Conclusions of Law

1. Because the Celerity Agreement provides a low cost, local, peaking capacity resource that meets an identified need of SDG&E's, and that it will increase the usefulness of the capacity of the BUG resources while also reducing their emission rates for many pollutants, and that it makes use of existing sites rather than necessitating the development of new greenfield sites and associated transmission facilities, the Celerity Agreement should be approved.

2. Approval of the contract should be contingent upon the units' capacity qualifying towards SDG&E's resource adequacy requirements, and upon installation of air emission filters.

3. SDG&E's request to (a) receive its testimony into evidence as Exhibits 1 and 1(C), and (b) seal the confidential information found in Exhibit 1(C) pursuant to the confidential information guidelines set forth in D.06-06-066, should be granted.

ORDER

IT IS ORDERED that:

1. The application of San Diego Gas & Electric Company for approval of the Celerity Distributed Generation supply contract is approved, contingent upon the Commission and the California Independent System Operator determining that the contract capacity counts towards San Diego Gas & Electric Company's resource adequacy requirements and on all backup generator units participating in this program having air emission filters installed.

2. The request by the Alliance for Retail Energy Markets, that San Diego Gas & Electric Company be directed to sell any excess local resource adequacy capacity to other load serving entities relates to San Diego Gas & Electric Company's general practices of buying and selling generation as considered in other Commission proceedings, and not to the reasonableness of the specific contract at issue in this case, is therefore beyond the scope of this proceeding and is denied.

3. San Diego Gas & Electric Company's request to receive its prepared testimony and seal the confidential versions of such testimony is granted. These documents have been marked as Exhibits 1 and 1(C), respectively. San Diego Gas & Electric Company's confidential testimony shall remain sealed for a period of three years from the effective date of this decision pursuant to Decision 06-06-066.

4. Application 08-10-003 is closed.

This order is effective today.

Dated October 15, 2009, at San Francisco, California.

JOHN A. BOHN

RACHELLE B. CHONG

TIMOTHY ALAN SIMON

Commissioners

I dissent.

/s/ MICHAEL R. PEEVEY

President

I dissent.

/s/ DIAN M. GRUENEICH

Commissioner