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4-Traders Homepage  >  Equities  >  Nyse  >  Calpine Corporation    CPN

Delayed Quote. Delayed  - 06/24 10:01:56 pm
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Calpine : Sutter Energy Center unlikely to power back up anytime soon

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06/15/2016 | 04:29am CEST

June 15--A recently shuttered power plant in Sutter County is unlikely to reopen in the near future, according to new documents that also shed light on the reasons the facility closed.

The California Public Utilities Commission last week released a draft resolution authorizing the cold layup of the Sutter Energy Center, which was shut down in January amid continuing economic struggles. The commission will consider the resolution on July 14.

The timetable for the power plant's return to operations is unknown. The facility is not needed for grid reliability in 2016, and Calpine Corp., which owns the plant, does not anticipate it will be needed in 2017, according to the draft resolution.

In a statement, Calpine spokesman Ned Wigglesworth said the power company "continues to assess the long-term viability of the Sutter Energy Center."

"It remains our hope that conditions in the future will allow us to bring the facility back online," Wigglesworth said.

The closure resulted in 20 jobs lost to the area, with Calpine offering employees positions elsewhere. But the company did not go into detail about the cause of the layup when it was first reported, other than saying the plant was not economically viable.

The PUC resolution dates the start of the plant's struggles to January 2005. That year, the Western Area Power Administration (WAPA) withdrew from the California Independent System Operator (CAISO), which manages about 80 percent of the state's electric flow.

The withdrawal "crippled" the plant's ability to dispatch into the market, according to the draft resolution.

WAPA spokeswoman Jennifer Neville said WAPA did not withdraw from CAISO. Rather, she said, there was a third-party contract that expired in 2005, prompting WAPA to join the Balancing Authority of Northern California in an effort to keep its federal power rates low.

A December 2005 agreement approved by the Federal Ene gy Regulatory Commission allowed the Sutter Energy Center to reenter the power market, but it was now subject to a WAPA transmission fee it would not have incurred if WAPA remained under the California Independent System Operator's control, according to the draft resolution.

The contracts the power plant secured between 2005 and 2011 "failed to provide the revenue needed to support Sutter's long-term viability," according to the PUC.

In 2012, the PUC acted to keep Sutter operating through 2012 after Calpine in November 2011 said it intended to retire the plant.

The PUC told Pacific Gas and Electric Co., Southern California Edison and San Diego Gas & Electric to enter into a resource adequacy contract with Sutter.

At the time, the California Independent System Operator predicted the Sutter plant would be needed to help integrate renewable resources and phase out older, dirtier plants by 2017.

The plant had 25 employees. Calpine will retain five employees to run two peaker facilities in Yuba City, according to a press release from the January shutdown.

The plant had a payroll of around $1.5 million. General Manager Larry Sessions said in January the impact of employment on Yuba-Sutter could be muted because many of the workers commute from outside the area.

Calpine will continue to pay property taxes on the facility while it is laid up. The tax bill contributes $1.7 million to Sutter County.

A laid up power plant has its operations suspended, but continues to be maintained so it can restart if necessary.

CONTACT reporter Andrew Creasey at 749-4780 and on Twitter @AD_Creasey.

___

(c)2016 the Appeal-Democrat (Marysville, Calif.)

Visit the Appeal-Democrat (Marysville, Calif.) at www.appeal-democrat.com

Distributed by Tribune Content Agency, LLC.

© Tribune Content Agency, source Regional News

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