ALJ/HSY/avs Date of Issuance 4/18/2011
Decision 11-04-007 April 14, 2011
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
In the Matter of the Application of SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) for Approval of Results of Fast Track of Its New Generation Request for Offers and for Cost Recovery. |
Application 07-02-026 (Filed February 28, 2007) |
In the Matter of the Application of Southern California Edison Company (U338-E) for Approval of Results of Standard Track of Its New Generation Request for Offers and for Cost Recovery. |
Application 08-04-011 (Filed April 4, 2008) |
DECISION APPROVING AMENDED CONTRACT
AND DENYING REQUESTS TO MODIFY PRIOR DECISIONS
This decision approves Southern California Edison Company's amended and restated contract with CPV Sentinel, LLC, which is an amendment, restatement and consolidation of a contract previously approved by the Commission in Decision (D.) 08-04-011 and a contract previously approved by the Commission in D.08-09-041. This decision denies Southern California Edison Company's petitions to modify those prior decisions in order to achieve this result. These proceedings are closed.
1. Background
Decision (D.) 08-04-011 in Application (A.) 07-02-026 approved, among other things, Southern California Edison Company's (SCE) 10-year contract with CPV Sentinel for up to 455 megawatts (MW) of capacity and energy from five combustion turbine generators to be located in Riverside County, California, which was slated to be on-line by August 1, 2010 (CPV Sentinel I contract).
D.08-09-041 in A.08-04-011 approved, among other things, SCE's separate 10-year contract with CPV Sentinel that added up to 273 MW of expected capacity and energy from three additional gas turbines at the same facility in Riverside County, which was slated to by on-line by May 1, 2012 (CPV Sentinel II contract).
After approval of the contracts, CPV began taking steps to construct the projects. The construction process, however, coincided with a lawsuit brought by the Natural Resources Defense Council (NRDC) and others against the South Coast Air Quality Management District (SCQAMD) challenging the validity of the SCQAMD's internal bank of offsets for PM10 emissions known as the Priority Reserve. Then-existing law required every air pollution control district or air quality management district in a federal nonattainment area for any national ambient air quality standard pollutant to establish, by regulation, a system by which all reductions of air contaminant emissions used to offset certain future emission increases are banked prior to use. The SCAQMD promulgated various rules establishing offset exemptions, providing priority reserve offsets and creating or tracking credits used for offset exemption or priority reserve projects. In NRDC v. SCAQMD, the Los Angeles Superior Court found certain of SCAQMD's rules to be in violation of the California Environmental Quality Act. (NRDC v. SCAQMD, Sup. Ct. Los Angeles Co., 2007, No. BS 110972.) Following that ruling, the SCAQMD stopped issuing any permits based on Priority Reserve PM10 emission offsets or exemptions from these offsets, which prevented CPV from obtaining the air permits it needed to construct the CPV projects.
In response to the NRDC decision, the state legislature took action in order to allow construction of new generation within the SCAQMD. In particular, Assembly Bill 1318, among other things, allowed the SCAQMD to transfer a limited number of emission credits from its Priority Reserve to the CPV projects upon CPV's payment of mitigation fees and the California Energy Commission's validation of the offsets. The delays in obtaining permits, however, made it impossible for CPV to complete construction of the CPV Sentinel I and CPV Sentinel II projects by their respective expected initial delivery dates of August 1, 2010, and May 1, 2012.
SCE negotiated and entered into an amended contract with CPV, which is an amendment and restatement of the CPV Sentinel I and II contracts into a single contract. The amended contract changes the Sentinel I and II contract prices, provides for an August 1, 2013, initial delivery date1 (with potential extension to May 1, 2014), and makes other minor changes to the original contract terms.
On December 10, 2010, SCE filed a petition to modify D.08-04-011, which approved the CPV Sentinel I contract, and a petition to modify D.08-09-041, which approved the CPV Sentinel II contract, by adding identical findings of fact, conclusions of law, and ordering paragraphs to both decisions to the effect of approving the amended, consolidated contract. No party filed a response to either of the petitions.
By Administrative Law Judge (ALJ's) ruling dated March 15, 2011, the proceedings were consolidated.
1 The amended contract provides for potential extension of the initial delivery date to May 1, 2014 if the Commission has not approved the amended contract and if certain legal actions have not been resolved in CPV's favor by June 30, 2011.
