5. Non-Bypassable Charges
Several parties express concern with how the applications propose to handle any stranded costs resulting from the Fuel Cell Projects.
PG&E proposes that consistent with several prior Commission decision, it be allowed to recover any stranded costs associated with the Fuel Cell Project through an NBC for a ten-year period following commercial operation of the plants.9 Merced Irrigation District, Modesto Irrigation District, and CCDC responded to PG&E's proposal by requesting that the Commission confirm that according to D.08-09-012, customer generation departing load (CGDL) and municipal departing load (MDL) will not have to pay any NBCs to collect stranded costs resulting from the Fuel Cell Projects. In its reply, PG&E agreed that any recovery of stranded costs would be subject to the limitations and conditions of D.08-09-012.
In contrast to PG&E's proposal, SCE suggests that all customers, including MDL and customers otherwise excluded from NBCs associated with new generation, such as CGDL customers, should pay for stranded costs from its fuel cell project. SCE reasons that since the project is a demonstration of an emerging technology and will provide educational and market transformative effects for all customers, all customers should pay any stranded costs, i.e. above-market costs, associated with the project.
CMUA and EPUC oppose SCE's proposal to charge the cost of the fuel cell program to all customer classes. According to both parties, the Commission established in D.08-09-012 that there are two categories of NBCs associated with new generation resources, those arising from D.04-12-048 relating to most new generation added by the utilities, and those arising from D.06-07-029 relating to generation resources that are predominantly for reliability purposes. CMUA and EPUC further assert the Commission established in D.08-09-012 that MDL and CGDL customers are excluded from paying any NBCs under D.04-12-048 and D.06-07-029 that arise from the utilities' "new generation resources."10 CMUA and EPUC contend the Fuel Cell Projects fall within the definition of new generation resources and it is improper for SCE to suggest deviation from D.08-09-012 in this application and attempt to create a new category of generation for demonstration and educational purposes that would deviate from the mandates of D.08-09-012.
WPTF opposes recovery of any stranded costs related to either the PG&E or SCE Fuel Cell Projects. WPTF argues that the projects are ineligible for stranded cost recovery under D.08-09-012 because 1) there was no competitive procurement process for these UOG projects; and 2) the projects do not qualify as costs to meet resource adequacy requirements under Pub. Util. Code Section 380(g). As a result, WPTF argues that PG&E and SCE shareholders should bear any above-market, or stranded costs of these projects.
CMUA and EPUC are correct that MDL and customers otherwise excluded from new generation NBCs, such as CGDL customers, should be exempt from any stranded costs of the Fuel Cell Projects. In D.08-09-012, the Commission is clear that CGDL and MDL customers are excluded from paying D.04-12-048 and D.06-07-029 NBCs. (D.08-09-012, Ordering Paragraph 2.) The Fuel Cell Projects are new generation resources as defined in D.08-09-012, even if the utilities' major reason for pursuing the project is for demonstrative and educational purposes. Therefore, we reject SCE's suggested treatment of Fuel Cell Project stranded costs. We will not deviate from D.08-09-012 here and create a new category of "demonstration project" that would allow SCE to charge stranded costs from this project on MDL and other customers exempt from NBCs according to D.08-09-012. We agree with CMUA that any deviation from the guidance set forth in D.08-09-012 is more appropriately considered as a petition to modify that decision.
That said, we understand SCE's concerns and believe they raise a legitimate issue, albeit one that is better raised via a petition to modify. In comments on the proposed decision, WPTF argues that because the primary benefits of the project accrue to society at large, the costs should be broadly applied either via taxation or some other means.11 In many respects, WPTF's arguments stem from the same concern SCE raises to support its proposal to share the stranded costs across all bundled and departing load customers. Again we do not believe changes to determinations made in D.08-09-012 are appropriately made here, but we encourage parties who believe changes are warranted to file a petition for modification on these issues. In addition, we reject WPTF's argument that shareholders should bear the stranded costs of these projects because we have already found that PG&E and SCE met the requirements for competitive solicitation of these projects. Again, we will treat these projects as new generation resources and follow the NBC guidance in D.08-09-012 for cost recovery.
9 PG&E cites D.04-12-048, D.06-06-035, and D.06-11-048 as providing guidance on stranded cost recovery.
10 D.08-09-012 states, "New generation includes generation from both fossil fueled and renewable resources contracted for or constructed by the investor-owned utilities subsequent to January 1, 2003." (D.08-09-012 at 1, n. 1.)
11 WPTF Comments, 3/22/10 at 4-5.
