By the OGJ Online Staff
HOUSTON, Feb. 22�The California Department of Water signed a fixed-price, 10-year agreement to buy up to 1,400 Mw of electricity from a unit of Tulsa-based Williams, the company said Thursday.
The contract is just the second long-term agreement reached between the state Department of Water Resources (DWR) and a private generator since lawmakers authorized the state to get into the power purchasing business. With California�s two largest investor-owned utilities nearing bankruptcy, the state has stepped to keep the power flowing to consumers. The DWR has been buying short-term energy, while it negotiates long-term contracts with generators, but the going has been slow.
Earlier this month, Calpine Corp. said it signed a 10-year $4.6 billion contract to sell electricity to California, starting in October. Under the agreement, Calpine will provide a constant block of power starting with 200 Mw, and rising to 1,000 Mw by January 2004.
Under the Williams agreement, beginning in April, the company will provide at least 175 Mw of peaking power, increasing to at least 350 Mw by June 1, and to at least 900 Mw by 2006.
With an April start date, the Williams contract will help the state get through the summer when the California Independent System Operator (ISO) is projecting electricity shortages could total thousands of megawatts. Thursday, for the first time since Jan. 13 the ISO canceled all emergency power alerts as electricity supplies increased.
Over the course of the transaction, Williams will provide a mix of peaking power�16 hr/day, Monday-Saturday�and round-the-clock power, the company said. The terms allow Williams to provide up to an additional 500 Mw of power beginning in 2003. Financial and other terms of the transaction were not disclosed.
Williams Chairman Keith Bailey said the company has long advocated long-term power contracts as a major part of the solution to California's energy situation.
�We are aware of credit issues some power suppliers have with California,� he said. �However, we believe we have adequate protection in our contracts to enter into agreements with the state and have confidence that credit issues will be resolved for the long-term.''
In California, Williams has tolling agreements with AES Corp. to supply fuel to and market nearly 4,000 Mw of capacity from three AES-owned generating facilities in Alamitos, Redondo Beach, and Huntington Beach.
Dave Freeman, Gov. Gray Davis�s adviser to the California Department of Water Resources, said the state is pleased with Williams�s cooperation in developing the long-term agreement and looks forward to a �series of contractual agreements in the near future.�
