Pacific Gas and Electric nears okay of ‘wood tolling’ deal with Sierra Pacific

The California Public Utilities Commission at its June 9 meeting will look at approving an emergency “wood tolling” agreement where Pacific Gas and Electric would provide wood from endangered forest areas to five Sierra Pacific Industries power plants that burn biomass for fuel.

Pacific Gas and Electric has requested approval of an amendment to its Power Purchase Agreement (PPA) with Sierra Pacific Industries (SPI). The SPI PPA had an initial commercial operation date of Sept. 9, 2015, and covers delivery from five existing biomass facilities (Burney, Lincoln, Quincy, Sonora, and Anderson II). These five existing biomass facilities are currently online and delivering under the PPA, which will expire in 2035.

In aggregate, over the 20-year term, the PPA provides 58 MW of contract capacity and approximately 294 gigawatt-hours (GWh) of Renewable Portfolio Standards-eligible generation annually in contract years 1 and 2, 322 GWh/year in contract year 3, and 406 GWh/year in contract years 4-20.

To respond in part to a proclamation from Gov. Jerry Brown, PG&E executed this agreement amending the SPI PPA. It covers a wood tolling agreement whereby PG&E or its designee will deliver forest biomass fuel to the SPI facilities at no cost, and buy the electricity generated from that fuel that is incremental to the power contracted for under the PPA. The agreement does not mandate incremental generation or fuel deliveries. The price for incremental generation is confidential.

The agreement per year terms limit maximum fuel deliveries at 205,800 bone dry tons (BDT) split across the SPI facilities. With a contracted conversion rate of 1.1 BDT per megawatt-hour (MWh), this limits maximum incremental power deliveries under the agreement to about 187 GWh annually. Fuel deliveries under the agreement will begin no earlier than the first day of the first month following commission approval.

The agreement will expire on Sept. 8, 2019. The agreement does not add capacity; it utilizes the SPI facilities’ existing excess generation capacity. It does not cover the cost of the incremental delivered fuel, nor is SPI paying for the fuel.

Severe drought conditions and an epidemic infestation of bark beetles have caused tree mortality in several regions of California. In October 2015, Gov. Brown issued an Emergency Proclamation to protect public safety and property from falling dead trees and wildfire. This proclamation ordered the California Public Utilities Commission to take various measures to ensure that contracts with bioenergy facilities that receive feedstock from high hazard zones will be expedited.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.