2. Background

In D.07-09-010, the Commission approved two power purchase agreements (PPAs), along with associated option agreements and proposed leases (collectively, Agreements), between SDG&E and developers J-Power, USA Development Company (J-Power) and Wellhead Power Margarita, LLC (Wellhead) (collectively, the Developers), and found that the Agreements did not require approval under Pub. Util. Code § 851. Under the Agreements, SDG&E would lease to each of the Developers a single parcel of land on which the Developers would construct and operate peaking generation facilities (peakers). The Developers would operate the peakers and sell the output to SDG&E under agreed terms. At the end of the 25-year terms of the Agreements, the leases would expire and SDG&E would take ownership of the peakers.

SDG&E filed a petition for modification of D.07-09-010 on September 5, 2008, followed by a minor amendment on September 11, 2008. On April 1, 2009, the Commission issued D.09-03-033, modifying D.07-09-010. In part, the Commission authorized: 1) modifications to selected sections of the decision that addressed the power purchase agreements (PPA) with J-Power and Wellhead; and 2) SDG&E to amend its Petition for Modification within 90 days to clarify whether the Wellhead peaker would be constructed on SDG&E property, and if not, to identify the new location of the peaker; and to provide details of all the changes regarding the Amendment. SDG&E subsequently requested an extension of the 90 day period, which was authorized in a ruling on July 1, 2009.

On September 22, 2009, SDG&E timely filed a petition for modification of D.07-09-010, as modified by D.09-03-033. SDG&E requests approval of its proposed modifications to the Amendment to the Wellhead Option Agreement (Amended Agreement (Amended Agreement) and the modified power purchase agreement (Modified PPA).