SCE to Pursue Long-Term Natural Gas Contracts

March 08, 2006

March 8, 2006

Planned solicitation would differ from common gas procurement strategies

ROSEMEAD, Calif., March 8, 2006 – Southern California Edison (SCE) today announced plans to issue a request for offers (RFO) in April 2006 for natural gas supply contracts and financial hedge products of up to 59 months in duration.

The utility received a robust response to its Dec. 12, 2005, request for information from the natural gas industry regarding available supply products.  Numerous potential suppliers responded, offering a wide range of products based on multiple delivery locations. 

“Our natural gas requirements are substantial and growing due to California’s dependence on this fuel for roughly half of its electricity generation,” said Pedro Pizarro, SCE senior vice president of power procurement.   “We intend to solicit longer contracts than are common in today’s market to protect our customers from the degree of short-term price volatility seen during 2005.”

In this competitive solicitation, SCE will seek bids for natural gas supplies and financial hedge products for its “tolling*” generation agreements, its new Mountainview power plant in Redlands, Calif., qualifying facilities contracts, and the California Department of Water Resources (CDWR) “tolling” contracts managed by SCE.   Bids associated with CDWR contracts would be implemented through contracts with that agency.

In addition to traditional contract products, SCE will specifically invite proposals for gas supply for new infrastructure projects, such as liquefied natural gas facilities and new pipeline capacity.

“We urge those who may participate in the upcoming RFO to contact SCE immediately and begin preparation of enabling and credit agreements,” said Kevin Cini, SCE’s director of energy supply and management.  “Such agreements will be needed before awards can be made at the end of the RFO process, which may progress rapidly.”

Interested suppliers are encouraged to review SCE’s and CDWR’s current standard enabling agreements and credit support agreements for natural gas products and financial derivatives at www.sce.com/GasRFO.   Supplier questions about the April RFO can be addressed to GasRFO@sce.com.   RFO documents, submittal instructions and transaction-specific terms and conditions will be available at www.sce.com/GasRFO in April. 

*Tolling contracts are agreements between electricity buyer – in this case SCE, and independent wholesale power sellers – that require the buyer to contract for the natural gas needed to generate the power.

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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.