September 20, 2005
ROSEMEAD, Calif., Sept. 20, 2005 –Southern California Edison (SCE) today discontinued the request for offers (RFO) process it began on April 22 seeking long-term power contracts to bolster regional power supplies. The utility cited a lack of support for the plan as the reason for its decision.
In a memo issued Sept. 9 by the California Public Utilities Commission, the commission did not accept key provisions of the SCE plan – the utility entering into power contracts on behalf of all SP-15 participants and allocating a proportional share of contract benefits and costs to all participants.
“We were attempting to help the state address a serious power supply dilemma – inadequate new plant construction in Southern California,” said SCE CEO Alan Fohrer. “However, consensus does not yet exist among regulators and market participants regarding who should issue contracts in support of overall system reliability.”
SCE had proposed issuing long-term contracts for up to 1,500 megawatts of new generation capacity on behalf of all retail power providers using the southern or “SP-15” part of the state-managed power grid. Under the proposal, contract costs and benefits would be shared by all entities that depend on a reliable grid to serve their customers. Long-term contracts are essential if developers are to finance new plant construction.
SCE offered its interim approach to attracting new plant investment after assessments by state agencies such as the California Energy Commission and the California Independent System Operator indicated that supply-and-demand conditions in the SP-15 area would continue to tighten in the future and that new generating resources would be needed to maintain system reliability. Because the design, siting, permitting, and construction of new power plants can take several years, SCE believed it was imperative that steps be taken now to ensure adequate supplies for 2006 and beyond.
“SCE will continue to meet its customers’ needs through short- and medium-term contracts with available resources. For example, SCE has received a robust response in its current five-year solicitation and expects to finalize new contracts on Oct. 4,” said Fohrer. “We urge the commission to immediately initiate a proceeding to address the need and means to construct new generation to support Southern California grid reliability, including an examination of an equitable allocation of costs to all beneficiaries of new generation.”
How SCE secures power for its customers:
- On a peak-consumption day, customers of SCE and other retail providers in SCE’s service territory need almost 22,000 megawatts (MW) of electricity. One MW is enough electricity to power approximately 650 average homes.
- Approximately 30% of the power needed by SCE customers comes from utility-owned hydro, coal, and nuclear plants. SCE soon will add the new 1,050-MW Mountainview natural gas plant in Redlands, Calif., to its portfolio. Utility-owned generation tends to be the least expensive of SCE’s electricity sources.
- SCE is the nation’s leading purchaser of renewable energy. Approximately 18% of SCE’s power comes from energy sources such as wind, solar, biomass, geothermal, and small hydro facilities. The national average is less than 3%.
- The balance of the electricity SCE delivers to customers is purchased from independent power providers, currently through contracts of five years or less. SCE uses open, competitive contract solicitations to secure least-cost, best-fit power contracts. The utility has issued nine such solicitations during the past three years, the most recent occurring on Sept. 9, 2005.
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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.