Background
On December 21, 2010, the Commission issued Decision (D.) 10-12-035, which approved the "Qualifying Facility and Combined Heat and Power Program Settlement Agreement" (Settlement) entered into by Southern California Edison Company, Pacific Gas and Electric Company, San Diego Gas & Electric Company, The Utility Reform Network (TURN), the California Cogeneration Council, the Independent Energy Producers Association, the Cogeneration Association of California, the Energy Producers and Users Coalition, and the Division of Ratepayer Advocates (DRA) (collectively, Settling Parties). The Settlement provides a detailed and comprehensive framework for a Qualifying Facility and Combined Heat and Power Program (QF/CHP Program) in California. Among other things, the Settlement includes a procurement framework for Qualifying Facilities and Combined Heat and Power facilities. As a result of these procurement obligations, the Commission in D.10-12-035 also established certain requirements and cost obligations on electric service providers, Community Choice Aggregators (CCAs), publicly-owned utilities, and their respective customers.
On April 1, 2011, the Settling Parties and the California Municipal Utilities Association (CMUA) filed a petition for modification of D.10-12-035 (April 2011 Petition). The proposed changes and clarifications specified the extent to which Transferred Municipal Departing Load (MDL) Customers would be responsible for any non-bypassable charges (NBCs) associated with the Settlement and provided that New MDL Customers will not be responsible for any NBCs associated with the Settlement. The April 2011 Petition made the distinction that the benefits from the QF/CHP Settlement were different for MDL customers when compared with Direct Access (DA) and CCA customers; therefore, separate treatment of how costs are allocated was reasonable for MDL customers.
The Commission granted the April 2011 Petition in D.11-07-010. However, in response to joint comments filed by Marin Energy Authority (MEA), the Alliance for Retail Energy Markets (AReM), Shell Energy North America (US) L.P (Shell) and the Direct Access Customer Coalition (DACC) that the agreement could result in the shifting of costs from MDL to DA and CCA customers, D.11-07-010 also concluded that CCA and DA customers would not be responsible for any costs incurred on behalf of MDL Customers. In addition, D.11-07-010 stated that to the extent the modifications proposed by Settling Parties and CMUA resulted in any unrecovered costs attributable to MDL Customers, these costs would be the responsibility of the Settling Parties,1 consistent with the requirements of Pub. Util. Code § 366.2(d)((1).
On July 28, 2011, Settling Parties and CMUA (collectively, Joint Petitioners) filed a petition to modify D.11-07-010, among other things (July 2011 Petition). The Joint Petitioners request that the conclusions made in response to the joint comments from MEA, AReM, Shell and DACC, specifically the paragraphs and associated Conclusions of Law (COLs) concerning § 366.2(d)(1) and cost shifting, be deleted. The Joint Petitioners ask for these deletions because, they argue, "in addition to being erroneous, the late-added paragraphs and COLs have an additional deleterious effect. Because D.11-07-010 included these passages, and these provisions are not acceptable to all of the Settling Parties, the QF/CHP Settlement has not yet become effective. If the Commission grants this Petition, all of the conditions precedent associated with the QF/CHP Settlement will have been satisfied and the QF/CHP Settlement can finally become effective."2 The July 2011 Petition cites the desire to have a settlement effective date as the motivation for having the language deleted, and they claim errors in both law and in the facts as the rationale for the deletion.
The July 2011 Petition seeks to have the following paragraphs and Conclusions of Law deleted from D.11-07-010:
On page 7:
The proposed modifications in the Petition limit the time period to recover certain costs associated with the Settlement from MDL Customers. Therefore, there is a possibility that MDL Customers would not be responsible for some portion of the costs related to generation resources procured on their behalf. Pursuant to Pub. Util. Code § 366.2(d)(1), which prohibits the shifting of recoverable costs between customers, the [Investor-owned Utilities] IOUs cannot recover costs attributable to MDL Customers from bundled or other departing load customers (i.e., CCA and DA Customers). As such, any unrecovered costs attributable to MDL Customers shall be the responsibility of the Settling Parties.
Footnote 10:
As suggested by Joint Respondents, this could include investor owned utility shareholders and the Settling Parties that represent the QF and CHP owners and developers.
On page 12:
In response to comments, this decision has been revised to clarify that consistent with the requirements of Pub. Util. Code § 366.2(d)(1), bundled, CCA and DA customers shall not be responsible for any costs incurred on behalf of MDL Customers. Rather, to the extent the modifications proposed in the Petition result in any unrecovered costs that are attributable to MDL Customers, these costs shall be the responsibility of Settling Parties.
Conclusions of Law:3
3. Pub. Util. Code § 366.2(d)(1) prohibits the shifting of recoverable costs between customers.
4. Pursuant to Pub. Util. Code § 366.2(d)(1), the IOUs cannot recover any unrecovered costs attributable to MDL Customers from bundled, DA or CCA customers.
Second, the Joint Petitioners request that if the July 2011 Petition is "granted without modification or alteration,"4 then the Commission could also establish the effective date of the Settlement Agreement as "the date when a Commission order granting the Petition becomes final and non-appealable" and close the proceedings.5
Third, in addition to the request to modify D.11-07-010 and the establishment of the settlement effective date, the Joint Petitioners request that the consolidated dockets be closed.
Joint Petitioners concurrently filed a motion for expedited consideration of the July 2011 Petition. The assigned Administrative Law Judge (ALJ) sent an email to parties to see if there would be any opposition to shortening the time to file comments and replies to the Petition. No opposition was received, so the ALJ granted the motion for expedited consideration. Pursuant to the shortened comment period, MEA, AReM, Shell and DACC (collectively, Joint Respondents) filed comments opposing the Petition on August 5, 2011. Joint Petitioners filed their reply on August 9, 2011.
1 See D.11-07-010 at 7, including footnote 10.
2 July 2011 Petition at 2.
3 On September 9, 2011, the Joint Petitioners filed an amendment to the petition for modification, detailing errata and clarifications to the July 2011 Petition. The text of the July 2011 Petition references COLs 3 and 4 from D.11-07-010. However, while Appendix A of the July 2011 Petition lists COLs 3 and 4, it erroneously identifies language from COL 2 rather than 3, and misstates COL 3 as COL 4. With this clarification, the language from the amended petition is shown here.
4 July 2011 Petition at 1.
5 July 2011 Petition at 8.
