2. Scope of Issues

The assigned Commissioner's December 3, 2010, scoping memo and ruling identified the following issues to be determined in the proceeding:

1. Are the power purchase agreements just and reasonable? In deciding this overarching issue, we will consider the following factors:

a. Will the power purchase agreements reduce customer costs by providing better market value?

b. Will the power purchase agreements provide operational benefits?

c. Will the power purchase agreements result in reduced greenhouse gas (GHG) emissions?

d. Will procurement under the power purchase agreements satisfy the Emissions Performance Standard adopted by D.07-01-039?

e. Will procurement under the power purchase agreements serve to meet PG&E's MW targets and GHG emissions reductions under the QF/CHP Settlement? This issue encompasses consideration of whether procurement under the power purchase agreements should count toward the MW and GHG emissions reduction targets.

f. Will procurement under the power purchase agreements serve the Commission's policy preference for the utilities to maintain their current level of QF capacity, as provided in D.07-12-052? This issue encompasses consideration of whether procurement under the power purchase agreements should count toward PG&E's obligation to maintain its current level of QF capacity.

2. Should PG&E be authorized to recover the costs of the power purchase agreements through the Electric Revenue Recovery Account (ERRA) and allocate stranded costs consistent with Section 13.1 of the QF/CHP Settlement Term Sheet? This issue encompasses consideration of whether PG&E's cost allocation proposal is consistent with the QF/CHP Settlement.