Californians like to think they show the rest of the country the way to a clean energy future. Inconveniently, utility power purchase agreements (PPAs), which have been the principal economic model for renewable energy in the state, face legal collapse within two weeks. The PPA crisis is one of the consequences of the bankruptcy of Pacific Gas & Electric, the state’s largest utility. The immediate cause of PG&E’s filing on January 29 was the weight of its prospective liabilities for billions in wildfire damages allegedly caused by its transmission equipment. The company took the opportunity afforded by the bankruptcy court’s protection to “reject” more than $30bn of its high-cost, long-term PPAs for renewable energy. With the support of the Federal Energy Regulatory Commission (FERC), PG&E’s renewables suppliers are fighting the company’s attempt to default on its obligations. So far PG&E appears to have the support of the judge, Dennis Montali. On April 10, he announced that he would give PG&E and its PPA counterparties until May 3 to agree a resolution.
FT 18th April 2019 read more »