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Friday, Dec 8, 2023

Wind Farm Deal Moves SDG&E Closer to Goals


CEO: Donald E. Felsinger.

Revenue: $9 billion in 2010; $8.1 billion in 2009.

Net income: $733 million in 2010; $1.12 billion in 2009.

No. of local employees: 16,000.

Headquarters: Downtown San Diego.

Year founded: 1998 as a parent company to SDG&E (1881) and other subsidiaries.

Stock symbol and exchange: SRE, New York Stock Exchange.

Company description: Energy company with 1.4 million regional customers and subsidiaries in international power generation and minerals.

With San Diego Gas & Electric Co.’s recent announcement of a contract to buy up to 156 megawatts of clean power from a sister corporation’s planned wind farm in Mexico, SDG&E moves closer to its California Public Utilities Commission goals for energy purchased from renewable sources.

No California power companies were able to meet the utilities commission-mandated 2010 goal of obtaining 20 percent of its purchased power from renewable energy sources in part for lack of supply. But SDG&E takes the goal seriously, even if they’re at just 12 percent.

“It’s a little shy of the 20 percent, but with the added contract and other new sources of power, we will be able to meet our goals,” said Jennifer Ramp, spokeswoman for SDG&E. “We’ve signed 12 contracts to purchase more than 1,000 megawatts — mostly solar — so we can put more renewable power on the grid by 2020.”

The power provider, which serves about 1.4 million metered residential, business and government customers, said April 19 that it has signed a 20-year contract with Sempra Generation to pay 12 cents per watt of wind power from the Energia Sierra Juarez wind farm immediately south and east of Jacumba. The project should start delivering power in 2014, according to Scott Crider of Sempra Generation.

“This will be a very high-quality wind resource and one of the major high-quality wind resources in the Southwest,” said Crider, spokesman for Sempra Generation. “It’s power produced in the region’s backyard — and it doesn’t have to travel a long distance, which makes it a smart project.”

Sempra Generation has been developing the project since 2007, and expects to begin construction once permits are finalized on both sides of the border, Crider said. BP AlternativeEnergy, a subsidiary of BP p.l.c., plans to buy half of the Sierra Juarez project. The two companies are partners in two other wind farms, in Colorado and Indiana.

“We will have to put the cross-border power transmission line in place — a three-mile link to SDG&E’s power grid,” Crider said. “If the contract is approved by state regulators, we could start construction in 2012.”

Concerns Among Consumer Groups

Utility consumer groups say that it’s hard to tell what the contract means for ratepayers. But they have concerns over what they see as Sempra buying power from itself and over the pricing of the power.

“We know that past transactions between SDG&E and Sempra have not been particularly good deals for consumers,” said Michael Shames of the Utility Consumers’ Action Network. “The Palomar generating station deal turns out to have been fairly expensive and less promising than thought at the time. The El Dorado power plant deal has yet to be evaluated. So the SDG&E-Sempra track record hasn’t proven to be a very good one.”

Ramp, of SDG&E, said that the contract process has and will receive a great deal of scrutiny.

“Because Sempra Generation is an affiliate, it was a very scrutinized process,” she said. “This is the first time a contract has been made public. All negotiations are overseen by independent evaluators as required by the CPUC. ”

Matthew Freedman, staff attorney with the Bay Area-based Utility Reform Network, said the group is not opposing the contract. But, he said, he wonders about the price per watt, which is a penny higher than market price now.

“The price of wind turbines has declined significantly in the past two years and the Sempra filing makes it clear that they haven’t selected or purchased the turbines yet,” Freedman said. “So, when they finally do, the ratepayers will probably not get the benefit of the declining costs to generate power.

“We’d like to see some flexibility in the contract so the price of power would more accurately reflect the costs,” Freedman added. “Otherwise, the benefits of lower generating costs will flow to the shareholders, not the ratepayers.”

The Energia Sierra Juarez project, which remains in design stages, appears to be the same as the La Rumorosa Wind Project that Sempra Generation signed Southern California Edison to in July 2007. That project was intended for 125 wind turbines that would deliver between 200 and 250 megawatts of power.

Calls to Southern California Edison and Sempra Energy to find out what happened to that contract were not returned by press time.

Marty Graham is a freelance writer for the San Diego Business Journal.


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