San Diego Gas & Electric
SAN DIEGO, March 9, 2007– San Diego Gas & Electric (SDG&E) today announced it is launching a competitive bid process for new electricity resources that will be needed for reliability starting in 2010. Overall, SDG&E is seeking a minimum of 700 megawatts (MW) of energy through a combination of demand-response (conservation) and generation projects.
“We currently have several power contracts with the California Department of Water Resources that will expire over the next few years and that electricity must be replaced,” said Terry Farrelly, SDG&E’s vice president for electricity and gas procurement. “This latest solicitation is the next step in implementing our long-term resource plan to make sure we can meet our customers’ energy demands now and in the future.”
Through the bidding process, also known as a “request for offers,” or RFO, SDG&E seeks the following resources:
1. Energy saved through new “demand-response” contracts with local businesses, which agree to reduce their electricity use during times of critical demand in exchange for a lower rate or other incentives. This is consistent with California’s priority of preferred, environmentally sound resources for utilities in increasing energy supplies. The more energy SDG&E can save through demand-response projects, the less the utility will need to buy from conventional energy sources.
2. At least 200 MW of electricity from new “peaker” plants within the SDG&E service territory. Peakers are small, efficient power plants that are used only during peak periods and can be activated or shut down quickly – usually within 10 minutes – to meet sudden surges in electricity demand.
3. About 500 MW of generation from a power plant in or outside SDG&E’s service territory that could run around the clock.
A megawatt is enough energy to power about 650 homes.
SDG&E will assess all conforming bids according to the CPUC’s adopted regulatory framework to determine which resources best meet customer needs at the lowest cost. This evaluation process includes active participation by SDG&E’s Procurement Review Group, comprised of CPUC staff, consumer advocates and other non-market participants, as well as an independent evaluator. These entities are involved at all stages of the RFO process, including the preparation of the RFO, bid evaluation and determination of the final “short list” of bidders. Once the evaluation process is completed, all proposed contracts are subject to CPUC review and approval.
Although SDG&E is not specifically seeking renewable resources in this RFO, the utility is encouraging bidders with renewable offers to participate in a renewables-only RFO that will be issued later this month and will be evaluated in parallel with the RFO announced today.
SDG&E also will evaluate in this RFO the option to acquire the 480 MW El Dorado Energy power plant in Boulder City, Nev., which is owned by a Sempra Energy subsidiary. Under the terms of a settlement agreement between Sempra Energy and California state agencies in October 2006, SDG&E has the option to purchase the plant for book value in 2011. The CPUC has estimated that purchasing the 6-year-old natural gas-fired El Dorado plant at book value would save SDG&E customers more than $100 million compared to building or acquiring a brand-new plant.
The energy provided through this latest RFO is needed in addition to the planned Sunrise Powerlink transmission line, which will bring about 1,000 MW of clean, renewable energy to San Diego from the Imperial Valley. The Sunrise Powerlink is supported by a broad range of businesses and trade groups that count on the availability of reliable power to keep the regional economy strong.
More information about the RFO is available at www.sdge.com/2010-2012capacityrfo/
San Diego Gas & Electric is a full-service energy utility that serves 3.4 million consumers through 1.3 million electric meters and more than 825,000 natural gas meters. Its service area spans 4,100 square miles and includes more than 125 communities from Southern Orange County to the Mexican border. SDG&E is a regulated subsidiary of Sempra Energy (NYSE:SRE). Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company. To learn more, go to www.sdge.com.