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For Immediate Release: April 26, 2006
Media Contact: Claudia Chandler - 916-654-4989

Energy Commission workshop explores
lowering capital cost for generation projects


Sacramento - The California Energy Commission will hold a workshop to address credit policies imposed for new and repowered generation projects, especially renewable projects.

Credit policies have a significant impact on the cost of financing generation projects, especially when it comes to renewable energy, stated Energy Commission Chairman Joseph Desmond. We need to balance appropriate financial protection with encouraging renewable energy facilities and ensuring that consumers are benefiting from lowered electricity costs. This workshop will explore strategies to achieve this balance.

The workshop will explore alternatives to current practices that could help lower the costs of electricity for consumers and help the State achieve its renewable energy goals.

Scheduled for June 2006, the workshop will bring together investment bankers, power plant investors, portfolio managers, insurance companies, risk managers, developers, and investor-owned and municipal utilities to address credit policies for projects in California.

Burdensome credit requirements have been identified as a barrier to achieving California's goal of 20 percent renewables by 2010, commented Chairman Desmond. We need to resolve this issue and achieve a workable policy that protects utility and consumer interests while ensuring competitively priced electricity.

Workshop topics include:

  • Examining how credit policies in other states compare to California
  • Characterizing how California's current credit policies contribute to project costs in terms of real dollars
  • Exploring the extent that these policies impede generation project development including renewable projects
  • Identifying a set of prudent solutions that would satisfy present credit policies while lowering the effective cost of capital, including step-in rights, insurance products, risk pooling and letters of credit
  • Quantifying the range of potential savings to ratepayers of one or more of these solutions
  • Identifying topics for future research, and establish next action steps

Additional information on the workshop is available at

www.energy.ca.gov/lowering_capital_costs/

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