Pacific Gas & Electric (PG&E), the major California investor-owned utility, is buying what would be its first wind farm, a proposed 246 megawatt project under development by Iberdrola Renewables.

The utility says it has a contract with Iberdrola to purchase and operate the Manzana Wind Project in the Tehachapi area of Eastern Kern County -- historically a California wind hot bed that is seeing resurgence in new project development.

The deal would require approval from the California Public Utilities Commission. PG&E says the project could begin generating power by December 2011.

California utilities must serve 33% of their electricity demand with renewable energy by 2020. To this point, PG&E has typically contracted to purchase electricity from third-party renewable generators, rather than owning projects itself.

It is also pursuing 250MW of utility-owned solar photovoltaic, announced earlier this year and billed as “PG&E’s first direct investment in renewable generation in over a decade”.

PG&E expects the Manzana project to cost ‘just over $900m,’ including payments to Iberdrola to develop and build the project. That would lead to a 1.1% increase in electricity rates in 2012 compared to 2009, or $0.25 a month on the average residential customer’s bill.

The utility serves some 15 million people in northern and central California.

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