California Lays Down the Welcome Mat for Renewable Energy Projects

June 21, 2006

A number of recent actions by California regulators, transmission system operators, and utilities are effectively rolling out the red carpet for renewable energy projects. On June 15th, the California Public Utilities Commission (CPUC) assured utilities that they can recover their investments in new transmission lines to access known renewable energy resources. The CPUC noted that the Tehachapi area in Southern California could produce more than 4,000 megawatts of wind power, but new transmission lines to access that resource could cost as much as $1 billion. The CPUC decision gives utilities confidence in pursuing such projects, since they can recover their costs in customer rates. See the CPUC press release.

Meanwhile, the California Independent System Operator (ISO), which manages the flow of power on the state's power grid, has established a four-point program to assure that the grid can accommodate new renewable power plants. The plan includes considering renewable power growth when evaluating proposed transmission projects, avoiding financial disincentives for renewable energy in power marketing, using forecasting and management tools to effectively integrate renewable power into grid operations, and upgrading an existing program that aims to remove barriers for intermittent renewable energy sources. See the California ISO press release (PDF 117 KB). Download Adobe Reader.

Photo of a turbine and generator, with complex industrial equipment in the background, including a tall stack that is emitting steam.

The Leathers geothermal plant in the Imperial Valley is one of many power generators that have agreed to sell their power at a new rate.
Credit: Warren Gretz

Finally, Southern California Edison (SCE) announced in May that it has reached an agreement with its four largest renewable energy suppliers to establish a fixed price through 2012 for its purchases of small hydropower and wind, solar, biomass, and geothermal power. The agreement establishes a price of 6.15 cents per kilowatt-hour, increasing by 1 percent per year, and eliminates any tie to natural gas prices, which had previously caused prices to vary widely. The agreement was reached with Caithness Energy, LLC, which owns wind and geothermal plants; Colmac Energy Inc., which owns a 47-megawatt biomass power plant on the Cabazon Indian Reservation near Mecca; Ormat Technologies, Inc., which owns three geothermal plants in the Imperial Valley; and FPL Energy, which owns wind and solar thermal power plants. In June, six subsidiaries of CE Generation, LLC, all of which own geothermal plants, also signed onto the deal. See the press releases from Edison International (SCE's parent company), Ormat, and CE Generation.