Duke, California cut tentative deal on 800 MW

By the OGJ Online Staff

HOUSTON, Mar. 5, 2001—Subject to final agreement, Duke Energy Corp. Monday said it will supply 550 MW beginning in 2002 to the California Department of Water Resources (DWR).

Beginning Jan. 1, 2003, the amount will increase to 800 MW. The contract totaling $4 billion will continue through Dec. 31, 2010. Calpine Corp. and Williams have previously reported signing long-term power supply agreements with the state.

Bill Hall, head of Duke California' operations, called the memorandum of understanding a significant step toward definitive long-term contracts between Duke Energy and the Water Resources Department. Hall said negotiations are continuing with good progress being made.

"We believe long-term contracts provide the critical underpinning for a stable electricity market and are happy the state is moving in that direction," he said. "We will continue to work with the governor and the legislature as they develop the necessary legal and regulatory framework necessary to make such contracts viable."

California Gov. Gray Davis was expected to announce more long-term power contracts for the state at a news conference in Los Angeles Monday. At the news conference, scheduled for noon Pacific time, Davis will "announce the progress of the state securing long-term energy contracts," said a spokeswoman.

Earlier, Williams and Calpine agreed to provide as much as 4,000 MW of electricity over the next 10-20 years but little of it is scheduled to be available in time for the summer peak. Under terms of the contract reported in February, Calpine will sell 1,000 MW for 10 years to DWR starting with 200 MW in October and building to 1,000 MW by January 2004.

Under the fixed price contract reported Feb. 28, the company will begin delivering 200 MW in July and increase to 1,000 MW from July 2002-2011. A peaking power contract commits Calpine to supplying 90 MW of power by August with the rest by August 2002.

The California Department of Water Feb. 23 signed a fixed-price, 10-year agreement to buy up to 1,400 MW of electricity from a unit of Tulsa-based Williams. Under the Williams agreement, beginning in April, the company will provide at least 175 MW of peaking power, increasing to at least 350 MW by June 1, and to at least 900 MW by 2006.

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