3. SCE's Petition for Modification, Related Filings
and September 2, 2008 Proposed Decision
On January 28, 2008, SCE filed the instant petition for modification (petition) of D.07-01-039.10 The petition acknowledges that SCE's general rate case (GRC) filing for Test Year 2009, Application 07-11-011, includes a request for authority to recover $178,593,000, which represents SCE's share of certain capital expenditures at Four Corners. SCE argues that D.07-01-039 could be construed to prevent SCE from fulfilling its financial obligations as a co-owner of Four Corners and that moreover, "[i]f SCE does not pay its share of such expenditures, it will not receive power from Four Corners, but will remain liable for unpaid costs.[fn omitted]"11 SCE also contends that as a minority owner, its "financial obligation with regard to Four Corners is not one over which it has much discretion or choice."12 Therefore, SCE asks the Commission to revise D.07-01-039 "... to find that financial contributions required under preexisting contractual obligations for generating units owned jointly with third parties are not `covered procurements' under the EPS."13 More specifically, SCE proposes that the Commission modify the provision defining what constitutes a new investment in covered procurements (Rule 3(1)(c) of the Adopted Interim EPS Rules) and create the following exemption.
Except for financial contributions required by existing contractual agreements (effective prior to January 25, 2007), new investments in the LSE's own existing non-Combined-cycle Gas Turbine (CCGT) baseload power plants that are: (1) designed and intended to extend the life of one or more units by five years or more, (2) result in a new increase in the rated capacity of the powerplant, or (3) designed and intended to convert a non-baseload plant to a baseload plant ....14
The following parties filed responses: the Division of Ratepayer Advocates (DRA), the Western Power Trading Forum (WPTF), the Independent Energy Producers Association, and jointly, the Natural Resources Defense Council (NRDC), Union of Concerned Scientists, The Utility Reform Network, Environmental Defense Fund, Center for Energy Efficiency and Renewable Technologies and Western Resource Advocates. Although these responses disagree on whether investments in Four Corners should be exempt from the EPS, all agree that SCE's petition seeks too broad a modification. Though SCE's reply does not suggest any language revisions, it reiterates that SCE's singular objective is to obtain an exemption for Four Corners throughout the remainder of the contractual term.
A proposed decision, filed on September 2, 2008, recommended that the Commission deny the petition as overbroad but find that SCE's requested capital expenditures for Four Corners Units 4 and 5 (in SCE's then-pending 2009 GRC) are not subject to the EPS -- and therefore are recoverable -- because they do not fall within D.07-01-039's definition of new ownership investment. D.07-01-039 states that the term is not meant to apply to "every replacement of equipment or addition of pollution control equipment."15 The proposed decision reasoned, therefore, that the term encompasses "major refurbishments, such as those for repowering an existing powerplant" but not the requested capital expenditures for Units 4 and 5.16 The proposed decision relied in part on SCE's representation of its contractual liability to its Four Corner's partners to make the expenditures and its limited decisionmaking role, as well as SCE's GRC prepared testimony. While the proposed decision recommended that SCE be authorized to recover the requested capital expenditures, it also recommended that the Commission direct SCE to conduct a study and report within six months on whether SCE should continue to maintain its interest in Four Corners after December 31, 2011.
10 Petition for Modification of Decision 07-01-039 of Southern California Edison Company (Petition). On February 13, 2008, SCE filed an amended petition, which corrects some minor errors but does not modify the substance of the request.
11 Petition at 3.
12 Petition at 8.
13 Petition at 5.
14 Petition at 8-9, as amended [proposed modification underlined].
15 D.07-01-039 at 52.
16 Proposed Decision at 7.
