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ERCOT 2019 Summer Quarter Outlook

LCG, May 29, 2019-- LCG released a new summer (June – September 2019) report that looks at how the ERCOT grid copes with strained network conditions. Resource adequacy analysis for the region is especially important during extreme summer loading conditions. This summer the network is under particular scrutiny as the reserves have tightened because of recent retirements.

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South Field Energy Breaks Ground for 1,182-MW Power Plant

LCG, May 16, 2019--South Field Energy LLC announced yesterday its groundbreaking for an 1,182-MW, combined-cycle electric generating facility in Columbiana County, Ohio. The natural gas-fired facility is scheduled to commence operations in mid-2021 and represents a $1.3 billion investment.

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Industry News

California Capsule: Refund Hearings End Today

LCG, July 9, 2001Closed-door hearings at the Federal Energy Regulatory Commission in Washington are scheduled to end today and so far there is no sign of agreement between California and power producers over the amount of refunds due the state for overcharges, if any.

After two weeks, California was hanging adamantly to its demand for $8.9 billion from the power producers, while they were offering no more than forgiveness of $500 million in surcharges tacked onto their bills because of heightened credit risk in California and that only if they were paid.

Curtis L. Wagner Jr., FERC's top administrative law judge who is moderating the hearings, said "I'm still hoping for a big settlement, but we may just have partial settlements," adding "It's still hard to tell." However, he said he would not extend the talks beyond today.

Yesterday, the California Independent System Operator presented expert witnesses in support of its $8.9 billion claim. On Saturday, the power producers made their own presentartions in defense of their charges. Neither side has given an inch.

Michael Kahn, California's chief negotiator, seemed to favor an impasse. "The plan for California beyond Monday," he said, "is what the plan has always been. We want FERC to order refunds." As to reducing the state's demand, Kahn said forget it. "This is not a rug bazaar," he said.

If, as expected, the talks end without agreement, Wagner will have seven days to recommend his own settlement to the dispute. That, along with a transcript of the hearings, would go to the FERC commissioners for their deliberations.

Of the transcript, Wagner said "If you need something to cure insomnia, get the record and read it."

PG&E to Pay Calpine for QF Power
Calpine Corp. said Friday that Pacific Gas & Electric Co. had agreed to a five-year deal with Calpine's qualifying facilities that will clear the way for payment of about $267 million in power sold by the QFs to the utility.

The arrangement is expected to be approved on Thursday by the U.S. Bankruptcy Court for the Northern District of California.

Under the deal, Calpine will provide PG&E with power at an average price of $53.70 per megawatt hour. Calpine's 13 QFs provide about 450 megawatts of delivered power to the utility.

"By insulating against volatile natural gas prices, this agreement will help ensure our customers receive a reliable source of power at reasonable prices over the next five years," said Kent Harvey, PG&E's chief financial officer. He added that the company would like to execute similar deals with all 300 of its other QF contracts.

The agreement ends speculation that Calpine erred by not taking a reserve against its unpaid bills. Since California power purchasers most notably PG&E and Southern California Edison Co. fell behind in payments to wholesale power suppliers, those firms have taken reserves against their earnings to cover their exposure to the credit risk.

Calpine elected not to do so, raising eyebrows and causing some concern that the company could end up taking a charge of as much as 50 cents per share if it wasn't paid for any of the power it has sold.

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