Reworked Power Deal to Save State $71 Million

The state announced Thursday that it has renegotiated a $403-million long-term electricity contract for a savings of $71 million.

The changes to a 10-year contract with CalPeak Power cancel the construction of one of seven small “peaker” power plants, which are designed to run for short periods when electricity consumption rises. State officials say the new contract also gives the state more flexibility about when and how much power it must purchase.

The CalPeak contract is one of dozens signed by the state Department of Water Resources in the spring of 2001 when wholesale electricity prices were roughly 10 times higher than today. Gov. Gray Davis’ administration has been working for months to restructure the contracts with terms more favorable to the state.

Three of the six peaker plants CalPeak must build under the contract are already operating. Two more are expected to be finished by June and the last is scheduled to begin working in June 2003.