Practice Areas & Industries: Winston & Strawn LLP

Practice/Industry Group Overview

CPUC Experience

Before the CPUC, the Winston & Strawn energy group has represented a wide range of independent power producers, reflecting all types of generating technologies in virtually every significant regulatory development affecting the independent power industry in California since 1981.  Below is a brief overview of the group’s experience, organized by generating technology.
 
Cogeneration/Combined Heat and Power—The energy group’s representation of independent power producers dates back to the early 1980s, when the Public Utility Regulatory Policies Act of 1978 (PURPA) was first implemented to require investor-owned utilities to purchase power from qualifying facilities (QFs), including cogeneration facilities. As QF developers struggled to convince unwilling utilities to enter into negotiated power purchase agreements, one of our attorneys negotiated some of the first individual power purchase contracts and was subsequently instrumental in convincing the CPUC to require utilities to offer and sign the so-called “standard offer” QF contracts.  This achievement set the standard for the industry and was a key factor in California becoming the leading state for QF development.
 
In 1985, along with several clients, one of our attorneys founded the California Cogeneration Council (CCC), an ad-hoc association of companies that own and operate natural gas-fired cogeneration facilities. The CCC has been the leading group advocating for the policies and regulations that have encouraged and sustained cogeneration development in California. The energy group has been active on behalf of the CCC in every significant proceeding before the CPUC since the inception of the CCC.  The group’s experience includes the periodic development of the “avoided cost” rates that utilities are obligated to pay QFs under PURPA-based contracts, rate setting and rate design for natural gas transportation services, policies associated with the deregulation and restructuring of California’s electricity system, and, most recently, the establishment of requirements to enable QFs to obtain new or renewed contracts with the utilities.

The energy group’s efforts have consistently yielded important benefits for its QF clients. The group took the lead position during the California energy crisis in Washington, D.C. and Sacramento on behalf of QF power projects operating in California, and negotiated favorable settlements and contract amendments that protected cogenerators during the energy crisis, including in connection with the bankruptcy proceeding of Pacific Gas and Electric Company (PG&E). One of our attorneys also secured a place for a QF client on the Official Creditor’s Committee in the PG&E bankruptcy, and then acted as counsel to that client after assisting it in being elected co-chair of the committee. The energy group also has played and continues to play a very active role before the California legislature on issues impacting cogeneration in the state.

More recently, through proceedings before the CPUC, the energy group again secured new standard offer contracts for QFs; this time for QFs whose long-term contracts with California’s investor-owned utilities have or will expire in the near term. In summary, the cogeneration story in California is a prime example of the energy group’s ability to shape regulatory and legislative policies to support the initial investment in, and continued viability of, this important California industry.
 
Renewables—The energy group has played a similarly instrumental role in the development of policies that support and encourage the development and operation of renewable power projects in California. In the 1980s, this included assistance in the development of wind, geothermal, biomass, and other renewable technologies. In more recent years, the group has acted on behalf of the California Wind Energy Association (CalWEA), a trade association of wind developers and other wind industry participants, in regulatory and legislative matters in California, including in connection with the formation and ongoing development of California’s Renewables Portfolio Standard (RPS) program. The group had a leading role in developing policies to guide the utilities’ procurement of renewable power to meet the RPS requirements and, as such, has particular experience in issues relating to the procurement of renewable power in California. The team is now regularly called upon by developers of renewable projects to assist in preparing bids into utility solicitations and has extensive experience negotiating and advising on renewable power purchase agreements. The group also has represented a coalition comprising CalWEA, the California Biomass Energy Alliance, and the California Landfill Gas Coalition in a number of regulatory proceedings at the CPUC.

Conventional Thermal—The energy group has represented owners and operators of conventional thermal power plants in California, particularly large natural gas-fired facilities. The group has been active for these clients in a range of proceedings and matters before the CPUC and other state and local agencies. In recent years, the group was actively involved in defending large generator clients in the numerous investigations, regulatory proceedings, and legal challenges arising from the California energy crisis, including those initiated and conducted by the CPUC, and in connection with negotiating and documenting comprehensive settlements of those matters. Attorneys on the team also participated extensively in the CPUC proceedings leading up to the development of policies for implementing and enforcing new generator operation and maintenance standards that were developed in the wake of the energy crisis in an attempt to exert greater regulatory control over the state’s large wholesale generating facilities.

The energy group continues to represent its large generator clients in connection with audits, on-site inspections, and other ongoing monitoring conducted by the CPUC through its Consumer Protection and Safety Division.

More recently, the energy group has represented its large generator clients in key proceedings before the CPUC regarding utility procurement policies and the establishment of resource adequacy requirements for load serving entities (LSEs). The CPUC’s resource adequacy program generally requires LSEs to demonstrate that they have procured sufficient capacity to serve their customers’ projected electricity demand, plus a 15 to 17 percent reserve margin. The CPUC recently added a local component to the program, requiring LSEs to demonstrate that they have procured sufficient capacity to serve projected demand in local capacity constrained areas. These policies are influencing LSE procurement practices, and shaping the further development of electricity markets in the state.

CEC Experience

The energy group also has experience with the CEC licensing process for thermal power plants. The team obtained approval for the Three Mountain Power Project, a 500 MW natural gas-fired combined cycle generating facility in Northern California that involved an extremely contentious and complex review process.  The group’s attorneys litigated a number of challenges initiated by the California Unions for Reliable Energy, or CURE, the group funded by the state’s labor unions to challenge projects that do not make up-front contractual commitments to use union labor.

In addition, the energy team currently represents Mirant Corporation in connection with modifications to its proposed Contra Costa Unit 8 Power Project, and the transfer of assets associated with that project to PG&E. In that case, the team recently obtained a novel approval from the CEC that will allow PG&E to restart construction in advance of obtaining certain resource agency approvals that ultimately will be needed to operate the project, thereby allowing construction to proceed immediately, which is critical in meeting California's growing demand for electrical capacity.