4. The Settlement Agreement
The SA consists of two phases as described below:
4.1. Phase 1: Utility-Owned Projects
Phase 1 would focus on utility-owned generation (UOG), with the following components:
_ SDG&E will install, own and operate up to 26 MW of PV facilities on SDG&E-owned property.
_ SDG&E will solicit bids for turnkey5 projects, on permitted sites, that use commercially viable PV technologies.
_ Bids will be evaluated using upfront agreed upon criteria that focus on cost of annual energy delivered and capacity benefits.
_ Cost cap of $125 million.
_ Cost cap of $6,000/kilowatt (kW) measured against CSI installations subject to changes in CSI experience.
4.1.2. Phase 1b: Utility-Owned Turnkey Projects/Power Purchase Agreement Competition
_ SDG&E would obtain site control and complete environmental permitting necessary for 8 to 12 MW of PV in the Borrego Springs area. SDG&E would hold a solicitation for power purchase agreements (PPAs) to compare the cost of the PPAs with a utility-owned turnkey project for the Borrego Springs project.
_ If the turnkey project wins out, then these MW will be attributed to the $125 million in Phase 1. If the PPA wins, then the MW will be attributed to Phase 2.
4.1.3. Phase 1c: Utility-Owned Innovative Applications Project
_ Would establish a set aside of up to 4 MW for SDG&E to develop innovative technologies in eastern San Diego that may include one or more of the following: charging stations for plug-in hybrids, battery backup, battery storage, different emerging PV technologies, and support for "cool zones" augmented with conventional rooftop PV as may be appropriate.
4.2. Phase 2: PPAs with Independent Power Producers
Phase 2 would proceed after the completion of Phase 1. SDG&E would solicit PPAs from independent power producers for PV projects in SDG&E's service territory subject to the following requirements:
_ Projects could be as small as 1 MW, but they would have to be aggregated into minimum of 5 MW PPAs.
_ A cost cap in $/kW will be established based upon the cost of Phase 1 projects. However, no program MW cap exists.
4.3. Standard of Review and Commission Policy Regarding Review of Settlements
Rule 12.1(d) of the Commission's Rules of Practice and Procedure (Rules) provides that:
The Commission will not approve settlements, whether contested or uncontested, unless the settlement is reasonable in light of whole record, consistent with the law, and in the public interest.
Rule 12.4 states that the Commission may reject a proposed settlement whenever it determines that the settlement is not in the public interest. In reviewing a settlement, the Commission considers "individual elements of the settlement in order to determine whether the settlement generally balances the various interests at stake as well as to assure that each element is consistent with our policy objectives and the law."6
5 A turnkey project is typically constructed by a developer and turned over to the utility upon commercial operation.
6 Decision (D.) 94-04-088 at 8.
