COM/JB2/jt2 Date of Issuance 10/19/2009

Decision 09-10-027 October 15, 2009

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Application of San Diego Gas & Electric Company (U902E) for Approval of the Celerity Distributed Generation Supply Contract.

Application 08-10-003 (Filed October 3, 2008)

DECISION APPROVING THE APPLICATION OF SAN DIEGO GAS & ELECTRIC COMPANY FOR APPROVAL OF THE CELERITY DISTRIBUTED GENERATION SUPPLY CONTRACT

1. Summary

This decision grants San Diego Gas & Electric Company's (SDG&E) application for approval of the Celerity Distributed Generation supply contract. Under the terms of the contract, Celerity Energy Partners San Diego LLC (Celerity) will provide up to 25 megawatts of reliable, dispatchable power to SDG&E by aggregating and coordinating the generation from a number of relatively small diesel backup generators (BUGs). The price for this capacity is significantly lower than prices offered to SDG&E in responses to a recent solicitation for peaking resources. In addition, Celerity will install new filters on the BUGs, significantly reducing their emission rates for certain types of pollutants such as particulates and carbon monoxide. In order to ensure that ratepayers obtain these benefits, we condition our approval of the contract on Celerity obtaining approval from the Commission and the California Independent System Operator that the full contracted amount of capacity will count towards SDG&E's resource adequacy requirements, and that new emission filters are installed on all BUG units participating in this program.