California utilities look to Oregon to meet renewable energy needs

When the newly built Willow Creek wind farm in Oregon's Gilliam and Morrow counties begins operating by year's end, the power it generates will flow to California
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Competition for renewable energy has whipped up a wind war in the West.

California is the big dog in the fight, reaching into the Northwest to buy large amounts of wind power from Columbia Gorge projects. Los Angeles Department of Water & Power and San Francisco's Pacific Gas & Electric are among those securing long-term contracts for hundreds of megawatts of wind power in Oregon and Washington.

"They're certainly trying to grab it everywhere they can," said Lee Beyer, chairman of the Oregon Public Utility Commission, which regulates the state's large utilities.

The motivation behind California's quest? A rigorous law that says renewable energy must account for 20 percent of electricity sales by 2010.

Electricity has been flowing among Western states for decades. Now the stakes are higher.

Oregon and Washington also face clean energy laws that have made wind power the most coveted of resources. Competition from a rival of California's size -- it uses six times as much electricity as Oregon -- is making home-turf purchases more difficult and more expensive.

New energy will cost considerably more than the cheap hydroelectric power that has kept Northwest electric rates among the lowest in the country. The premium that local utilities might pay to beat a competing bid from California would drive prices higher still.

"The issue is cost," Beyer said. "California can pay more."

Californians are used to heftier utility bills. Residential customers pay about 15 cents a kilowatt hour for electricity; Oregonians pay 9 cents.

PacifiCorp, which operates Oregon utility Pacific Power, owns several wind farms in the Northwest and Wyoming and is building more. That power stays local, meeting PacifiCorp customers' demand.

The strategy was designed, in part, to parry California's influence in the marketplace. Instead of going to independent developers to negotiate long-term contracts, PacifiCorp can produce its own power.

"We're not going to enter into a bidding war with a PG&E (Pacific Gas & Electric in San Francisco) or a Southern California Edison," said Scott Bolton, PacifiCorp's director of government affairs. "What's cost effective for them is not cost effective for us."

Portland General Electric, Oregon's largest utility, has taken a similar tack with its Biglow wind farm in Sherman County.

Even so, both utilities buy from developers such as Portland-based Iberdrola Renewables. PGE will announce several new contracts this fall.

PGE and Pacific Power together account for almost 70 percent of the state's energy use.

Oregon law requires a 25 percent contribution from renewables by 2025. Interim targets call for 5 percent by 2011 -- far lower than California's 20 percent goal -- and 15 percent by 2015.

California's requirements increase to 27 percent in 2015 and 33 percent in 2020.

The power from the region's large hydroelectric dams doesn't count toward the requirements in any Western state.

Wind power isn't the only way to meet the goals. Solar, biomass and geothermal also qualify. But at this point, wind energy is the most affordable and available.

PGE and PacifiCorp have met the 5 percent requirement, utility officials said. They'll also meet the 15 percent target.

As deals are negotiated, California looms as an intimidating rival. It boasts a renewables cache that delivers about 35,500 gigawatt hours of electricity annually, or 11.8 percent of total demand. That's enough to serve all PGE and Pacific Power customers combined.

San Francisco's PG&E would need 2,400 megawatts of wind to meet the 2010 requirement, if it were to rely on a single renewable resource, Oregon's PGE told regulators. That's more than the total capacity of the 20 wind farms operating in Oregon and Washington.

Of course, PG&E isn't relying on one type of clean energy. It's also gathering supplies of solar, geothermal and biomass. The utility, which serves more than 5 million customers (Oregon's PGE serves 813,000), prefers in-state purchases because transmission and other costs tend to be lower, officials said. But they will make deals elsewhere if the terms are right.

"We're aggressively adding renewables," said Jennifer Zerwer of Pacific Gas & Electric. Renewables account for about 12 percent of PG&E's electricity. "We're on track" to meet the 2010 goal of 20 percent, she said.

More: http://www.oregonlive.com/environment/index.ssf/2008/08/california_utilities_look_to_o.html

like Hawaii has. I am sickened by my electric bills as it is. California needs to get more control over its electric needs.