The California Public Utilities Commission at its Feb. 12 meeting will look at a recommended decision from staff to approve termination of a Power Purchase Agreement between Pacific Gas and Electric (PG&E) and Rio Bravo Poso Cogeneration Co.
In October 2014, PG&E filed for approval of the Rio Bravo Poso Termination Agreement. The Termination Agreement amends the Standard Offer 4 (SO 4) qualifying facility (QF) Power Purchase Agreement (PPA) between PG&E and Rio Bravo Poso Cogeneration (RBP), whose 37-MW coal-burning combined heat and power facility (RBP Facility) provides the Poso Creek oil field with steam for enhanced oil recovery and PG&E with electricity. The agreement would terminate the PPA no later than Feb. 28, 2015, instead of March 4, 2020, which was the original PPA expiration date.
Under the agreement, RBP will relinquish its right to deliver and receive payments for electricity from PG&E, and will cease using coal or petroleum coke as fuel at the RBP Facility. In exchange, PG&E will make a payment to RBP. PG&E said that the Termination Agreement is reasonable and should be approved because early termination of the PPA will: result in significant customer savings; avoid environmental degradation from the combustion of coal and/or petroleum coke; and decrease the amount of non-dispatchable baseload generation in PG&E’s portfolio. PG&E asserts that the RBP Facility’s shutdown will provide PG&E with 98,146 metric tons (MT) of greenhouse gas (GHG) emission reduction credits, which is a 12% reduction in PG&E’s unmet GHG emissions reduction target that was established by the QF/CHP Settlement approved in a prior case. PG&E also seeks authority to recover the costs, in rates, of any purchases made pursuant to the Termination Agreement.
Under the recommended order, Pacific Gas & Electric can recover the costs of this amendment in rates, and subject to verification by the commission’s Energy Division, Pacific Gas & Electric is authorized to count 98,146 metric tons associated with the shutdown of the facility as a greenhouse gas credit toward the utility’s Combined Heat and Power Program Settlement greenhouse gas emissions reduction target.