COM/MP1/tcg Date of Issuance 10/20/2010
Decision 10-10-016 October 14, 2010
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking to Implement the Commission's Procurement Incentive Framework and to Examine the Integration of Greenhouse Gas Emissions Standards into Procurement Policies. |
Rulemaking 06-04-009 (Filed April 13, 2006) |
DECISION GRANTING IN PART PETITION
OF SOUTHERN CALIFORNIA EDISON COMPANY
TO MODIFY DECISION 07-01-039
TABLE OF CONTENTS
Title Page
DECISION GRANTING IN PART PETITION OF SOUTHERN CALIFORNIA EDISON COMPANY TO MODIFY DECISION 07-01-039 1
1. Summary 2
2. Background and Related Procedural History 3
2.1. Four Corners 3
2.2. Senate Bill 1368 4
2.3. Assembly Bill 32 7
3. SCE's Petition for Modification, Related Filings and September 2, 2008 Proposed Decision 7
4. October 23, 2008 Ruling of Assigned Commissioner and Assigned ALJ 10
5. Discussion 11
5.1. Overview: Import of the New Information 11
5.2. Framework for Determining Recovery of Capital Expenditures
at Four Corners 14
5.3. Content of SCE's Petition 21
5.4. Timeliness of SCE's Petition 23
6. Comments on Proposed Decision 23
7. Assignment of Proceeding 25
Findings of Fact 25
Conclusions of Law 27
ORDER 28
DECISION GRANTING IN PART PETITION
OF SOUTHERN CALIFORNIA EDISON COMPANY
TO MODIFY DECISION 07-01-039
1. Summary
This decision grants, in part, the petition of Southern California Edison Company (SCE) to modify Decision 07-01-039 regarding the obligation of Four Corners Generating Station Units 4 and 5 (Four Corners) to comply with the Emissions Performance Standard the decision adopts. While we deny SCE's request for a wholesale exemption for Four Corners, we authorize a partial exemption, limited to capital expenditures incurred prior to 2012 under the current co-tenancy agreements, and therefore, before the greenhouse gas rules issued by the California Air Resources Board pursuant to Assembly Bill (AB) 32 take effect.
Given the important role Four Corners has played and currently plays in SCE's energy supply portfolio, the long-term contractual commitments SCE has made to its co-tenants, and the limited time remaining under the co-tenancy agreements, we find that it is prudent to allow certain capital expenditures incurred prior to January 1, 2012, subject to our review and approval prior to any recovery in rates. For discrete investments of less than $1 million, SCE shall make a showing of reasonableness. For capital expenditures of $1 million or more, SCE's showing shall also establish necessity, based upon consideration of four factors, including prevention of imminent safety hazard and continuation of basic operation through 2016, when SCE's contractual obligations under the co-tenancy agreements terminate. We direct SCE to make all reasonableness showings in its 2012 general rate case.
Because AB 32's new rules will be in effect on January 1, 2012, we cannot treat the period from 2012 through 2016 in the same way and must deny SCE's request to recover in rates any capital expenditures planned for Four Corners Units 4 or 5 in 2012 or later, if those expenditures will increase the life of the powerplant by five years or more. Consequently, we direct SCE to conduct a study on the feasibility of continuing to maintain its interest in Four Corners after the end of 2011 and to report on its study and propose a course of action in its 2012 general rate case. SCE's report must be submitted prior to final determination on rate recovery of any Four Corners-related capital expenditures reviewed in that general rate case. SCE may not extend any of its existing co-tenancy agreements or enter into any new agreements to expand or extend its ownership in Four Corners without first obtaining Commission approval.
Finally, we direct SCE to report in its 2012 general rate case on its remedial activities to ensure that its pleadings are complete, accurate, and fully explain the bases for its positions.
