PG&E asks retroactive discretion on buybacks. (Pacific Gas and Electric cogeneration contracts)

PG&E Asks Retroactive Discretion On Buybacks

Pacific Gas & Electric Co. (PG&E) told federal regulators here that existing contracts with cogenerators should be declared nonbinding on the utility if their buyback rates are so high as to cause an increase in the prices retail customers pay for power.

That proposal was made by PG&E's general counsel, Howard Golub, at a regional hearing of the Federal Energy Regulatory Commission. The purpose of the March 27 session was to examine the effects of the Public Utility Regulatory Policies Act of 1978 (Purpa).

"The avoided-cost rule should be clarified to enable the utility to curtail [the purchase of energy from qualifying facilities] any time the continued acceptance would result in system costs that are greater than those which the utility would incur if it generated or purchased power from other sellers,' Golub said.

Representatives of utilities from Alaska to Arizona told the commission of their problems with overcapacity. They said Purpa is unreasonable to require the purchase of power from cogenerators and small power producers when the power is not needed from a qualifying facility (QF).

PG&E had the most far-reaching proposals to modify Purpa regulations. Golub asked that the commission allow PG&E to reject QF power it does not need, that rates for purchasing power be marketbased rather than avoided-cost-based, and that QFs bid against one another to achieve the lowest possible buyback rate for a particular piece of a utility's kilowatt needs.

According to PG&E, California's Public Utilities Commission can reopen buyback contracts and mandate new terms. PG&E says the Federal Energy Regulatory Commission can reopen the contracts but cannot thetate new clauses.