III. CONCLUSION

We dismiss the Motion for Stay of D.09-12-042 as moot. For the reasons stated above, we modify D.09-12-042 to: (1) clarify instances where reference to "avoided cost" is referring to the utilities' short-run avoided costs as previously adopted by the Commission in D.07-09-040; (2) clarify language in the Decision that could lead to ambiguity regarding the fact that the price adopted in the Decision is the price utilities must offer under the AB 1613 program; (3) correct an inaccuracy regarding the FERC's requirements for obtaining certification as a QF; (4) clarify statements referencing any above-market portion of contract costs; (5) clarify the statement that the pricing formula adopted in the Decision reflects the current market price for power; (6) clarify that the discussion regarding procurement of emissions allowances is merely illustrative; (7) include additional findings of fact regarding how DA and CCA customers receive benefits associated with the 10% location bonus; (8) delete references to D.02-11-074; and (9) correct typographical errors. Rehearing of D.09-12-042, as modified, is denied

THEREFORE, IT IS ORDERED that:

1. The Motion for Stay of D.09-12-042 filed by Joint Utilities is dismissed as moot.

2. D.09-12-042 shall be modified as follows:

a. The first sentence of footnote 6 on page 7 is modified to read:

"Indeed, CHP systems with more than 1 MW participating in this program never would be QFs if they do not apply to the FERC for certification to become a QF."

b. The first full sentence on page 11 beginning with "Finally as discussed in Section 3.4..." is deleted in its entirety.

c. The first sentence of the second full paragraph on page 13 beginning with "These factors all support..." is modified to read:

"These factors all support a conclusion that requiring the utilities to offer a certain price under the AB 1613 program would be within the Commission's authority."

d. The second sentence of the second paragraph on page 16 beginning with "While one could argue..." is modified to read:

"While one could argue that indifference would be achieved by setting the price equal to the short-run avoided cost price adopted in D.07-09-040 or the market price, we do not believe that such a narrow application would be the appropriate measure in this instance."

e. The first three sentences of the first paragraph on page 23 beginning with "This determination is supported..." are deleted in their entirety.

f. The fourth sentence of the first paragraph on page 23 is modified to delete the word "similarly."

g. The second paragraph on page 24 beginning with "The second consideration..." is modified as follows:

"The second consideration is what costs should be allocated to the benefiting customers. AB 1613 requires the costs and benefits associated with any tariff or contract entered into pursuant to the AB 1613 program to be allocated to all benefiting customers. As we discussed in Section 3.1 above, the purpose of this FIT is to encourage the development of a certain type of CHP system that provides certain energy efficiency and environmental attributes. The price utilities offer to the eligible CHP facilities should include costs associated with these energy efficiency and environmental attributes."

h. The second sentence of the third paragraph on page 24 beginning with "As discussed in this decision..." is modified to read:

"As discussed in this decision, pricing offered under the contracts shall include costs associated with GHG attributes, in the form of GHG compliance costs, and an adder for locating within certain load areas."

i. The first sentence of the second paragraph on page 39 beginning with "While we find..." is modified to read:

"While we find that the pricing formula adopted in this decision for determining the price utilities must offer to eligible CHP facilities reflects the marginal unit currently avoided by an eligible CHP facility, it is possible that the formula will need to be revised in the future as the market for power from this source of generation develops."

j. The third and fourth sentences of the first paragraph on page 47 beginning with "For compliance costs associated..." is modified to read:

"For instance, for compliance costs associated with procuring emissions allowances, as opposed to direct compliance costs in the form of fees or taxes, we believe that instead of reimbursing the Seller for allowance costs paid by the Seller, the Buyer shall procure allowances on behalf of the Seller. In this scenario, since the utility Buyer will be procuring allowances for its entire portfolio it will be better equipped to manage allowance procurement at a lower cost for ratepayers."

k. The first full sentence on page 69 beginning with "This price is not limited..." is modified to read:

"This price is not limited to the short-run avoided cost price adopted in D.07-09-040 or the CAISO market price."

l. Finding of Fact 20 on page 74 is modified to read:

"An electrical corporation should file an application seeking authorization to establish a maximum kilowatt hours limitation on the amount of excess electricity it must purchase under this program before a maximum MW limitation is set."

m. Finding of Fact 62 is added to read:

"A ten percent location bonus is appropriate in constrained areas because CHP sited in these areas would provide system benefits such as transmission and distribution upgrade deferrals and local grid stability and reliability."

n. Finding of Fact 63 is added to read:

"The record supports that a ten percent locational adder is an appropriate proxy for determining the locational benefits of the AB 1613 program."

o. Finding of Fact 64 is added to read:

"Because all retail end-use customers, including DA and CCA customers, receive transmission and distribution services from the investor owned utilities, all customers receive the locational benefits of any transmission and distribution upgrade deferrals."

p. Finding of Fact 65 is added to read:

"All retail end-use customers benefit from the locational benefits of local grid stability and reliability."

3. Rehearing of D.09-12-042, as modified herein, is denied.

This order is effective today.

Dated April 22, 2010, at Los Angeles, California.

MICHAEL R. PEEVEY

President

DIAN M. GRUENEICH

JOHN A. BOHN

TIMOTHY ALAN SIMON

NANCY E. RYAN

Commissioners