A California consumer group criticized the announced state savings by Gov. Gray Davis‘ renegotiated power deals with Calpine, and other companies, that cut the state’s $ 43-billion long-term contract bill by $ 3.5-billion as ”vastly overstated.”
The Foundation for Taxpayers and Consumers Rights sent a letter to Davis outlining their objection to the new deals with Calpine, Constellation Energy and some small generators.
”To provide consumers with real relief from these exorbitantly priced contracts, the largest contracts — two 10-year deals signed with Calpine, each for 1,000 MW of power — should have dropped in price by approximately 60%,” FTCR said. ”Instead, one contract was reduced a mere 2%, from $ 61/MWh to $ 59.60/MWh, while the other was not reduced at all and remains at $ 58.60/MWh. These renegotiations appear to be little more than a fig leaf that does little to cover the obscene electricity rates Californians continue to pay.”
‘If companies will not agree to substantially reduce the price of the contracts as well as the length, then Californians would be better served by an aggressive litigation strategy rather than continued backroom negotiations that result in deals such as those you announced yesterday,” the letter said.
Separately, Calpine Chief Operating Officer James Macias said that the new deals will not harm the company’s financial situation. ”I am very confident that, between now and 10 to 15 years from now, prices will go up and we’ll sell that power at very attractive prices…. We don’t feel we have given up much,” he said.
The deals lifted Calpine shares Tuesday by 10%, but shares lost that gain after Calpine said Wednesday it expected weaker earnings and would sell up to 60-million newly issued shares of its common stock.