PG&E (TG:PCG)
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California regulators on Thursday approved two contracts that PG&E Corp.'s (PCG) utility signed with BrightSource Energy for solar power the utility will use to comply with state renewable energy requirements.

The contracts allow Pacific Gas & Electric Co. of San Francisco to buy 310 megawatts of power from two solar-thermal power plants built in the California desert by privately held BrightSource by 2014. A request by PG&E to purchase an additional 1,000 megawatts of solar power from BrightSource is still pending at the California Public Utilities Commission.

California requires regulated utilities like PG&E to use renewable sources for a fifth of the power they sell by 2010, with that mandate seen expanding to one-third renewables by 2020 under pending legislation.

In addition to the solar-power contracts, the CPUC approved a related agreement in which BrightSource will pay PG&E royalties from global sales of power generation equipment using its proprietary technology and from licensing fees, according to the CPUC. Terms of the royalty agreement were kept confidential.

Terms of the power contracts also were confidential, although PG&E said the prices are in line with market benchmark rates set by the CPUC. Those prices start at about 12.9 cents a kilowatt-hour in 2013, not including additional payments for peak daytime generation, rising each year to 16 cents a kilowatt-hour in 2020.

Edison International (EIX) unit Southern California Edison also has signed power purchase agreements with BrightSource, for a total of 1,300 megawatts of solar power to be delivered by 2016, with the first 100 megawatts due online by 2013.

Shares of PG&E were recently trading 18 cents lower at $39.83.

-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@dowjones.com