Calpine, California agree on $8.3 billion electricity pact

The state stepped into a breach created by the near-bankruptcy of California's two largest utilities. Blocked by state law from passing the full cost of electricity to their customers, Pacific Gas and Electric and Southern California Edison no longer can afford to buy power.

In early February, Calpine signed a 10-year, $4.6 billion contract to sell California up to 1,000 megawatts of electricity around-the-clock through 2011. Wednesday's deals include another 10-year contract to sell an additional 1,000 megawatts of electricity to California for up to $5.2 billion.

Although the values of the contracts are different, the average hourly rate in each deal is roughly $60 per megawatt hour, said Calpine spokesman Bill Highlander.

Calpine will begin selling the first 200 megawatts this July when the company opens new plants in Pittsburg and Yuba City. The full load of 1,000 megawatts won't start flowing until mid-2002.

California officials declined to discuss the new contracts. Gov. Gray Davis wants to keep the details under wraps until the state can negotiate long-term contracts with other major power generators based outside California.

In a separate 20-year contract also disclosed Wednesday, Calpine agreed to provide California up to 495 megawatts of electricity when the state's supplies run low. Calpine said the so-called "peaking generation" contract could be worth up to $3.1 billion.<