2. Factual and Procedural Background
On April 3, 2009, Southern California Edison Company (SCE) filed Application for Authorization to Recover Costs Necessary to Co-Fund a Feasibility Study of a California IGCC with Carbon Capture and Storage (Application).
The Application "seeks authorization to recover costs necessary for SCE to co-fund a feasibility study that will determine the technical feasibility and commercial reasonableness of an integrated gasification combined cycle (IGCC) facility with carbon capture for use in Enhanced Oil Recovery (EOR) with sequestration in Kern County, California."3
The Application states that:
The facility is referred to as Hydrogen Energy California (HECA). If shown to be technically feasible and commercially reasonable, and, if appropriate regulatory and commercial support can be established, the HECA facility will provide low-carbon, baseload electricity within California by gasifying non-conventional fuel resources (primarily petroleum coke from California's oil refineries or, as needed, blends of petroleum coke and other solid fuels) to produce hydrogen for electricity generation through an IGCC plant and capture the CO2 for EOR with storage.4
Thus, the facility, if feasible, would produce power while reducing greenhouse gases.
The Application has its roots in Resolution E-4227A, which was adopted on February 20, 2009, and directs SCE:
... to fund Phase I of a feasibility study to evaluate an Integrated Gasification Combined Cycle plant, approves a memorandum account to record the costs of this study and any costs spent on Phase II, and further determines that SCE must file an application in order to request recovery of these costs.5
Further language directing SCE to fund Phase I of the studies is in Ordering Paragraph 2, which states "SCE is directed to fund up to $17 million for Phase I of the HECA Study and to record those expenditures in HECAMA [Hydrogen Energy California Memorandum Account]."
The Resolution granted SCE a memorandum account, called HECAMA, to fund up to $17 million for Phase I of the studies, and up to an additional $13 million for Phase II of the studies. The Resolution stated that:
The Commission denies SCE's request to authorize recovery of certain costs recorded in the HECAMA via this resolution. SCE may seek recovery of the costs stemming from SCE's participation in Phase I and Phase II of the HECA study by filing an application with the Commission requesting authority for recovery of the costs. The application may also seek authorization to spend, record in the HECAMA and recover costs spent on Phase II of the HECA study. This order to SCE to fund Phase I of the HECA feasibility study does not prejudge the Commission's review of any subsequent SCE application. A timely application will receive priority review.6
On April 2, 2009, SCE entered into an agreement with HEI and made a first payment of $10 million later in the month, within 30 days of April 2 as provided for in the agreement.7
This Application, which was filed the day after the signing of the agreement, states that SCE is requesting that the Commission, pursuant to Resolution E-4227A:
Determine that it is reasonable for SCE to comply with Resolution E-4227A and provide up to $17 million in funding for Phase I of the HECA feasibility study, and establish ratemaking authorizing SCE to recover up to $17 million for Phase I costs recorded in the HECAMA upon Commission disposition of the Application; and
Establish ratemaking authorizing SCE to recover up to $13 million in costs for Phase II of the HECA feasibility study recorded in the HECAMA, subject to a reasonableness review in a future Energy Resource Recovery Account (ERRA) Reasonableness proceeding.
Approve SCE's Public Disclosure Plan to publicize the study results.8
The $30 million of funding by SCE would constitute approximately 20 percent of the $152 million budgeted for Phase I studies assessing initial feasibility and the Phase II Front End Engineering Design (FEED) study.9
Attached to the Application (served, but not filed) was SCE's testimony in support of the application.
Simultaneously with the filing of its application, SCE filed a Motion of Southern California Edison Company for an Expedited Procedural Schedule (SCE Motion).
On April 16, 2009, Resolution ALJ 176-3232 reached a preliminary determination that this proceeding was ratesetting and that hearings would prove necessary.
On April 20, 2009, Pacific Gas and Electric Company (PG&E) filed a motion seeking party status in this proceeding.10 On April 27, 2009, The Utility Reform Network (TURN)11 and the Commission's Division of Ratepayer Advocates (DRA)12 filed protests. TURN protested that recovery of costs should require a full review of the reasonableness of costs, not just a review to determine whether the application meets the requirements set forth in Resolution E-4227A. DRA, which filed an appeal of Resolution E-4227A, protested that the Commission should hold this proceeding in abeyance pending resolution of the appeal.
On April 28, 2009, SCE filed Southern California Edison's (U-338-E) Proof of Compliance with Rule 3.2 of the Commission's Rules of Practice and Procedure along with three exhibits documenting SCE's provision of notice of its proposed rate increase.
On April 28, 2009, an Administrative Law Judge's Ruling Accelerating Schedule for Protests or Comments, Setting a Prehearing Conference (PHC) for May 8, 2009, and Granting Pacific Gas and Electric's Request (PG&E) for Party Status (ALJ Ruling) mailed. In addition to setting the PHC and granting PG&E party status, the ALJ Ruling set deadlines for protests or comments on the application and for the filing of PHC Statements.
On May 1, 2009, PG&E filed comments. In addition, the Commission received comments from San Diego Gas & Electric Company and Southern California Gas Company (filing jointly) and from the Independent Energy Producers Association (IEP). On May 6, 2009, SCE filed its response to protests and comments.
On May 7, 2009, TURN, DRA, and Hydrogen Energy International (HEI) and SCE filed PHC Statements for consideration at the PHC, which took place in San Francisco on May 8, 2009. On May 26, 2009, the assigned Commissioner issued a Scoping Memo and Ruling of Assigned Commissioner, setting the scope of issues in the proceeding and a timetable for case management.
On July 1, 2009, HEI was selected by the National Energy Technology Laboratory of the U.S. Department of Energy (DOE) for negotiations leading to a $308 million award under DOE's Funding Opportunity Announcement entitled "Clean Coal Power Initiative - Round 3" (CCPI-3).13
Evidentiary Hearings took place on September 1-3, 2009 in San Francisco. SCE, HEI, DRA, and TURN filed and served opening briefs on September 23, 2009.
On September 24, 2009, the Commission adopted Decision (D.) 09-09-049, which modified Resolution E-4227A and denied rehearing of the resolution, as modified. Specifically, D.09-09-049 modified Ordering Paragraph 2 of Resolution E-4227A, cited above, to delete the words directing SCE to fund the feasibility studies. Ordering Paragraph 1 of D.09-09-049 states:
Ordering Paragraph No. 2 of Resolution E-4227A is modified to read as follows: "SCE shall record no more than $17 million for Phase I of the HECA Study in the HECAMA."
SCE, HEI, DRA, and TURN filed and served reply briefs on September 30, 2009.
On September 30, 2009, an ALJ Ruling scheduled public participation hearings (PPH) for October 28, 2009 in Bakersfield, CA, which is a major city close to the site of the proposed project.
On October 16, 2009, an ALJ Ruling ordered SCE to provide notice of the PPHs through newspaper notices and public service announcements in Spanish language media. The ruling ordered these steps to remediate for SCE's failure to provide notice of the evidentiary hearings pursuant to Rule 13.1(b) of the Commission's Rules of Practice and Procedure, and in place of the notice otherwise required by that Rule.14
On October 27, 2009, SCE submitted proof of compliance with the October 16, 2009 ALJ Ruling.
The PPHs took place at 1:30 and 6:30 p.m. on October 28, 2009, in Bakersfield at the Bakersfield City Hall Council Chambers. Following the PPHs, the case was submitted.
3 Application at 3.
4 Application at 1.
5 Resolution E-4227A at 1.
6 Id. at 1-2.
7 SCE-1 Attachment 4; TR at 28:6-10.
8 Application at 5.
9 Application at 4.
10 Motion of Pacific Gas and Electric (U 39 E) to Become a Party, April 20, 2009.
11 Protest of The Utility Reform Network (TURN Protest), April 27, 2009.
12 Protest of the Division of Ratepayer Advocates to the Application of Southern California
Edison Company for Authorization to Recover Costs Necessary to Co-Fund a Feasibility Study
of a California IGCC with Carbon Capture and Storage (DRA Protest), April 27, 2009.
13 Ex. SCE-2 at 17.
14 The evidentiary hearings were noticed properly by the Commission through publication in the Commission's Daily Calendar.
