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California: Large energy buyers find market dry

Shaken energy managers throughout Silicon Valley are finding cheap, long-term electricity deals a thing of the past as they go about trying to replace expiring energy contracts.

Wholesale electricity suppliers to large businesses are generally offering only short-term deals in the six-month range and those are pegged to the day-ahead market on electricity prices.

"There is no market out there," says Earl Bouse, an energy consultant for such large energy users.

More than 6,000 large businesses, including many of Silicon Valley's most prominent corporations, signed long-term contracts in the summer of 2001 when electricity prices collapsed. Rates were often at 50 percent of what Pacific Gas & Electric Co. could offer.

But now those contracts are expiring and large users are searching for options.


With some energy experts predicting a new energy crisis looming in 2006-07 when the state may be forced to close many of its older, air-polluting power plants, energy suppliers are reluctant to get tied down with long-term contracts. The state's goal of a 15 percent generation reserve also could tie up excess supplies in the coming years, which could keep prices higher later this decade.

This has left corporate energy directors scrambling to find new deals to ensure their companies have an adequate supply of energy on the private market.


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