PG&E contract with Nevada geothermal project terminated

A power purchase contract between PG&E Corp.’s (NYSE: PCG) and a geothermal project developer has been terminated.

PG&E told the California Public Utilities Commission (CPUC) on April 25 that it has terminated a contract with Arclight Capital Partners LLC unit Terra-Gen Power. Confidentiality agreements allow the parties to decline to offer a public explanation.

Under the 25-year contract renewable-energy developer Terra-Gen said it would build a 53-MW geothermal power plant near Reno, Nev., and sell the power to PG&E when the plant was set to be completed in 2013. PG&E had agreed to pay more than 11.25 cents a kWh for the electricity, according filings with the CPUC.

In a 2010 filing with the CPUC, “PG&E found from its Least-Cost Best Fit (LCBF) analysis that the PPA is reasonable and that the Project is viable and meets PG&E’s current renewable resource needs.”

In a letter to the commission, PG&E said the contract had been terminated and the utility was withdrawing its previous request for approval.

Terra-Gen obtained federal approval to build the Coyote Canyon geothermal power project on public land in Dixie Valley, Nev., in 2011, as part of an Obama administration initiative to fast-track renewable-energy projects proposed for public land.

Just last week, U.S. Department of the Interior Secretary Ken Salazar lauded the efforts of the administration to streamline the permitting of renewable energy projects on federal lands.