Renewables Provide Stable Prices for Calif. Utility

May 7, 2006 – Vol.11 No.7

RENEWABLES PROVIDE STABLE PRICE FOR CALIFORNIA UTILITY.

With the exception of electricity generated from biomass-fueled power plants, there is no fuel cost associated with wind, solar, geothermal and small hydro electric power. Once built, renewables should supply power at a predictable if not consistent price for decades. Though unpredictable actions by Mother Nature can change energy output, such as a drought reducing water supply behind a hydroelectric dam, renewable energy technologies should produce power year after year at a cost predicted even before the facility is built.

That kind of price stability and consistency should be very attractive to managers in the power generation business.

Conversely, of course, the price of fossil fuels for power generation - particularly natural gas - is volatile and unpredictable. Global fuel supplies - reserves - are determined by educated guess. The words and whims of political leaders can cause prices to skyrocket or crash. Sometimes furious Mother Nature can halt fuel supplies in a swat.

That kind of price instability should make managers run to renewables.

Managers at Southern California Edison (SCE) clearly like the stability renewables can offer. The company has announced that it has secured a fixed price for renewable power from four of its major renewable energy providers: Caithness Energy, Colmac, Ormat and FPL Energy. A price of 6.15 cents per kilowatt hour, with a one percent increase every year beginning in the second year, will be in effect until 2012.

The renewable energy provided by the four companies represents about 45 percent of the renewables SCE buys for its customers. SCE says it does not profit from acquiring electricity for its customers: It provides this service at cost.

The president of Caithness Energy, which is SCE’s largest supplier of renewables said that the pricing plans provide revenue certainty for existing plants and will help attract investment in new renewables for SCE customers.

The utility is keeping the doors open for additional fixed price offers until the end of business on May 19, 2006. Another Request for Proposals for renewable energy will be issued this summer. Visit SCE at http://www.edisonnews.com/