By the OGJ Online Staff
HOUSTON, Mar. 5�California Gov. Gray Davis Monday said the state signed long-term contracts with generators for about 8,886 Mw of power at an average price of $69/Mw-hr, covering about 75% of the state's net short position between now and 2010.
The governor is attempting to line up power from outside sources over and above what the state's investor-owned utilities can produce from their own plants. The 40 separate agreements have terms from 4 months to 10 years and one contract is for 20 years.
The contracts include a diverse mix of more than 20 suppliers and power companies, including Calpine Corp., Duke Energy Corp., Dynegy Inc., Enron Corp., Reliant Energy Inc., and Williams. Other power companies include Sempra Energy, El Paso Corp., Constellation Energy Group Inc., Avista Corp., and PacifiCorp, a unit of the UK's ScottishPower PLC.
It was unclear if the contracts with Duke, Williams, and Calpine were the same or in addition to contracts which the companies have previously reported.
Under terms of the agreements reported by Davis, the average price of the power is $79/Mw-hr for the first 5 years. In the second 5 years the price drops to $61/Mw-hr. The prices include power sold during peak periods, according to the governor. Individual contract terms were not released. He said the prices are 75-80% below today�s spot market prices for power.
Terms of some of the long-term contracts include speeding up construction of new power plants. About 5,000 Mw is scheduled to come on line within 24 months. The 10-year contracts were limited to generators that can provide power supplies starting no later than the third quarter of 2001.
The agreements also include seasonal power exchanges with the Bonneville Power Administration and Powerex, a unit of Canada's BC Hydro.
Besides the long-term contracts, 11 short-term contracts were signed by the DWR. Prices for the short-term contracts have fallen to $228/Mw-hr, down from $330/Mw-hr for short-term contracts before the end of February.
These contracts allow the California Department of Water Resources (DWR) to buy 75% of its power on the day-ahead market. That means 25% of the power required to serve load will still be bought in the more expensive hour-ahead and day-of markets. The DWR is purchasing power on behalf of the noncreditworthy utilities which cannot afford to buy power to serve their customers.
The DWR was authorized to make both short and long-term power purchases under state legislation enacted Feb. 2. DWR has been negotiating long-term contracts to save the state money by getting out of the more expensive real time markets. The state�s independent system operator's load varies from 27,000 MW to 55,000 Mw at summer peak to serve California�s electricity needs.
The governor also is negotiating to buy the troubled utilities� transmission systems.