Calpine signs contracts to keep Sutter gas plant alive

Calpine (NYSE: CPN) said May 7 that it has signed contracts with California’s three investor-owned utilities for the 578-MW Sutter natural gas power plant to provide it “resource adequacy” (RA) for the second half of 2012.

The RA contracts should enable Sutter to continue in operation as the California Public Utilities Commission (CPUC) moves forward in developing long-term capacity procurement policies to ensure modern, existing resources remain available to meet California’s future power demands, Calpine said in a news release.

The contracts are with PG&E (NYSE: PCG) subsidiary Pacific Gas & Electric, Edison International (NYSE: EIX) subsidiary Southern California Edison and Sempra Energy (NYSE: SRE) subsidiary San Diego Gas & Electric. The fate of the Sutter combined-cycle power plant, located near Yuba City, Calif., has been the subject of much public discussion in recent months. Although it is one of the newer gas-fueled power plants in California, built in 2001, it did not have sufficient business to keep going in the short run.

The California ISO and other entities have said, however, that Sutter’s quick-start ability could become increasingly important in the next few years as California increases its renewable energy mandate.

Earlier this year, Calpine CEO Jack Fusco told GenerationHub that Sutter could not simply sit idle for a couple of years without essentially being forced to renew its state operating licenses.

The California PUC had instructed the trio of in-state utilities to negotiate with Calpine about Sutter.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.