Assignment of Proceeding

Mark J. Ferron is the assigned Commissioner in Application 08-11-001, Rulemaking (R.) 06-02-013, R.04-04-025, R.04-04-003 and R.99-11-022 and Amy Yip-Kikugawa is the co-assigned ALJ in these proceedings.

Findings of Fact

1. D.10-12-035 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, TURN, the California Cogeneration Council, the Independent Energy Producers Association, the Cogeneration Association of California, the Energy Producers and Users Coalition, and DRA (Settling Parties).

2. On April 1, 2011, the Settling Parties and CMUA filed a petition for modification of D.10-12-035.

3. D.11-07-010 granted the April 2011 petition to modify D.10-12-035.

4. D.11-07-010 concluded that, consistent with Pub. Util. Code § 366.2(d)(1), CCA and DA customers would not be responsible for any costs incurred on behalf of MDL Customers.

5. On July 28, 2011, Settling Parties and CMUA filed a joint petition to modify D.11-07-010.

6. Settling Parties and CMUA contend that the discussion of § 366.2(d)(1) in D.11-07-010 is factually and legally erroneous.

7. D.10-12-035 adopted terms for CHP procurement contracts at seven and twelve years.

8. The dates established in D.10-12-035 as modified by D.11-07-010 correspond to dates of CHP procurement contracts of seven and twelve years, ensuring that there will be no cost-shifting amongst customers.

9. In order to establish a Settlement Agreement Effective Date, two remaining conditions must be met, as defined by Sections 16.2.1 and 16.2.2 of the CHP Program Settlement Agreement Term Sheet.

10. On July 18, 2011, condition 16.2.2 of the Term Sheet to establish a Settlement Agreement Effective Date was met upon the FERC Order being final and non-appealable.

11. In order to satisfy condition 16.2.1 of the Term Sheet to establish a Settlement Agreement Effective Date, a final and non-appealable Commission decision approving the QF/CHP settlement that does not modify, change, and/or make an addition to the settlement is needed.

12. D.11-03-051 held in abeyance an application for rehearing filed by CMUA and unresolved portions of CCSF's application for rehearing.

Conclusions of Law

1. The joint petition to modify D.11-07-010 should be granted by deleting the indicated paragraphs on page 7 and page 12 and the associated conclusions of law 3 and 4.

2. Section 16.2.1 of the Term Sheet will be satisfied when D.10-12-035 and this decision reach final and non-appealable status.

3. The Settlement Agreement Effective Date should be when D.10-12-035 and this decision reach final and non-appealable status.

ORDER

IT IS ORDERED that:

1. The joint motion for expedited consideration of the joint petition for modification of Decision 11-07-010 and request to establish settlement agreement effective date and grant motion for closure is granted.

2. The joint petition for modification of Decision 11-07-010 and request to establish settlement effective date and grant motion for closure filed by the California Municipal Utilities Association, Southern California Edison Company, Pacific Gas and Electric Company, San Diego Gas & Electric Company, The Utility Reform Network, 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 is granted as set forth in Ordering Paragraphs 3 and 4, and is otherwise denied.

3. The following text from Decision 11-07-010 is deleted: A) 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." The deletion on page 7 includes footnote 10. B) 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." C) Conclusions of Law 3 and 4.

4. The Settlement Agreement Effective Date shall be when Decision 10-12-035 and this decision reach final and non-appealable status.

5. Application 08-11-001, Rulemaking (R.) 06-02-013, R.04-04-025, R.04-04-003 and R.99-11-022 remain open.

This order is effective today.

Dated October 6, 2011, at Los Angeles, California.

I dissent.

/s/ TIMOTHY ALAN SIMON

I abstain.

/s/ MICHEL PETER FLORIO

Commissioner

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