This excerpt taken from the PCG 10-K filed Feb 18, 2005.
Other Power Purchase Agreements
Electricity Purchases to Satisfy the Residual Net Open PositionIn 2004 the Utility continued buying electricity to meet its residual net open position. During 2004, more than 10,000 Gigawatt hours, or GWh, of energy was bought and sold in the wholesale market to manage the 2004 residual net open position. Most of the Utility's contracts entered into in 2004 had terms of less than one year. In 2004, the Utility both submitted and requested bids in competitive solicitations to meet intermediate and long-term needs and anticipates procuring electricity under contracts with multi-year terms beginning in 2005.
Renewable Energy RequirementCalifornia law requires that, beginning in 2003, each California retail seller of electricity, except for municipal utilities, must increase its purchases of renewable energy (such as biomass, wind, solar and geothermal energy) by at least 1% of its retail sales per year, the annual procurement target, so that the amount of electricity purchased from renewable resources equals at least 20% of its total retail sales by the end of 2017. The Utility was excused from meeting its annual procurement target under the current law in 2003 and 2004 due to its Chapter 11 proceeding. With its exit from Chapter 11, as of January 1, 2005, the Utility is no longer exempt from complying with its annual procurement target. To meet the 20% goal by the end of 2017, the Utility estimates that it will need to purchase 700-800 GWh of electricity from renewable resources each year. During 2003 and 2004, the Utility entered into several new renewable power purchase contracts that will help the Utility meet its goals. The Utility also is conducting negotiations with several renewable energy providers pursuant to a request for offers made by the Utility in July 2004 that should result in the Utility entering into a number of new renewable contracts in 2005. In January 2005, the California Senate introduced a bill proposing to require the goal to be met by the end of 2010 instead of 2017. The CPUC also has suggested that the 20% goal be met by 2010. The Utility estimates that the accelerated goal would require the Utility to increase the amount of its annual renewable energy purchases to approximately 800-900 GWh. Based on the medium load scenario in the Utility's long-term electricity procurement plan, the Utility believes that it can meet the accelerated goal.
Annual Receipts and PaymentsThe payments made under qualifying facility, irrigation district, water agency and bilateral agreements during 2002 through 2004 were as follows:
At December 31, 2004, the undiscounted future expected power purchase agreement payments were as follows: