PSC questions PacifiCorp bid process

State regulators on Friday again centered their attention on Utah's lack of rules on competitive bidding for new power generation.

The meeting was the second time parties came together since Portland-based PacifiCorp chose itself from more than 100 outside bids to build a $350 million power plant near Mona, Juab County.

Utah Public Service Commission Chairman Ric Campbell said the meetings eventually should lead to new rules governing how PacifiCorp conducts its bidding process.

"If the Legislature is unable to do it, we will," said Campbell, who added that he thinks the process will take another three to six months.

PacifiCorp has been criticized under the current process for acting simultaneously as a competitor, jury and judge in the bidding process. In the Currant Creek case, the utility offered its own benchmark model against other competitive bids, analyzed those bids through an in-house model and ultimately chose itself as the winning bidder.

In March, the three-member commission concluded that the Currant Creek project was the most economical alternative of more than 100 outside bids received by PacifiCorp.

Yet during the hearings, F. David Graeber, principal of Dallas-based Spring Canyon Energy LLC, one of the losing bidders, maintained that his company could build the same plant for $310 million.

Spring Canyon did not participate in Friday's hearing, but representatives of California-based Calpine Corp. did show up.

"Disclosure is important for trust in the process if the utility is acting as a competitor and judge," said Steve Schleimer, Calpine's director of market policy and regulatory affairs. "It's OK for the utility to participate, but if they're going to participate what you really need is an independent evaluator that reports to the commission, not to the utility."

In the Currant Creek bidding process, PacifiCorp hired Navigant Consulting Inc. to monitor the methodology used to evaluate the proposals, but the utility was criticized because it paid Navigant hundreds of thousands of dollars for its work.

"This is a difference of opinion," said Artie Powell, rate analyst for the Utah Division of Public Utilities. "Some people said Navigant wasn't independent enough. The division took a stance that they were."

Last week PacifiCorp announced that Calpine lost a bid to Denver-based Summit Vineyard LLC to build a 534-megawatt, natural gas-fired power plant at the former Geneva Steel site.

Calpine has said it will dispute Summit's selection.

Also discussed Friday was whether PacifiCorp should be excluded from offering its own bid in the selection process. Some suggested more disclosure was needed by the utility in revealing its estimated total direct costs and the details surrounding its model.

Two more meetings are scheduled to discuss PacifiCorp's evaluation methods and the independence of an evaluator.

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E-mail: danderton@desnews.com