Kings County Solar

A 15-MW solar project in Kings County will be delayed by two years in order to benefit PG&E's estate through its bankruptcy period. 

U.S. Bankruptcy Judge Dennis Montali on Nov. 4 approved Pacific Gas & Electric's request to delay two large contracts for renewable-energy projects in order to "benefit the utility's estate."

A 15-MW solar farm being developed by Java Solar in Kings County will be pushed out two years to an unconfirmed commencement date, while a 300-MW battery storage facility being built by Dynegy in Moss Landing will start selling power to PG&E about six months behind its original schedule of December 2020.

The California Public Utilities Commission will review Montali's order and provide a final decision on the matter. The CPUC on Nov. 7 approved a slew of similar renewable-energy contract delays requested by PG&E. On the same day, the commission approved extending the lives of a number of California's once-through-cooling power plants (see related story).

PG&E said it exercised "sound business judgment" when it decided to push the renewables projects to a later date, stating that the extensions will allow the company to purchase and store energy at a cheaper price. PG&E and Java Solar agreed to a 10-percent discount in their contract, while Dynegy agreed to a five-percent discount for the battery storage contract.

When asked if the discount was required in order to keep the contract alive during PG&E's bankruptcy, Dynegy spokesperson Meranda Cohn said that information was confidential.

PG&E is "undertaking a careful and thorough review of its portfolio of electricity procurement agreements" as it tries to exit bankruptcy, the utility said. Postponement of the contracts is "reasonable under the circumstances [and] in the best interests of the utility and its estate," PG&E lawyers wrote to Montali.

Montali's court should "presume that [PG&E] acted prudently, on an informed basis, in good faith, and in the honest belief that the action taken was in the best interests of the bankruptcy estate," PG&E lawyers said. In addition, PG&E determined that the savings obtained through the discounted contract prices "far outweigh the milestone extensions that the utility is granting," lawyers said.

The solar power contract with Java is a long-term power-purchase agreement in which PG&E will buy solar power from a project on 96 acres of agricultural lands in unincorporated Kings County. The project is currently under development and not yet operational, according to PG&E.

The battery storage contact with Dynegy is intended to help PG&E "meet the resource adequacy requirements imposed on it by the CPUC and other regulators," lawyers wrote to Montali. Dynegy's project is also currently under development and not yet operational, but is due to be completed by its original date—the end of 2020—regardless of when PG&E begins purchasing its stored power.

In June 2018, five months before the Camp Fire and about seven months before PG&E filed for bankruptcy, the utility asked the CPUC to approve Dynegy's battery storage project, along with four other projects that would provide about 567 MW of storage. The Dynegy project would be the largest of its kind in the world, according to the company.

Meanwhile, in a separate court filing with Montali, the official committee of unsecured creditors said it is concerned that PG&E refused to make Chief Financial Officer Jason Wells available for an upcoming deposition on the company's financial plans. Wells' deposition is "necessary for us to assess the propriety of and present need for the relief requested," the committee said.

PG&E stated that requiring Wells to go through another deposition would be "unduly burdensome," "duplicative" and "unnecessary." However, the committee of unsecured creditors said Wells is the only witness noticed by the creditors' committee who is actually a company employee—"making his testimony not only warranted, but essential."

Furthermore, "PG&E's circumstances have dramatically changed," the committee said. "PG&E has identified at least one large-scale post-petition fire to which its equipment may have contributed, which may impact certain rights and conditions precedent to parties' funding obligations." A PG&E transmission line has been identified as a possible cause of a wildfire in Sonoma County that broke out Oct. 23, despite the utility conducting a public-safety power shut-off at the time (see CEM No. 1562).

Also, in a court conference with U.S. District Judge James Donato on Nov. 4, PG&E and wildfire victims' lawyers said they are close to agreeing to a final wildfire victims' claims deadline extension to Dec. 31 (see CEM No. 1563). The date is to be reviewed for approval by Montali next week.

In other PG&E bankruptcy news, a coalition of 27 California mayors and chairs of boards of supervisors wrote the CPUC Nov. 4, saying that proposed bankruptcy plans being considered do not meet requirements that PG&E emerge as a viable, creditworthy entity able to function over the long term. The letter proposes a customer-owned utility, and says the elected officials are developing such a plan, urging the CPUC to consider it as part of its review of the Chapter 11 reorganization.

"The proceedings appear dominated so far by a pitched battle between Wall Street titans for control of the bankruptcy process, control of the company, and the ability to control exit financing," the letter says. "This is merely spectacle, without regard for what will be left behind when the financial players inevitably leave the scene."

The letter also urged the court to consider whether the plans address PG&E's operational issues, and said that both of the current plans do not.

Signatories include the mayors of San Jose, Sacramento, Oakland, Stockton, Modesto, Elk Grove and other cities as well as supervisors from the counties of San Mateo, Santa Cruz, Marin, Yolo and San Benito.

Staff Writer

David Krause is an energy reporter covering the California Energy Commission and Air Resources Board. He writes about transportation, climate change, utilities, and wildfires. He has an MFA in Writing, an MA in English, and a BS in Civil Engineering.