FW: CPCFA updates

-----Original Message-----
From: Schultz, Don
Sent: Monday, October 22, 2001 11:07 AM
To: Boyd,Kelly; Brown,Jeff; Chinn,Randy; Clark,Woody; Ferrera, Anna; Johannesson,Magnus; Kelly,Brian; Lingbloom, Lawrence; Lipper,Kip; Lyons, Joseph; Phillips,Guy; Sherriff,Rona; Symonds,Toni; Zeps,Gabrielle

Cc: Bondonno,Maria; Campbell,Rod; Hartmann,Audra; Julian, Bill
Subject: CPCFA updates

CALIFORNIA ENERGY MARKETS
u u Friday, October 19, 2001 u u No. 640 u u

[1] Power Authority Faces Legislative Backlash
After a three-month honeymoon, the new California Power Authority
is being shredded in the winds of politics this week with the Legislature
looking into its deals, the California Energy Commission annoyed with its
monopolizing ventures and the Department of Water Resources rebuffing
its plan to sell its power through state contracts. Other than skepticism
from legislative staff about its microturbine bid plan, the Power Authority
escaped major problems in its requests for bids for photovoltaics and
fuel cells at [18].

[18] Assembly to Investigate Power Authority
(from [1])
Is the California Power Authority a dangerously
out-of-control state agency, or is it the best hope for get-ting
back some state control over electricity supplies?
The Joint Legislative Audit Committee is looking into the
Power Authority's role thus far in carrying out the letter
and spirit of SBx2-6 in a hearing set for November 1.
The move is spearheaded by the offices of Assem-blymember
Fred Keeley (D-Boulder Creek), the chair
of the joint committee, and Assembly speaker Bob
Hertzberg (D-Van Nuys). Both members were princi-pal
authors of the Power Authority's enabling legisla-tion,
SBx2-6. Legislative staff are questioning the
Energy Foundation's
unpaid role in devel-oping
the Power
Authority's requests
for bids, particularly
the RFB for microtur-bines.
Only one com-pany,
Capstone, can
meet the requirement written into the RBF by the Energy
Foundation, and staff are looking into potential overlaps
between Capstone and the Energy Foundation.
Political maneuvers are swirling around the Con-sumer
Power and Conservation Financing Authority.
Not only elected officials are concerned; the staff and
heads of other agencies the Power Authority must
work with are digging in their collective heels to op-pose
Power Authority overtures. Tom Hannigan, di-rector
of the Department of Water Resources rebuffed
Power Authority board chair David Freeman's pro-posal
to have it buy peaker output. California Energy
Commission members said they are at policy odds
with the Power Authority's siting plans.
In an October 4 letter to Freeman, Hannigan said
that the Power Authority's power-wind and fossil
peakers-is likely too expensive, overblown and not
able to respond quickly enough to balancing power
needs. "The letters of intent already approved by the
Power Authority could far exceed [DWR's] ability to ab-sorb
that power given the outlook for net-short need."
Freeman assumes that the market for Power Authority
power will be via contract, not the spot market. "Selling
on the spot market is difficult to finance and risky," said
Power Authority spokesperson Amber Pasricha.
The Power Authority is the only agency cur-rently
in the position of actually being able to acquire
new energy as the state's $12.5 billion bond issue to
underwrite continued DWR power purchases is in
limbo and the California Independent System Operator
is still not creditworthy. Still, the Power Authority
cannot issue bonds until it has its own economic
house in order, and an Assembly investigation might
jeopardize that [J.A. Savage].
[18.1] Power Authority RFB Drafts Too
Narrow to Grow Market, Say
Respondents
The Power Authority received a remarkably
reserved response to its draft request for bids for mi-croturbines,
fuel cells and photovoltaics, but most say
the parameters it sets are too restrictive. The Power
Authority planned to finalize the projects in its Octo-ber
19 meeting.
The microturbine maker Capstone is the only com-pany
that can comply with the draft RFB in the short
term, according to Jennifer Rice, Capstone vice presi-dent
of governmental affairs. Others involved with the
RFB also readily admit that Capstone, a known entity
in Los Angeles Department of Water & Power terri-tory,
is the only game in town.
Sempra Energy, in its comments to the Power
Authority, said that it had filed a response simply
because it wanted to keep a placeholder to make sure
that larger microturbines would not be excluded in
future RFBs. Turbec, which has experience in the
European market, also questioned the size restriction
of microturbines in the RFB, noting that its standard
unit is 100 KW. The RFB as written calls for 70 KW
or smaller turbines.
In the photovoltaics bid process, the Sacramento
Municipal Utility District said it was dismayed that
the Consumer Power and Conservation Financing
Authority was stepping on its territory and that the
authority was limiting bids to a turnkey system, which
SMUD maintains pads the cost. Green Mountain
also wanted to expand the bid to consider existing in-stallations,
central-station plants and power purchase
contracts [J.A. S].
<http://www.capowerauthority.ca.gov/MediaRelease/PR01%20006.pdf<