December 12, 2005
ROSEMEAD, Calif., Dec. 12, 2005—Southern California Edison (SCE) today issued a request for information (RFI) so that the utility can better assess the capability and willingness of suppliers to provide natural gas products under longer-term arrangements.
SCE’s natural gas requirements are substantial and expected to increase because of new tolling agreements and operation of its new, state-of-the-art, 1,054-megawatt power plant in Redlands, California – the Mountainview Project. The first of the plant’s two generating units began commercial operation on Dec. 10 and the second is currently scheduled to begin commercial operation early in 2006.
SCE seeks to mitigate the risk of gas price increases and provide greater assurance of delivery of the natural gas for the time and quantity needed, both for its own gas requirements and for the gas requirements associated with the California Department of Water Resources contracts managed by SCE. Therefore, SCE is asking energy industry participants to identify their capabilities to provide SCE with various gas supplies, financial hedges, and products such as firm gas transportation and firm storage that provide supply flexibility and reliability.
Information is also being sought on potential natural gas products from new infrastructure projects such as liquefied natural gas and new or alternate hedging strategies. One way to hedge natural gas supply and price risk is to use physical delivery arrangements and financial instruments such as options and swaps to protect customers from large price fluctuations.
After evaluating the results of the RFI, SCE could issue one or more requests for offers for natural gas products under long-term contracts. Such contracts could range from 1 to 10 years and could be expected to start between June 1, 2006, and Nov. 1, 2010. SCE contracts lasting five or more years require the approval of the California Public Utilities Commission.
“We want to ensure that there are sufficient and reliable natural gas supplies for our contracts and power plants that are fueled by natural gas and that our customers’ exposure to volatile natural gas prices is limited,” said Kevin Cini, SCE’s director of energy supply and management.
Responses are requested from natural gas producers, marketers, distributors, pipeline companies, and storage entities, as well as financial institutions by Jan. 18, 2006. Submittal instructions, as well as templates for RFI responses to certain products, are available at www.sce.com/GasRFI. RFI responses should be e-mailed to GasRFI@sce.com.
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An Edison International (NYSE:EIX)company, Southern California Edison is one of the nation’s largest electric utilities, serving a population of more than 13 million via 4.6 million customer accounts in a 50,000-square-mile service area within central, coastal and Southern California.