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Decision 11-04-033 April 14, 2011
Before The Public Utilities Commission Of The State Of California
Order Instituting Rulemaking on the Commission's Own Motion into Combined
Heat and Power Pursuant to Assembly Bill 1613.
(Filed June 26, 2008)
ORDER GRANTING LIMITED REHEARING OF DECISION (D.) 10-12-055
ON THE ISSUE OF GHG COMPLIANCE COSTS, MODIFYING DECISION, DENYING REHEARING OF DECISION, AS MODIFIED,
AND DENYING MOTION TO STAY
Today's decision disposes of the applications for rehearing of Decision
(D.) 10-12-055, filed by the Joint Utilities.1 D.10-12-055 was issued in response to a Petition for Modification of D.09-12-042, filed by the Joint Utilities. In D.09-12-042, we adopted the policies and procedures for purchase of excess electricity from eligible Combined Heat and Power ("CHP") systems by an electrical corporation under The Waste Heat and Carbon Emissions Reduction Act, Assembly Bill 1613 (Stats. 2007, ch. 713) ("AB 1613").
On January 18, 2011, PG&E and SDG&E together filed a timely application for rehearing of D.10-12-055, and SCE separately filed a timely application for rehearing of D.10-12-055. Concurrently, the utilities jointly filed a motion for stay of D.10-12-055 until the later of resolution of the Joint Utilities' Petition for Enforcement pursuant to Section 210(h) of the Public Utility Regulatory Policies Act of 1978 ("Enforcement Petition") filed with the Federal Energy Regulatory Commission ("FERC") on January 31, 2011,2 or the effective date of a Commission decision resolving their applications for rehearing of D.10-12-055.
Both applications for rehearing claim that the price to be paid to AB 1613 generators violates both the Public Utility Regulatory Policies Act of 1978 ("PURPA")3 and FERC regulations because it is higher than the utilities' avoided costs and contend that the record is insufficient to support the pricing adopted by D.10-12-055.4 Specifically, PG&E/SDG&E argue that the AB 1613 price formula exceeds avoided cost because it pays a firm price for an as-available product. (PG&E/SDG&E's Rehrg. App., at p. 2.) SCE claims the price formula exceeds avoided costs because it is higher than other avoided costs paid to other QFs with "identical relevant characteristics." (SCE's Rehrg. App., at p. 2.) Both rehearing applications also offer multiple variations on these avoided cost arguments and also claim the location bonus and the pass through of greenhouse gas ("GHG") compliance costs to the purchasing utility affirmed in
D.10-12-055 violate PURPA because they do not constitute avoided cost payments. (PG&E/SDG&E's Rehrg. App., at pp. 11-13; SCE's Rehrg. App., at pp. 10-13.)
San Joaquin Refining Company, Inc. ("San Joaquin") filed a response and California Clean DG Coalition ("CCDC") and FuelCell Energy Inc. ("FuelCell") filed a joint response to the Joint Utilities' rehearing applications and their motion for stay. The Joint Utilities filed a reply to the responses on their motion for stay.
We have reviewed each and every argument raised in the rehearing applications and are of the opinion that rehearing should be granted on the limited issue of the GHG compliance costs, and that modifications to D.10-12-055, as described herein, are warranted to: (1) modify our treatment of GHG compliance costs to be consistent with avoided cost principles; (2) clarify why the market price referent ("MPR") based energy price adopted by D.09-12-042 and affirmed in D.10-12-055 is consistent with avoided cost principles; (3) clarify why the 10% Location Bonus is consistent with avoided cost principles, and (4) conform D.09-12-042 with the modifications ordered by D.10-04-055 and D.10-12-055, as modified herein. Rehearing of D.10-12-055, as modified, is denied. We also deny the Joint Utilities' motion for stay as without merit.
1 We refer to Pacific Gas and Electric Company ("PG&E"), Southern California Edison Company ("SCE"), and San Diego Gas and Electric Company ("SDG&E") collectively as the "Joint Utilities".
2 See FERC Docket No. EL11-19-000.
3 PURPA is codified in scattered sections of 16 U.S.C. including § 796 (definitions), § 824a-3, and §§ 2601 et seq.
4 FERC regulations define "avoided costs" as "the incremental costs to an electric utility of electric energy or capacity or both which, but for the purchase from the qualifying facility or qualifying facilities, such utility would generate itself or purchase from another source." (18 C.F.R. § 292.101(b)(6).)