COM/MP1/jf2/acb* Mailed May 7, 2004

Decision 04-05-018 May 6, 2004

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Rulemaking to implement the provisions of Public Utilities Code § 761.3 enacted by Chapter 19 of the 2001-02 Second Extraordinary Legislative Session.

Rulemaking 02-11-039 (Filed November 21, 2002)

DECISION ADOPTING GENERAL ORDER

IMPLEMENTING AND ENFORCING ELECTRIC

GENERATOR GENERAL DUTY STANDARDS,

MAINTENANCE STANDARDS, AND

CAISO'S OUTAGE COORDINATION PROTOCOL

TABLE OF CONTENTS

Title Page

DECISION ADOPTING GENERAL ORDER 1

IMPLEMENTING AND ENFORCING ELECTRIC 1

GENERATOR GENERAL DUTY STANDARDS, 1

MAINTENANCE STANDARDS, AND 1

CAISO'S OUTAGE COORDINATION PROTOCOL 1

A. Background 3

B. Procedural History 5

C. Commission Jurisdiction 6

D. Implementation and Enforcement Approach 11

E. Participants' Major Concerns 12

1. General Concerns 13

a. Delegation of Functions to Staff 13

b. Procedures to Implement Standards 14

c. Enforcement Procedures 15

d. Potential Conflict with Other Authorities 16

e. Incorporation in Tariff 17

f. Amendments to Standards 21

2. General Duty Standards 23

a. Enforceability 23

b. Relationship with Existing Rules 24

c. Authority to Adopt, Implement and Enforce General Duty Standards 25

3. Maintenance Standards 26

a. Status of Appendix A to Standards 26

b. Unique Characteristics of Generating Assets 27

c. Overlap with Other Requirements 27

d. Relationship to Commission's Ratemaking and Regulatory Functions 29

4. Hydroelectric Logbook Standards 30

F. CEQA Compliance 31

G. Comments on Draft Decision 32

1. Comments on ALJ Thorson's Draft Decision 32

2. Comments on Draft Alternate Decision 40

H. Assignment of Proceeding 41

Findings of Fact 42

Conclusions of Law 44

ORDER 46

Attachment A GENERAL ORDER 167

Appendix A General Duty Standards For Operations and Maintenance

Appendix B Generator Logbook Standards (Thermal Energy)

Appendix C Generator Maintenance Standards

Appendix D Generator Operation Standards [Reserved]

Appendix E Fines for Specified Violations

Appendix F Generator Logbook Standards (Hydroelectric Energy)

Attachment B Commission Responses to Comments on Draft General Order Dated October 2, 2003

Attachment C Participants Submitting Comments on Draft General Order Dated October 2, 2003

DECISION ADOPTING GENERAL ORDER

IMPLEMENTING AND ENFORCING ELECTRIC

GENERATOR GENERAL DUTY STANDARDS,

MAINTENANCE STANDARDS, AND

CAISO'S OUTAGE COORDINATION PROTOCOL

We adopt a General Order (GO) providing rules for the implementation and enforcement of (1) General Duty Standards for Operation and Maintenance (General Study Standards) and (2) more detailed Maintenance Standards for Generators (Maintenance Standards) for electric generation facilities owned by an electrical corporation or located in the State of California. By adopting the GO, set forth as Attachment A to this decision, we also enforce the Outage Coordination Protocol adopted by the California Independent System Operation (CAISO). We issue the GO in response to legislation enacted by the California Legislature in 2002, now codified at Pub. Util. Code § 761.3.

While the General Duty and Maintenance Standards themselves were developed and adopted by the California Electricity Generation Facilities Standards Committee¹ ("Standards Committee" or "Committee"), the California Legislature has directed us to enforce and implement these provisions. Similarly, while CAISO has developed and adopted the Outage Coordination Protocol, the Legislature has also required that we enforce the Protocol. Our implementation and enforcement of the General Duty Standards, Maintenance Standards, and Protocol will help ensure the reliable operation of Generating Assets subject to our authority and provide for public health and safety.

We intend that this GO will be the basic framework for implementing and enforcing all standards and amendments adopted by the Standards Committee including general duty, logbook, maintenance, and operation standards. As a result of today's decision, the General Duty Standards and Maintenance Standards, as well as the generators' obligations under the CAISO Protocol, become enforceable through the GO. After other requirements and standards are adopted by the Committee, filed with us, and formally acted upon by us, we intend that these other requirements and standards will be appended to the GO and thereafter implemented and enforced by the Commission. Once this proceeding is concluded, the GO will codify all standards and requirements applicable to facilities used for the generation of electric energy (pursuant to Pub. Util. Code § 761.3)² and set forth the procedures to be used for implementation and enforcement.

A. Background

The statewide energy crisis of 2000-2001 resulted in many economic and personal hardships to people and businesses within California. In our recent filing with the Federal Energy Regulatory Commission (FERC), we indicated that the total cost of electricity needed to serve California, for the period of May 2000 through June 2001, was $19 billion higher than the cost incurred during the combined years of 1998, 1999, and 2000. Our filings with FERC document many instances of Generating Assets being placed on reserve status for questionable reasons and resulting in electricity power outages.³

In 2002, the California Legislature passed Senate Bill SBX2 39 during its second extraordinary session to help avoid such outages in the future. The Legislature determined that the public interest, as well as the public health and safety, requires the electric generating facilities and power plants in the state to be maintained appropriately and operated efficiently.

We commenced this rulemaking proceeding to address our obligations under the legislation, now codified at Pub. Util. Code § 761.3. Under the statute, we worked with CAISO to create the Standards Committee. As contemplated by the legislation, both our staff and that of CAISO provide administrative assistance to the Standards Committee. The Standards Committee is responsible for adopting standards for the maintenance and operation of facilities that generate electric energy for use or compensation within the state. The Standards Committee has adopted Logbook Standards for Thermal Powerplants (Thermal Logbook Standards) (filed with us on April 2, 2003), Maintenance Standards for Generators with Suggested Implementation and Enforcement Model (Maintenance Standards)(filed with us on May 16, 2003), and Revised General Duty Standards for Operation and Maintenance (General Duty Standards) (filed with us on June 6, 2003). The CAISO has previously adopted the Outage Coordination Protocol (Protocol). ⁴

Our decision today and the accompanying GO address the implementation and enforcement of the General Duty and Maintenance Standards, as well as the enforcement of the CAISO Protocol. We are contemporaneously considering a draft decision to enforce the Thermal Logbook Standards. Once we have finalized the logbook decision, the operative provisions of that decision will be included in the GO we adopt today.

In the next few months, we anticipate that the Committee will adopt operation standards. Once these operation standards are filed with us, we also will decide how they will be implemented and enforced. We intend to incorporate these operation standards into today's GO and use the GO to implement and enforce these standards.

Today's decision also refers one of the Committee-adopted General Duty Standards back to the Committee with a request that the Committee consider revising that Standard to limit its scope and applicability.