Sempra settles dispute over abandoned Rim Rock wind project investment

Sempra Energy said in its Aug. 4 quarterly Form 10-Q report that its San Diego Gas & Electric (SDG&E) subsidiary has settled a legal dispute over an abandoned investment in the Rim Rock wind farm.

In 2011, the California Public Utilities Commission (CPUC) and the Federal Energy Regulatory Commission approved SDG&E’s estimated $285 million tax equity investment in a wind farm project and its purchase of renewable energy credits from that project. SDG&E’s contractual obligations to both invest in the Rim Rock wind farm and to purchase renewable energy credits from it under the power purchase agreement were subject to the satisfaction of certain conditions which, if not achieved, would allow SDG&E to terminate the power purchase agreement and not make the investment.

In December 2013, SDG&E and the unnamed project developer began litigating claims against each other regarding whether the project developer had timely satisfied all contractual conditions necessary to trigger SDG&E’s obligations to invest in the project and purchase renewable energy credits. On Feb. 11 of this year, SDG&E, the project developer and several of the project developer’s parent and affiliated entities entered into a conditional settlement agreement, which was approved by the CPUC in July 2016 and will become final and non-appealable 30 days after the CPUC approval, provided that no party requests rehearing.

Under the settlement, among other things, the parties agreed to terminate the tax equity investment arrangement, continue the power purchase agreement for the wind farm generation and release all claims against each other, while generally continuing the other elements of the 2011 approved decision. The settlement deal will result in a $39 million credit to ratepayers, Sempra noted.

NaturEner, which owns and operates wind power projects in Montana, said in December 2013 that it had sued SDG&E for allegedly backing out of a promise to invest $285 million in the Rim Rock Wind project in Montana.

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.