San Diego Business Journal

Utilities Get OK to Again Buy Power



San Diego Gas & Electric Co. is gearing up to buy electricity again.

The California Public Utilities Commission gave the go-ahead on Oct. 24 for the state's three investor-owned utilities , Southern California Edison Co, Pacific Gas and Electric Co. and SDG & E; , to begin buying power again on Jan. 1.

That removes the state from the energy-buying business.

Most of the state's electricity needs are supplied through long-term power pacts signed by the state during the energy crisis. The three investor-owned utilities will buy what's called the "net short," or any difference between what is supplied by the contracts and daily short-term consumption.

The net short makes up 5 to 10 percent of SDG & E; customers' needs, said Ed Van Herik, a company spokesman.

SDG & E; has put out a request seeking bids for power. Company officials are assessing those bids, Van Herik said.

He declined to disclose the names of any bidders.

SDG & E; officials plan to file more information regarding its procurement process with the PUC within a week, Van Herik said.

The recent PUC decision calls for an up-front approval of the utilities buying process.

"In anticipation of Edison, PG & E; and SDG & E; resuming full procurement on Jan. 1, the commission recently granted the utilities permission to use more of the state's credit, interest free, to cover their projected procurement needs in 2003-2008," a PUC press release said.

The PUC determined Edison's and PG & E;'s power needs during 2003 are well within their ability to finance.

The commission called for a balancing account for the three companies to track energy costs.

California's 1996 deregulation law established a system that didn't allow utilities to pass high wholesale energy prices to their customers. Eventually, PG & E; fell into bankruptcy.

The state rescued SCE to keep it from the same fate. After the companies failed financially, the state used its financial might to act as California's major power buyer.

State officials signed $43 billion in long-term contracts during the energy crisis. Although some contracts have been renegotiated, the majority of companies, including San Diego-based Sempra Energy, continue talks.

, Rene'e Beasley Jones