Thursday, December 13, 2007

PG&E's Not Happy

PG&E has its knickers in a twist over the California Department of Water Resources' decision to renogiate its deal with Calpine.

Under the original deal, struck in 2001 during the market melee, Calpine would provide 1,000 MW, 24-7, to DWR. When Calpine tried to wiggle out of the contract after it went BK, DWR balked, claiming the move would cost consumers as much as $200 million.

Fast forward...

Calpine is about to exit BK and DWR has done a 180 and renogiated the deal which now stipulates that DWR will buy 82% less power from Calpine, saving the agency about $1 billion.

That means PG&E will have to fill in the gaps-- an expensive proposition that PG&E plans to pass on to ratepayers, which it claims would be a crime against humanity.

Just when I thought that we now live in a parallell universe where government agencies actually make prudent fiscal decisions and major utilities act as consumer advocates, DWR restored my faith in the bureaucracy by calling on the PUC to "restore the equity that was in place [in the original Calpine deal]" by offsetting some of PG&E's costs.

PG&E Criticizes Revamped Calpine Power Pact [Los Angeles Times]