Sonoma County's startup public power agency is poised to enter into a secondary energy supply contract with the company that operates The Geysers geothermal field on the Sonoma-Lake county border.
Sonoma Clean Power officials say the proposed 10-year deal with a subsidiary of Calpine Corp. fulfills their promise to spur local green energy generation and support local jobs. The power venture's political standing, if not its business future, depends on staying true to that mission, they have said.
"This is a really good start. I think it gives us credibility," said Sebastopol Mayor Michael Kyes, an agency board member who has pushed for pursuit of local power.
The deal will account for 15 percent of the agency's overall supply as it begins rolling out to customers next year. It will make up for a little under half of the agency's initial renewable energy portfolio.
The value of the contract was not immediately available because it is still under negotiation. It is set to be voted on Thursday by the Sonoma Clean Power board.
The deal with Houston-based Calpine represents a significant pivot for the power agency back to The Geysers, the world's largest geothermal energy field, tapped 53 years ago by PG&E for electricity generation.
Calpine, now the field's principal operator, was one of the initial bidders for Sonoma Clean Power's primary energy supply contract, but is not among three companies competing for the main deal.
Officials said they were glad it will be part of the initial power mix after all.
"A lot of people were saying to me when we were launching, &‘Why aren't you going with Calpine?'" said Sonoma County Supervisor Shirlee Zane, an agency board member.
She voiced hope that the deal would be a foothold toward expansion of local geothermal resources. The Geysers supplies about a quarter of California's renewable energy, but less than 1 percent of that power is purchased by utilities for Sonoma County customers, including those served by PG&E, the region's dominant electricity provider.
Calpine has approval for a $700 million expansion that would add two plants to the 15 it operates at The Geysers, increasing its power output by about 14 percent. It hasn't moved forward with the project because it hasn't found buyers for the new power.
"We want them to be able to expand as we expand and create those local jobs," Zane said. "I think that's very much the hope."
The proposed deal with Calpine Energy Services, the subsidiary, comes as Sonoma Clean Power is just days away from executing a primary power supply contract with one of three competing energy companies.
Calpine did not make the final cut due to a combination of factors, including price and ability to meet the agency's initial power needs within its current supply.
But talks with the company were reopened within the past month when agency officials were made aware of additional Geysers supply that recently became available, said Geof Syphers, interim CEO of Sonoma Clean Power. Calpine then put an offer on the table.
The tentative price was not disclosed in the proposed contract unveiled Friday, but Syphers said it fell within the same cap approved by the agency board for negotiations on the primary electricity deal. The cap reflects an average maximum retail rate that would equal PG&E's proposed 2014 generation rate of 9.72 cents per kilowatt hour.
Agency officials have said they need to be competitive with, if not cheaper than, rates offered by PG&E to make the public venture attractive to new customers and viable in the long term. Syphers said the Calpine contract would help with that goal.
"I think it's going to be a good deal for us," Syphers said.
The geothermal power provides a critical type of energy supply that can't come from sources dependent on weather, including wind and solar.
"It's considered baseload generation, meaning it runs all the time," said Syphers. The most common source of such electricity in California in natural gas.
With geothermal power filling that role, Syphers said, "it gives us all the greenhouse gas benefits and all of the guarantee you will actually have the power."
Calpine officials could not be reached for comment Friday.
The company has more than 90 power plants in the U.S. and Canada, most of them powered by natural gas. It employs more than 300 employees at The Geysers, where its plants generate about 725 megawatts of electricity.
The two additional plants would add about 100 megawatts. One megawatt is enough power to serve approximately 1,000 homes.
The proposed deal with Sonoma Clean Power would supply 10 megawatts of electricity starting next May, when the agency expects to begin serving its first customers, mostly commercial accounts. The supply would ramp up to 18 megawatts by 2020, but by that time, with additional customers, the Calpine contract would make up 10 percent of the overall supply.
The remainder of the agency's initial electricity supply would come from the primary power contract, proposed to span the first three years of operations, with an annual value of up to $130 million by 2017. It would account for a little more than half of the 33 percent renewable-power portfolio largely through the purchase of energy credits.
In California, renewable power includes electricity from wind, solar, geothermal, biomass and small hydroelectric projects.
The three companies competing for the primary contract are NRG Energy, based in Houston and Princeton, N.J.; Direct Energy, with a U.S. base in Houston; and Constellation, based in Chicago.
You can reach Staff Writer Brett Wilkison at 521-5295 or brett.wilkison@pressdemocrat.com.
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