Any Californians out there, I would love to hear what Davis has to say tomorrow night. After reading this article I am thinking that bankruptcy of the big utilities is the only way the QFs will get ANY money out of them. I also think that the California PUC will order the sun not to shine more often than every other day this summer. :-/
No cash, no power flowing
ContraCosta times
Published Wednesday, April 4, 2001
Despite PUC guarantees of payment, alternative energy companies have not fired up plants; legislature looks at several bills today
DAVIS TO SPEAK
Gov. Gray Davis will deliver a live statewide address on the energy crisis at 6:05 p.m. Thursday from his Sacramento office.
By Mike Taugher AND ANDREW LAMAR
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A week after state regulators took a series of steps designed to reduce the number of alternative energy producers who have shut down power plants rather than face the risk of not getting paid, those measures have done nothing to improve the electricity supply.
The state's overall demand for electricity this week has been relatively light, so the fact that roughly one-third of the power from alternative producers is unavailable set off few alarms.
But as demand grows in the coming months, the situation threatens to exacerbate summer blackout problems.
"If we do not get this fixed -- and get this fixed in the next couple of weeks -- we are going to have a serious, serious problem this summer," said Jan Smutny-Jones, director of the Independent Energy Producers Association, a Sacramento-based industry group that includes alternative energy companies, called qualifying facilities.
California electricity officials already expect that the state will be short 5,000 to 6,000 megawatts during peak periods this summer. But that figure could increase if the alternative energy firms, which have been keeping about 3,000 megawatts offline during the past month, continue to keep their plants idle.
"The hole keeps getting deeper because we don't keep the power online," Smutny-Jones said.
Meanwhile, Gov. Gray Davis has requested a five-minute block of television time Thursday evening to deliver what his office says will be an important live address on energy matters. Davis' office offered no immediate elaboration on the address, except to say it will contain an important announcement.
The governor two weeks ago prodded the Public Utilities Commission to order the state's financially strapped utilities to pay the qualifying facilities. The commission responded last week by ordering the utilities to pay them for power delivered from that point forward.
The commission also adjusted a formula to lower the amount the qualifying facilities receive for electricity sales and acted to raise consumer electricity rates.
The PUC's hope was that by guaranteeing they would be paid, the companies would agree to fire up their plants and boost the state supply.
So far, that has not happened.
"Basically, the PUC's effect was to worsen the situation," said Bob Sheffield, director of fiber and energy for Gaylord Container Corp., an Antioch cardboard manufacturer that has a 56-megawatt cogeneration power plant.
The Gaylord power plant has been shut down since February, and Sheffield said PG&E owes the company millions of dollars. He said no decision has been made about whether to start selling power, despite the PUC's order that PG&E pay them.
"For the PUC to tell PG&E to pay us is one thing. For PG&E to have the money to pay us, where is all that money going to come from?" Sheffield said.
But the PUC commissioner who pushed through the reforms said the failure of the qualifying facilities to respond is akin to a professional baseball player asking to renegotiate a binding contract.
"Everybody seems to be playing this market to see how much money they can get out of it," and the commission might start studying legal options to force the companies to produce power, said PUC Commissioner Carl Wood.
"We started the cash flowing again. They are in a better position than any of the other creditors," he said. "I don't know what more we can do."
Taken together, PG&E and Southern California Edison owe qualifying facilities $1.5 billion in uncollected bills for electricity delivered since last November. The PUC has not addressed those debts, and the companies dislike the new payment formula adopted last week.
Jack Raudy, a spokesman for 10 renewable energy companies that have formed a committee that could take Edison into bankruptcy, said none of his clients have idled their production because of financial concerns.
But Raudy said his clients, none of which use natural gas for fuel, were also unhappy with the PUC's actions last week.
"I'm sensing a lot of frustration," he said.
Meanwhile, in Sacramento, lawmakers appear content to let the PUC handle the dicey problem of how to pay qualifying facilities and keep them in business. Since a measure to assist the facilities ran into a roadblock in the Assembly two weeks ago, legislators have looked to the PUC to take the lead.
But several major energy bills could be approved by the Legislature today, as lawmakers rush to wrap up business before taking a one-week break for Easter next week.
Some of the pieces of legislation that could be sent to the governor's desk today are:
SB5X by Sen. Byron Sher, D-Stanford. The bill would provide $1 billion for energy efficiency programs and would offer assistance to the poor and a wide range of financial incentives for everything from building highly energy-efficient houses to using less air conditioning.
SB6X by Sen. John Burton, D-San Francisco. The bill would authorize the state to issue up to $5 billion in bonds to finance a public power authority that could build, acquire, finance or operate power plants.
SB28X by Sher. The bill would expedite the process for power plants to win approval and start construction.
In addition, Democratic senators described a closed-door meeting Tuesday with Davis as businesslike. Burton, the Senate president pro tem, said senators raised a number of concerns with Davis.
Senators "want to see what's in the long-term contracts, (are) worried about the cost of the transmission lines, (and are) worried about some of the suggestions about seizing the plants," Burton said.
Alternative energy companies produce roughly between 20 percent and 30 percent of the amount of electricity that can be produced in California. |
