Capitol Alert

Bankrupt PG&E makes deal to cut solar power prices. Won’t abandon CA’s clean energy goals

PG&E Corp., scrambling to save money, has been hinting for months it might scrap some of its expensive contracts to buy solar and wind energy — a move that would seriously undermine California’s efforts to turn its electricity grid green.

On Thursday, the bankrupt utility signaled it will stick with clean energy — if the price is right.

Facing pressure from state officials to reduce its dependence on fossil fuels, PG&E announced it has made a deal with three solar farms and two energy-storage providers that will give the utility a 10 percent discount.

In documents filed in U.S. Bankruptcy Court, PG&E said the new deals will save the company about $20 million over the next 15 years. While that isn’t a lot compared to PG&E’s multibillion-dollar mountain of debt, the new agreements could serve as a template for future deals as the company seeks to reduce costs.

Utility spokesman Paul Doherty said the suppliers reached out to PG&E, and the utility agreed to renegotiate their contracts.

The five projects are still under development. The three solar farms, all in Kern County, are controlled by a company called Recurrent Energy. The storage facilities, to be located in the Morgan Hill area south of San Jose, are owned by mNOC AERS LLC and Hummingbird Energy Storage LLC.

PG&E already gets more than one third of its electricity from solar, wind and other renewable sources, but is under pressure to increase its green power commitment. SB 100, which passed the Legislature last year, says California utilities must get half their power from renewables by 2026, 60 precent by 2030 and totally green by 2045.

As the state’s largest utility, PG&E’s bankruptcy complicates the state’s expectations to meet those targets, however.

Companies in bankruptcy have broad authority to cancel existing contracts, if the bankruptcy judge agrees that’s a reasonable business decision. PG&E has more than $40 billion worth of contracts with clean energy suppliers and has suggested it could cancel some of them.

The big reason is price: Most of its solar contracts were signed when solar was a lot more expensive than it is now. Standard & Poor’s and other Wall Street analysts have estimated that PG&E could save $2 billion or more by scuttling some of the pricier solar contracts.

PG&E even secured a court ruling in June giving it more leeway to unwind its contracts. The bankruptcy judge said the Federal Energy Regulatory Commission couldn’t halt PG&E from canceling its deals — denying FERC’s efforts to intervene in the process.

State officials, though, have vowed to make PG&E stick its green energy contracts. In June Gov. Gavin Newsom’s chief spokesman Nathan Click said the governor “will not allow bankruptcy to interfere with the state’s renewable energy goals.”

Related stories from Sacramento Bee

Dale Kasler covers climate change, the environment, economics and the convoluted world of California water. He also covers major enterprise stories for McClatchy’s Western newspapers. He joined The Bee in 1996 from the Des Moines Register and graduated from Northwestern University.