But, Smith said, customers should have to choose to receive Community Choice generation.

"We still believe it would have been more fair for customers to be given a choice," Smith said.

The San Joaquin Valley Power Authority could become the first public agency to provide electricity to customers through the state's Community Choice program.

The agency consists of Kings County and the cities of Clovis, Hanford, Sanger, Selma, Reedley, Kerman, Kingsburg, Parlier, Dinuba, Lemoore and Corcoran.

If the plan moves forward, the authority would serve 115,000 customers.

The reporter can be reached at mbenjamin@fresnobee.com or (559) 441-6166.