Competitive bypass strategies for Pacific Gas and Electric

PG&E

Competitive Bypass of PG&E

Given the higher degree of overall efficiency and the lower costs and resources required for transmission provided by on-site cogeneration facilities and the bypassing of PG&E's systems, it is recommended that the CPUC continue in its encouragement of cogeneration through the provisions of financial incentives and protective measures that ensure a backup power supply. This will provide the greatest potential value to consumers and tax payers in terms of technological, natural, and financial resources used in the generation of heat and electricity, and thus is the best course of action from an economic standpoint. Continuing to encourage cogeneration will also force PG&E and other utility companies to become more efficient and effective competitors, whereas discouraging cogeneration would allow these companies to build and maintain more monopolistic control over power supplies, which would lead to distinct disadvantages for business and residential consumers.

Arguments in Favor of the Recommendation

There are several key reasons that this recommendation is preferable to the alternative. Heat and electricity are both necessities for many businesses as well as for residential customers, and demand for these commodities are generally increasing. The varied pricing structures that have been implemented have not been adequate as controls for the demand of electricity, but lead to inequalities and certain inefficiencies in the production and distribution of energy. Cogeneration allows business to create both electricity and heat more efficiently, allowing utility companies to focus on residential sales and maximize the utility and efficiency of their services. Overall energy supply is also increased, keeping prices lower in areas of heavy usage and also decreasing costs associated with distribution over wide networks. Demand can increase without the need for an expansion of existing power plants or the creation of new points of generation and distribution.

Counterarguments