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24 July 2006 -- Southern California Edison (SCE) began the process of soliciting long-term power purchase contract offers by independent power producers (IPP) willing to invest in new power plants to serve Southern California.
The utility posted draft Request For Offers (RFO) documents on its Web site and informed members of the IPP industry of its intention to solicit contracts lasting up to 10 years for new generating facilities that could come online within the next several years.
The utility's action follows approval yesterday by the California Public Utilities Commission (CPUC) of a plan based on a proposal by SCE and other market participants. The plan calls for the benefits and costs of new generation contracts to be allocated to all customers within a utility's service territory who would benefit. SCE anticipates soliciting up to 1,500 MW of generation.
"The commission has taken an important step in support of Southern California's urgent need for additional generation," said Pedro Pizarro, SCE senior vice president of power procurement. "Although a number of details remain to be defined in future proceedings, the commission has provided essential cost recovery assurance needed by utilities if we are to offer long-term contracts for new generating capacity supporting systemwide reliability."
SCE is moving quickly to issue its RFO because the design, siting, permitting process, and construction of new power plants take several years. Recent assessments by state agencies such as the California Energy Commission and the California Independent System Operator indicate that power supplies could be tight as early as 2007 if extreme conditions develop, and that supply-and-demand conditions will continue to tighten in the future.
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