>>SoCal Edison To Buy Renewable Pwr At $61.50/MWh, 5 Years
17:24 EST Wednesday, May 10, 2006

SAN FRANCISCO -(Dow Jones)- Southern California Edison , the regulated utility division of Edison International (EIX), and four of its largest renewable power suppliers have agreed to a fixed price for wind, solar, biomass, geothermal, and small hydro power supplies, SCE said Wendesday.

If the deal is approved by the California Public Utilities Commission, SCE will pay $61.50 per megawatt-hour beginning in May 2007, with the price to rise 1% a year starting in the second year of the five-year deal, Edison said in a press release. The suppliers that SCE reached the agreement with are privately held Caithness Energy, privately owned Colmac Energy Inc., FPL Group Inc.'s ( FPL) merchant energy division, FPL Energy, and Ormat Technologies Inc. (ORA). The supplies involved account for about 45% of the renewable energy SCE buys.

The fixed price is in lieu of the power producers getting paid the costs that SCE would have otherwise incurred by generating the electricity at its natural gas-fired plants or purchasing supplies in the wholesale power market. SCE's avoided costs are tied to the price of gas, which has been high and volatile the past couple of years.

"The agreement helps protect customers from price volatility in natural gas markets," said SCE Chief Executive Officer Alan Fohrer.

California has ordered its three investor-owned electric utilities to get at least 20% of their power from renewable sources by 2010. The other two utilities affected are PG&E Corp.s' (PCG) Pacific Gas & Electric and Sempra Energy's (SRE) San Diego Gas & Electric Co.

PG&E is nearing completion of a similar deal with its suppliers, according to an industry source.

PG&E wasn't able to provide an update immediately Wednesday on the status of its negotiations.

Les Gelber, president of Caithness, said that the deal provides revenue certainty for the generating stations involved, which in turn attracts investment to the renewable energy industry in California.

SCE is offering the same fixed-price deal for the next 10 days to most of the renewable projects currently under contract with the utility.

Most of the power SCE provides to its customers comes from independent power producers. Its current renewable portfolio can deliver 2,588 MW of electricity. More than 150 independent renewable power projects are under contract with SCE.

-By Mark Golden, Dow Jones Newswires; 415-765-6118; Mark.Golden@dowjones.com
(END) Dow Jones Newswires
05-10-06 1723ET
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