The California Public Utilities Commission will consider at its Aug. 18 meeting a request from CCFC Sutter Energy LLC for approval to suspend operation of its Sutter Energy Center and place it in a cold layup status.
CCFC is a wholly-owned subsidiary of Calpine Corp. (NYSE: CPN). Generators like it are required to notify the commission and the California Independent System Operator (CAISO) at least 90 days in advance before changing the long-term status of a power plant. A resolution up for review by the commission affirms that CCFC has complied with the applicable standards and authorizes it to suspend operation of Sutter and place it in cold layup for at least 2016.
Sutter is a combined-cycle plant located in Yuba City, Sutter County. The 525 MW (net) plant consists of two gas-fired combustion turbine units and one steam turbine unit. The plant began commercial operation in July 2001. Sutter was originally connected to the Western Area Power Administration (WAPA) transmission system that was under CAISO’s operational control. In January 2005, WAPA withdrew from CAISO’s control and crippled Sutter’s ability to dispatch into the market, the resolution noted.
In December 2005, the Federal Energy Regulatory Commission approved Sutter’s pseudo-tie agreement with CAISO and allowed it to reenter the market as a system resource. Sutter is subject to a WAPA transmission charge that other system resources may not incur. This situation has created market challenges for Sutter. Sutter tried to procure Resource Adequacy (RA) contracts. While it secured a number of contracts between 2005 and 2011, those contracts failed to provide the revenue needed to support Sutter’s long-term viability. As a result, in November 2011, Calpine notified the commission that it would retire Sutter in 2012.
In response, the commission ordered Investor-Owned Utilities (IOUs) to negotiate a short-term contract with Calpine. Sutter, ultimately, negotiated a limited-term RA capacity contract with the IOUs. Those contracts ended on Dec. 31, 2012. Currently, Sutter does not have a contract and sells power to CAISO by virtue of the pseudo-tie agreement. Calpine is not seeking a Capacity Procurement Mechanism (CPM) designation from CAISO as CAISO has determined that Sutter will not be needed for grid reliability through at least 2016. Calpine also anticipates that Sutter will not be needed in 2017. Therefore, Calpine proposes to suspend operation of Sutter and place it in cold layup.