III. CONCLUSION

For the reasons stated above, we modify D.10-12-035 to: (1) clarify that Commission approval is required prior to any adjustment to the GHG emissions reduction targets; and (2) clarify that the only resources procured pursuant to the QF/CHP program are those that the Commission has determined are needed for system and local reliability. CMUA's request for abeyance of its rehearing application is granted. The issues raised in CCSF's rehearing application that were also raised in CMUA's rehearing application are also held in abeyance. Rehearing of D.10-12-035, as modified, is denied as to the issues raised in the rehearing applications that are not being held in abeyance.

THEREFORE, IT IS ORDERED that:

1. D.10-12-035 shall be modified as follows:

a. The following paragraph is inserted after the first paragraph on p. 51:

"Consistent with section 365.1(c)(2), the only resources procured pursuant to the Settlement Agreement will be resources that the Commission has determined are needed for system and local reliability. The Settlement Agreement provides that the procurement obligations set forth in the Settlement Agreement and under the RPS program supersede and replace the QF MW requirements adopted in D.07-12-052. (Term Sheet, § 16.2.6.) In D.07-12-052, the Commission adopted LTPPs for PG&E, SDG&E, and Edison for the ten-year period from 2007 through 2016. With regard to QF capacity, the Commission required the IOUs to maintain their current QF capacity over the next decade. (D.07-12-052, p. 85 (slip op.).) The MW targets for the initial program period do not exceed the MW targets the Commission already determined were required in the previous LTPP proceeding. (See Term Sheet, § 5.1.2; D.07-12-052, p. 85 (slip op.).) As for the second program period, there are no established MW targets but rather GHG emissions reduction targets. (Term Sheet, § 5.1.4.6.) The Settlement Agreement provides that the MW targets for the second program period shall be established in the Commission's LTPP proceeding. (Term Sheet, § 2.3.2.3.) A lack of need would justify an IOU not meeting the GHG emissions reduction targets. (Term Sheet, § 6.9.3.)"

b. Finding of Fact 20 on page 62 is modified to read as follows:

"To the extent the GHG Emissions Reduction Targets are modified, subject to Commission approval in the LTPP proceeding, the ESP and CCA obligations would also be modified to reflect any final CARB rules or regulations."

c. Finding of Fact 34 is added on page 64 to read as follows:

"The only resources procured pursuant to the Settlement Agreement will be resources that the Commission has determined are needed for system and local reliability."

2. CMUA's request for abeyance of its application for rehearing is granted.

3. Issues raised in CCSF's rehearing application that were also raised in CMUA's rehearing application relating to cost allocation to MDL customers and due process are held in abeyance.

4. As to the allegations raised in the rehearing applications that are not being held in abeyance, rehearing of D.10-12-035, as modified herein, is denied.

This order is effective today.

Dated March 24, 2011, at San Francisco, California.

MICHAEL R. PEEVEY

President

TIMOTHY ALAN SIMON

CATHERINE J.K. SANDOVAL

MARK FERRON

  Commissioners

I abstain.

/s/ MICHEL PETER FLORIO

Commissioner