A long-term contract signed before electricity prices skyrocketed has enabled the University of California to avoid millions of dollars in higher electricity bills, UC President Richard C. Atkinson said today.

But Atkinson warned UC Regents meeting in San Francisco that expiration of a contract administered by the state Department of General Services may confront some UC campuses with much higher costs this year for natural gas.

The university protected itself against big fluctuations in the price of electricity starting in 1998, when, together with the California State University, it signed a four-year contract with energy supplier Enron Corp. of Houston. The contract locked in prices over a four-year period ending March 31, 2002.

Under the contract, for instance, UC San Diego saved $12.3 million during the eight-month period between April and November 2000 by not having to pay higher electricity rates resulting from deregulation.

UC is one of the largest users of energy in the state, consuming approximately 332 megawatts of electricity systemwide per hour at peak usage. The university generates more than 100 megawatts of that amount on its own, through generation plants on several campuses, including UCLA, UC Davis, the UC Davis Medical Center, UC San Francisco and Berkeley.

Atkinson proposed that the capacity of existing energy co-generation sites at UC San Diego, UCLA, and UC San Francisco be expanded by this summer. In addition, he proposed economic and environmental planning and analysis begin immediately for the "rapid construction" over the next three years of new or additional co-generation plants at UC Davis, UC Irvine, UC San Francisco's Mission Bay campus, and possibly UC Riverside.

The university is also participating in the state's Electrical Peak Load Reduction Program, which seeks to prepare state facilities to reduce the demand for electricity, especially during the heavy-load summer months.

Included in the UC effort are infrastructure changes in existing or planned facilities to make them more energy-efficient.

The outlook for natural gas prices is less sanguine, Atkinson told Regents.

Natural gas prices have increased to an estimated level of $64 million annually for UC, two and one-half times the previous annual expenditure of $26 million. UC had participated in the state Department of General Services contract for the supply of natural gas, but expiration of the contract now leaves the university exposed to market prices.

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