Utilities may bid for Calpine's electricity

The state Public Utilities Commission has approved having three state investor-owned utilities begin negotiating contracts with Calpine Inc., giving at least a temporary reprieve to the Sutter Energy Center.

Commissioners approved the item Thursday on a 3-2 vote, with those in support saying they feared the effect on Sutter County's economy if the plant didn't get energy contracts soon, while opponents said a bad trend could result if other contract-starved plants line up to do the same.

"Ultimately, I can't say this item represents good value for the ratepayer or a good precedent going forward," said Commissioner Mark Ferron before he voted against the resolution.

The plant, along South Township Road west of Yuba City, faced a potential shutdown because of a lack of contracts to sell energy, according to Calpine officials. Elected bodies and economic development groups in Yuba and Sutter counties pushed to keep the plant open and testified in favor of the res lution earlier this month.

Joe Ronan, a senior vice president with Calpine, said his company sees the vote as good news.

"We're honestly relieved and happy. We're happy for the people in Sutter County," he said.

Commissioner Timothy Alan Simon, who voted in favor of the resolution, said he took the plant's relative newness — it began operating in 2001 — into account.

"I'm puzzled why we would want to retire, or create a situation where we might retire, a relatively new plant with new technology," he said during the commission meeting in San Francisco.

Sutter County Supervisor Larry Munger said he felt the same way, adding while there might not be enough electrical demand for the plant now, there will be in a few years as the economy recovers.

"You'd never get it built if you had to do it again," he said. "At least now, they have a chance to go out and sell the power."

Still, the move doesn't ensure the plant's continued operation. One commissioner who said she wanted to stress the resolution asked the utilities to negotiate with Calpine for a contract, but didn't require them to finalize one.

The commissioner, Catherine Sandoval, also said she wanted assurances the resolution wouldn't result in a overly lucrative contract, with ratepayers seeing higher bills as a result.

Thursday's vote opens a 30-day window for the utilities — Pacific Gas & Electric Co., Southern California Edison Co. and San Diego Gas & Electric Co. — and Calpine to agree on a contract.

The combined contracts can't be worth more than $17.9 million, though some commissioners doubted the utilities would be willing to pay near that amount.

Ronan said he is hopeful a request by the commissioners to allow the contracts to extend beyond the end of 2012 could give both sides some long-term stability.

"We have to successfully negotiate a contract," he said. "One would hope we could work something out."

At the same time, the state Independent system operator is requesting a waiver from the Federal Energy Regulatory Commission to keep the plant active, though Ronan said the waiver won't be necessary if Calpine can get a contract for Sutter Energy.

According to Calpine, the plant employs 26 people and generates more than $2.6 million annual property tax.

CONTACT Ben van der Meer at bvandermeer@appealdemocrat.com or 749-4786. Find him on Facebook at /ADbvandermeer or on Twitter at @ADbvandermeer.