In February 2009, Pacific Gas & Electric (PG&E) filed a five-year programme to develop 500 MW of solar electric projects within its distribution grid. Under the proposal, ownership of the solar projects would be split between PG&E and non-utility power producers.
PG&E would invest US$1.45 bn in its 250 MW of solar projects, and execute contracts for the remaining 250 MW that will be owned by non-utility developers. The size of the solar projects would range from 1 MW to 20 MW of capacity.
The Division of Ratepayer Advocates (DRA), an independent consumer advocacy division of the CPUC, says PG&E’s proposal (A.09-02-019) would authorise the utility to purchase solar generation facilities that could cost millions of dollars more than necessary for utility customers.
Ruling would inflate cost for solar electricity
The record before the CPUC shows that current market prices for similar competitively bid contracts for renewable energy from solar PV facilities is “actually much lower than what PG&E will be able to spend” if the CPUC approves an Alternate Proposed Decision by President Michael Peevey.
“The Alternate Proposed Decision would raise rates unnecessarily high and make solar PV less affordable throughout the market,” explains Dana Appling of DRA. “PG&E’s plan would create upward pressure on the cost of solar PV while it is currently showing a substantial downward trend.”
“Boosting the cost of solar is not in California’s best interest, especially when the higher prices come out of ratepayer pockets,” he adds.
At a cost of US$295 per MWh, PG&E would be allowed to spend more than 3.5 times the average price PG&E pays for power from all sources, more than twice the benchmark price for renewable energy in general, and significantly more than it now spends for similar solar PV contracts, according to DRA.
Group wants 'reasonable market-based cost' for solar
It urges the CPUC to decide in favour of solar PV at reasonable market-based cost and is encouraging customers to contact the Public Advisor’s Office to object.
Peevey is expected to rule on the proposal on 8 April.
DRA supported tradeable renewable energy credits (TREC)
Earlier this month, DRA supported the CPUC’s decision to authorise the use of tradable renewable energy credits for compliance with California Renewables Portfolio Standard (RPS). TRECs can be purchased for RPS compliance, subject to a price cap of US$50 per TREC and is limited to 25% of the three large California utilities’ annual RPS obligations.
DRA had advocated for a lower price cap, but agrees that a price cap is necessary to protect ratepayers from excessive payments in the early stages of the TREC market. A TREC market should relieve pressure on utilities to meet the state’s RPS goal as there is a limited supply of in-state renewable power, which has resulted in higher than expected costs for these resources.