California PUC to vote on investigation of QFs

The California Public Utility Commission will decide Thursday whether to investigate the state's qualifying facilities, small generators that deliver electricity to utilities under special contracts. Many of the QFs have not been producing power because they have not been paid by Pacific Gas & Electric and Southern California Edison. The committee representing QFs in Pacific Gas & Electric's bankruptcy protection proceedings reacted with 'disbelief' to the proposed order, a spokesman said.

Apr 19th, 2001


by Ann de Rouffignac
OGJ Online

HOUSTON, Apr. 18 -- The California Public Utility Commission will decide Thursday whether to investigate the state's qualifying facilities, small generators that deliver electricity to utilities under special contracts.

Many of the QFs have not been producing power because they have not been paid by Pacific Gas & Electric Co. and Southern California Edison Co. In at least one case, a judge has permitted a QF to sell power to a third party after the utility defaulted on its payments to the company.

The PUC said it wants "to identify the performance obligations of QFs, determine which QFs are failing to perform, or have announced intentions to do so, and take additional steps to ensure the availability of QF generation to California at reasonable prices," according to the draft order.

QFs were created under the auspices of Public Utility Regulatory Policies Act of 1978 (PURPA) and are governed by the Federal Energy Regulatory Commission. The PUC, however, said it has the primary role in calculating payments and in overseeing the contractual relations.

The Renewable Energy Creditors Committee representing QFs in Pacific Gas & Electric's bankruptcy protection proceedings reacted with "disbelief" to the proposed order, said spokesman Jack Raudy.

"It was the failure of the utilities to perform their payment obligations to QFs which have threatened their ability to provide energy to California," he said.

"The only lawful obligations that the commission should discuss are the obligations the utilities have to honor their contracts with renewable energy generators and other QFs by making back payments and continuing the meager payments they have begun."

Wednesday was the deadline set by the PUC for utilities to pay QFs for electricity delivered after March 27. According to Raudy, most renewable QF facilities received payment for the energy but not all received a complete capacity payment. And, he said, there was not a penny for past due bills.

The QFs have played a pivotal role in the ability of the California Independent System Operator to avoid blackouts. Together, they represent about 11,000 Mw or 22% of the state's electric generating capacity. The ISO ordinarily can count on about 6,000 Mw being available at any one time because much of the capacity is wind power and that varies.

However, about 3,000 Mw of QF production has been off line because of the owners haven't been paid since November. Owners of renewable energy facilities claimed they are owed $700 million in past due bills.

If the PUC adopts the order, each utility must submit to the PUC within 7 days a report that contains the following:

� Contractual and other legal obligations of qualifying facilities to the utility.

� Tabulation of megawatt hours delivered, not delivered, and capacity withheld in the past 12 months under each QF contract.

� Description of any declarations by QFs that intend to withhold future deliveries.

Contact Ann de Rouffignac at Annd@OGJOnline.com

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