5. Clean Coalition Motion - Request for Revisions to CREST PPA

Clean Coalition's motion seeks to achieve the following regarding SCE's CREST PPA:

(1) Modify Section 2.8 (Date of Initial Operation) and Section 4.2(d)(3) (Term and Termination);

(2) Modify Section 4 (Term and Termination);

(3) Modify Section 12 (Assignment);

(4) Remove Sections 14.2 (future modifications) and 14.4 (application for modifications);

(5) Add two new contract sections, Force Majeure and Indemnification; and

(6) Modify the CREST PPA to provide more options for interconnection agreements.

We address the merits of each request separately below. We also address additional clarifications suggested by other parties in comments on the proposed decision, such as, the execution date of the PPA, curtailment provisions, and collateral requirements.

5.1. Section 2.8 (Date of Initial Operation) and Section 4.2(d)(3) (Term and Termination) of the CREST PPA

Clean Coalition requests that the Commission direct SCE to add contract language to the CREST PPA at Section 2.8 (Date of Initial Operation) and modify Section 4.2(d)(3) (Term and Termination) to provide additional protections to the producers and developer in the event that SCE is responsible for delays in the interconnection process. Clean Coalition claims that, as currently written, SCE may elect to terminate the PPA regardless of whether a delay is caused by SCE or the developer. The specific language requested by Clean Coalition is set forth in Appendix A to Clean Coalition's motion and, essentially, seeks to prevent termination of the PPA for an unspecified period of time in the event the delay is caused by SCE.

SCE objects to Clean Coalition's request on a number of grounds. SCE claims that the contract modification proposed by Clean Coalition is vague and ambiguous. The Commission, SCE explains, cannot extend the date by which a generation project can begin operations indefinitely, even if those delays are caused by SCE, and SCE says that limits on these extensions need to be provided. SCE also expresses concern that, if the Commission adopts the suggested contract modifications, producers and developers may potentially fill the capacity cap for the § 399.20 program indefinitely, with non-viable projects.

Based on SCE's existing backlog in completing interconnection studies and other project development challenges that may delay a project from coming online in 18-months, we find merit in Clean Coalition's claim that the existing contract language provides SCE with excessive control over termination in the event SCE has unduly delayed the processing of interconnection requests by generators or if the project faces other legitimate delays outside of the producer's control. Accordingly, we find it appropriate to consider contract modifications suggested by Clean Coalition.

The contract language proposed by Clean Coalition provides for an extension to the Initial Operations date, set forth in Section 2.8, but lacks, as SCE points out, sufficient definition. Clean Coalition fails to provide a specific time period for any additional extension. The Commission recently addressed a very similar issue in D.10-12-048, the Renewable Auction Mechanism (RAM) decision. D.10-12-048 directs IOUs to require an 18-month online date plus one 6-month extension for regulatory delays, such as interconnection for the RPS contracts approved therein. In adopting this contract provision, the Commission reasoned in D.10-12-048 that a defined period of time, such as the 18 months, is preferable because it imposes strict time limits on processing and, in turn, attracts the most viable projects. The Commission in D.10-12-048 also recognized that "legitimate delays can occur relative to any timeline." (D.10-12-048 at 50.)

We similarly find, as discussed in D.10-12-048, that language providing for an 18-month online date plus one 6-month extension for regulatory delays should be incorporated into the CREST PPA. In modifying the existing PPA to provide for a 6-month extension of time, we likewise recognize that legitimate delays can occur relative to any timeline.

In comments to the proposed decision, SCE notes that additional clarification is needed on the contract term start date for purposes of the newly adopted timeframe of 18-months online date plus one 6-month extension. We agree. We therefore clarify that the contract term start date is the Effective Date, per Section 17 of the CREST PPA, or the last date signed by all contracting parties. In comments to the proposed decision, Silverado Power LLC⁸ and Clean Coalition suggested that the Effective Date be calculated from the date an interconnection agreement, not a PPA, is entered between the parties. We see benefits to this suggestion and urge Silverado Power LLC and Clean Coalition to raise this issue as the Commission implements § 399.20.

Accordingly, within 10 days of the effective date of this decision, SCE shall file a Tier 1 advice letter, effective immediately, incorporating into the CREST PPA the same language required by D.10-12-048⁹ and as set forth below, with non-substantive changes as needed to align internal references.

1.04 Commercial Operation Deadline.

(a) Subject to any extensions made pursuant to Sections 1.04(b), 1.04(c), 3.06(c) or 5.03, and further subject to Section 1.04(d), the Commercial Operation Date must be no later than the earlier of (i) [sixty (60) days] {for Baseload} [one hundred twenty (120) days] {for Intermittent} from the Initial Synchronization Date, and (ii) eighteen (18) months from the PPA Effective Date ("Commercial Operation Deadline").

(b) If all of the interconnection facilities, transmission upgrades and new transmission facilities, if any, described in Seller's interconnection agreement and required to interconnect the Generating Facility to the CAISO Controlled Grid have not been completed and placed into operation by the CAISO or the Transmission Provider on the estimated completion date set forth in Seller's interconnection agreement, then, upon SCE's receipt of Notice from Seller, which Notice must be provided at least sixty (60) days before the date that is eighteen (18) months from the PPA Effective Date, the Commercial Operation Deadline shall be extended on a day-for-day basis until all of the interconnection facilities, transmission upgrades and new transmission facilities, if any, described in Seller's interconnection agreement and required to interconnect the Generating Facility to the CAISO Controlled Grid have been completed and placed into operation by the CAISO or the Transmission Provider, except to the extent any delay in such completion and placement into operation results from Seller failing to complete its obligations, take all actions and meet all of its deadlines under Seller's interconnection agreement needed to ensure timely completion and operation of such interconnection facilities, transmission upgrades and new transmission facilities.

(c) If Seller has not obtained Permit Approval on or before that date that is ninety (90) days before the date that is eighteen (18) months from the PPA Effective Date, then, upon SCE's receipt of Notice from Seller, which Notice must be provided at least sixty (60) days before the date that is eighteen (18) months from the PPA Effective Date, the Commercial Operation Deadline shall be extended on a day-for-day basis until Seller obtains Permit Approval, except to the extent any such delay results from Seller failing to take all commercially reasonable actions to apply for and meet all of its requirements and deadlines to obtain such Permit Approval.

(d) Notwithstanding anything in this Agreement to the contrary, the Commercial Operation Deadline may not be later than twenty-four (24) months from the PPA Effective Date.

5.2. Section 4 (Term and Termination) of the CREST PPA

Clean Coalition requests that the Commission direct SCE to change the contract language in the CREST PPA by replacing the existing Section 4 (Term and Termination) with Section 6 from a similar but more recent Commission-approved contract, the SCE 2010 solar photovoltaic program (SPVP) contract. Clean Coalition states that, under the existing Section 4, SCE has the right to elect to terminate the PPA due to "a change in applicable Tariffs as provided or directed by the [Commission] or a change in any local, state or federal law, statute or regulation, any of which materially alters or otherwise materially affects SCE's ability or obligation to perform SCE's duties under [the PPA]." Clean Coalition states that traditional non-recourse financing will not accept this contract provision as lenders interpret it as providing an open right for SCE to terminate the PPA if a material change in law were to occur, and that the existing provision does not introduce a process to resolve issues associated with potential changes in the law.

SCE appears to generally object to Clean Coalition's request on the basis that the contract modifications are vague and ambiguous but does not offer any specific arguments in opposition to this proposal.

Based on the contract language approved by the Commission more recently in other standard RPS contracts, such as the SPVP contract, we find merit in Clean Coalition's claim that the existing language in Section 4 of the CREST PPA provides SCE with excessive control over termination of the PPA in the event of changes in the underlying law governing the PPA. We further find Clean Coalition's recommendation reasonable to replace Section 4 of the existing CREST PPA with Section 6 of the 2010 SPVP contract.

In adopting the 2010 SPVP contract, the Commission relied upon the already existing CREST PPA. Section 6 of the SPVP was not sufficiently controversial to warrant discussion when the Commission approved the 2010 SPVP contract via Resolution E-4299 on January 21, 2010. However, due to the similarity between the two contracts, Section 6 of the 2010 SPVP contract can essentially be described as a more refined version of Section 4 of the CREST PPA. Since the Commission's initial approval of Section 4 of the SCE CREST PPA on February 18, 2008 through Resolution E-4137, we have gained a better understanding of the contract terms and conditions that balance the utility's, ratepayer's, and producer's interests. More specifically, we understand the need for lenders to obtain a sufficient level of stability in the terms and conditions of a Commission-approved PPA and for a process to resolve potential changes to existing PPAs by the Commission. As a result, we find it reasonable to replace Section 4 of the CREST PPA (Term and Termination) with language from Section 6 of the SPVP contract.

Accordingly, within 10 days of the effective date of this decision, SCE shall file a Tier 1 advice letter, effective immediately, removing Section 4 of the existing CREST PPA and inserting the below noted language, Section 6 of the 2010 SPVP, with non-substantive changes as needed to align internal references and to delete references to "photovoltaic."

6. TERMINATION; REMEDIES

6.1. SCE may terminate this Agreement on Notice, which termination becomes effective on the date specified by SCE in such Notice, if:

6.1.1. Producer fails to take all corrective actions specified in any SCE Notice, within the time frame set forth in such Notice, that any Generating Facility is out of compliance with any term of this Agreement;

6.1.2. Producer fails to interconnect and Operate a Photovoltaic Module within any Generating Facility, in accordance with the terms of this Agreement, within one hundred twenty (120) days after SCE delivers electric energy to such Generating Facility for Station Use;

6.1.3. Producer abandons any Generating Facility;

6.1.4. Electric output from any Generating Facility ceases for twelve (12) consecutive months;

6.1.5. The Term does not commence within eighteen (18) months of the -- PPA Effective Date, subject to any extensions herein as to which Producer is the Claiming Party);

6.1.6. Producer or the owner of a Site applies for or participates in the California Solar Initiative or any net energy metering tariff with respect to any Generating Facility at such Site, as set forth in Section 7.12.6 and Section 7.16, respectively; or

6.1.7. Producer has not installed any of the equipment or devices necessary for any Generating Facility to satisfy the Gross Power Rating of such Generating Facility, as set forth in Section 4.2.2.

6.2. A Party may terminate this Agreement:

6.2.1. If any representation or warranty in this Agreement made by the other Party is false or misleading in any material respect when made or when deemed made or repeated if the representation or warranty is continuing in nature, if such misrepresentation or breach of warranty is not remedied within ten (10) Business Days after Notice thereof from the nonbreaching Party to the breaching Party;

6.2.2. Except for an obligation to make payment when due, if there is a failure of the other Part to perform any material covenant or obligation set forth in this Agreement (except to the extent such failure provides a separate termination right for the non-breaching Party or to the extent excused by Force Majeure), if such failure is not remedied within thirty (30) days after Notice thereof from the non-breaching Party to the breaching Party;

6.2.3. If the other Party fails to make any payment due and owing under this Agreement, if such failure is not cured within five (5) Business Days after Notice thereof from the non-breaching Party to the breaching Party; or

6.2.4. In accordance with Section 9.4.

6.3. This Agreement automatically terminates on the Term End Date.

6.4. If a Party terminates this Agreement in accordance with Section 6, such Party will have the right to immediately suspend performance under this Agreement and pursue all remedies available at law or in equity against the other Party (including seeking monetary damages).

5.3. Section 12 (Assignment) of the CREST PPA

Clean Coalition requests that the Commission direct SCE to change the contract language in the CREST PPA by replacing the existing Section 12 (Assignment) with Section 18 (Assignment) from 2010 SPVP contract. The existing Section 12 provides, in pertinent part that "Producer shall not voluntarily assign its rights nor delegate its duties under [the PPA] without SCE's prior written consent" and that "SCE shall not unreasonably withhold its consent to Producer's assignment of the [the PPA]." In support of its request, Clean Coalition states that the CREST PPA should be modified to (1) recognize that traditional non-recourse project financing requires assignment to lenders and (2) remove the uncertainty of obtaining SCE's reasonable consent in the event of an assignment.

We find Clean Coalition's recommendation reasonable to replace Section 12 of the existing CREST PPA with Section 18 of the 2010 SPVP contract. As we previously stated, in creating the 2010 SPVP contract, SCE modified the CREST PPA but made modifications to update the terms and conditions to reflect a better understanding of the terms and conditions that balance the utility's and producer's interests. As a result, the 2010 SPVP contract essentially represents a more refined version of the CREST PPA. When SCE filed Advice Letter 2364-E seeking approval of its 2010 SPVP contract, some parties protested Section 18 (Assignment) on the basis that Section 18 could potentially hinder project financing. As a result of these protests, SCE agreed to modify Section 18. When the Commission approved the 2010 SPVP contract via Resolution E-4299 on January 21, 2010, the Commission recognized the need of lenders for more flexibility in the terms and conditions related to assignment. Therefore, the Commission incorporated more flexibility into Section 18 (Assignment) of the SPVP contract. As a result, it is reasonable to replace Section 12 of the CREST contract (Assignment) with language from Section 18 of the SPVP contract.

Accordingly, within 10 days of the effective date of this decision, SCE shall file a Tier 1 advice letter, effective immediately, removing Section 12 of the existing CREST PPA and inserting the below noted language, Section 18 of the 2010 SPVP, with non-substantive changes as needed to align internal references.

18. ASSIGNMENT

Producer may not assign this Agreement or its rights or obligations under this Agreement without SCE's prior written consent, which consent will not be unreasonably withheld; provided, however, that Producer may, without SCE's consent (and without relieving Producer from liability under this Agreement), transfer, sell, pledge, encumber or assign this Agreement or the accounts, revenues or proceeds hereof to its Lender in connection with any financing for a Generating Facility if (i) such Lender assumes the payment and performance obligations provided under this Agreement with respect to Producer, (ii) such Lender agrees in writing to be bound by the terms and conditions of this Agreement, and (iii) Producer delivers such tax and enforceability assurance as SCE may reasonably request. Any assignment of this Agreement by Producer without SCE's written consent is not valid.

5.4. Sections 14.2 (Future Modification) and 14.4 (Application for Modifications) of the CREST PPA

Clean Coalition requests that the Commission direct SCE to change the contract language in the CREST PPA by removing the existing Sections 14.2 (Future Modifications) and 14.4 (Application for Modifications by SCE) of the CREST PPA.

Section 14.2 provides that the PPA "shall, at all times, be subject to such changes or modifications by the Commission as it may from time to time direct in the exercise of its jurisdiction." In support of its request to remove Section 14.2, Clean Coalition states that Section 14.2 hinders the developer from obtaining traditional financing because lenders are concerned that the Commission may unilaterally amend the PPA to materially change the economics of the contract and adversely impact the financial positions of the producer and lender. Clean Coalition suggests removing Section 14.2 from the CREST PPA to provide the required additional certainty to lenders that contracts will not be unexpectedly modified.

Section 14.4 provides that "Notwithstanding any other provision of this Agreement, SCE shall have the right to unilaterally file with the Commission an application for change in rates, charges, classification, service, Tariffs or any agreement relating thereto; pursuant to the Commission's rules and regulations." In support of its request to remove Section 14.4, Clean Coalition states that Section 14.4 hinders the developer from obtaining traditional financing because lenders are concerned that SCE may unilaterally seek Commission permission to materially change the economics or governance provisions of the PPA and, as a result, adversely impact the financial positions of the producer or lender.

For guidance on this issue, we again refer to SCE's 2010 SPVP contract. Notably, the 2010 SPVP contract does not contain provisions similar to Sections 14.2 and 14.4 of the existing CREST PPA. Multiple parties reviewed and commented upon SCE's initial proposal for the 2010 SPVP and, based on these comments, the Commission decided not to include terms and conditions similar to Sections 14.2 and 14.4 in the final version of the 2010 SPVP contract approved by the Commission. Consistent with the latter contract, we find merit in Clean Coalition's claim that the existing language in Sections 14.2 and 14.4 of the CREST PPA introduces excessive uncertainty into the future financial risks of the developer and the lender. As a result, it is reasonable to remove Sections 14.2 and 14.4 from the CREST PPA.

Accordingly, within 10 days of the effective date of this decision, SCE shall file a Tier 1 advice letter, effective immediately, removing Sections 14.2 and 14.4 of the existing CREST PPA.

5.5. Addition of Force Majeure and Indemnification Provisions to CREST PPA

Clean Coalition requests that the Commission direct SCE to change the contract language in the CREST PPA by adding two sections from the 2010 SPVP contract, Sections 9 (Force Majeure) and 16 (Indemnification). Clean Coalition states that the additional two provisions are needed to protect the buyer and the producer from events outside of their control but that the additions are not necessarily required to obtain financing. In support of its request to add these two sections to the CREST PPA, Clean Coalition states that no provisions in the existing CREST PPA address indemnification and force majeure.

For guidance, we again turn to the 2010 SPVP contract, which includes provisions regarding force majeure and indemnification. We find that including these provisions in the CREST PPA, as suggested by Clean Coalition, would provide clarity to the developer and the lender by protecting the producer from events outside of its control As a result, financing may proceed more smoothly. The majority of similar renewable PPAs now include these provisions. As a result, it is reasonable to add these provisions from the 2010 SPVP contract to the CREST PPA.

Accordingly, within 10 days of the effective date of this decision, SCE shall file a Tier 1 advice letter, effective immediately, adding the language set forth in Sections 9 (Force Majeure) and 16 (Indemnification) of the 2010 SPVP, which is reproduced below, to the CREST PPA, with non-substantive changes as needed to align internal references.

9. FORCE MAJEURE

9.1. Neither Party shall be in default in the performance of any of its obligations set forth in this Agreement, except for obligations to pay money, when and to the extent failure of performance is caused by Force Majeure.

9.2. If a Party, because of Force Majeure, is rendered wholly or partly unable to perform its obligations when due under this Agreement, such Party (the "Claiming Party") shall be excused from whatever performance is affected by the Force Majeure to the extent so affected. In order to be excused from its performance obligations under this Agreement by reason of Force Majeure:

9.2.1. The Claiming Party, on or before the fourteenth (14th) day after the initial occurrence of the claimed Force Majeure, must give the other Party Notice describing the particulars of the occurrence; and

9.2.2. The Claiming Party must provide timely evidence reasonably sufficient to establish that the occurrence constitutes Force Majeure as defined in this Agreement.

9.3. The suspension of the Claiming Party's performance due to Force Majeure may not be greater in scope or longer in duration than is required by such Force Majeure. In addition, the Claiming Party shall use diligent efforts to remedy its inability to perform. When the Claiming Party is able to resume performance of its obligations under this Agreement, the Claiming Party shall give the other Party prompt Notice to that effect.

9.4. The non-Claiming Party may terminate this Agreement on at least five (5) Business Days' prior Notice, in the event of Force Majeure which materially interferes with such Party's ability to perform its obligations under this Agreement and which extends for more than 365 consecutive days, or for more than a total of 365 days in any consecutive 540-day period.

16. INDEMNIFICATION

16.1. Each Party as indemnitor shall defend, save harmless and indemnify the other Party and the directors, officers, employees, and agents of such other Party against and from any and all loss, liability, damage, claim, cost, charge, demand, or expense (including any direct, indirect, or consequential loss, liability, damage, claim, cost, charge, demand, or expense, including reasonable attorneys' fees) for injury or death to persons, including employees of either Party, and physical damage to property including property of either Party arising out of or in connection with the negligence or willful misconduct of the indemnitor relating to its obligations under this Agreement. This indemnity applies notwithstanding the active or passive negligence of the indemnitee; provided, however, that neither Party is indemnified under this Agreement for its loss, liability, damage, claim, cost, charge, demand or expense to the extent resulting from its own negligence or willful misconduct.

16.2. Producer shall defend, save harmless and indemnify SCE, its directors, officers, employees, and agents, assigns, and successors in interest, for and against any penalty imposed upon SCE to the extent caused by Producer's failure to fulfill its obligations as set forth in Sections 7.2 through 7.4.

16.3. Each Party releases and shall defend, save harmless and indemnify the other Party from any and all loss, liability, damage, claim, cost, charge, demand or expense arising out of or in connection with any breach made by the indemnifying Party of its representations, warranties and covenants in Section 14. Notwithstanding anything to the contrary in this Agreement, if Producer fails to comply with the provisions of Section 10, Producer shall, at its own cost, defend, save harmless and indemnify SCE, its directors, officers, employees, and agents, assigns, and successors in interest, from and against any and all loss, liability, damage, claim, cost, charge, demand, or expense of any kind or nature (including any direct, indirect, or consequential loss, damage, claim, cost, charge, demand, or expense, including reasonable attorneys' fees and other costs of litigation), resulting from injury or death to any individual or damage to any property, including the personnel or property of SCE, to the extent that SCE would have been protected had Producer complied with all of the provisions of Section 10. The inclusion of this Section 16.3 is not intended to create any express or implied right in Producer to elect not to provide the insurance required under Section 10.

16.4. All indemnity rights survive the termination of this Agreement for 12 months.

5.6. Modification of the CREST PPA to Provide More Interconnection Agreement Options

Clean Coalition requests that the Commission direct SCE to modify the CREST PPA contract language to (1) provide a producer or developer with the option of entering into a CREST PPA even if the project is potentially experiencing delays when undergoing a system impact interconnection study, and (2) provide a producer or developer with options for interconnection agreements in addition to the currently available interconnection agreement under SCE's Electric Tariff Rule 21, referred to as the Interconnection Facilities Financing and Ownership Agreement (IFFOA). In support of these requests, Clean Coalition generally states that SCE has unduly delayed the processing of interconnection requests by generators. Clean Coalition further states that these delays impact investment and eligibility for federal grants.

Specifically regarding its first request, Clean Coalition states that producers and developers need the ability to enter into a PPA with SCE earlier in the process when undergoing an interconnection study. Having a PPA enables the producer or developer to make necessary investments in preparing for construction and to preserve eligibility for federal cash grants under § 1603 of the American Recovery and Reinvestment Tax Act. Under SCE's current procedure, producers and developers cannot enter into a PPA until they have completed the required interconnection studies and submitted the signed IFFOA.

Regarding its second request, Clean Coalition states that, as a result of existing delays in processing interconnection requests under the CREST PPA, producers and developers would like to be able to pursue other existing SCE interconnection agreements, not only the IFFOA, so that they can determine (1) if the processing time under other interconnection agreements is shorter than under the IFFOA and (2) how other interconnection agreements balance the risks between the producer or developer and SCE.

In its response to Clean Coalition's Motion, SCE appears to generally object to Clean Coalition's first request but does not offer any specific arguments in opposition to this proposal. SCE claims that Clean Coalition's second request is vague and ambiguous because the request does not identify any relevant interconnection agreements

In its comments on the October 11, 2011 proposed decision SCE clarifies that "[T]he IFFOA is not an IA [interconnection agreement] - it is merely a document listing the charges for electrical facilities necessary to interconnect the customer. It was written to be an attachment to the primary agreement."¹⁰ SCE goes on to explain that the CREST PPA is "a combination PPA/IA, with the IFFOA as an appendix."¹¹ These SCE clarifications inform our decisions on these interconnection matters.

Based on the Commission's experience with the RPS program and related contracts, we find merit in Clean Coalition's request that it be able to execute a CREST PPA before its interconnection studies are completed and an IFFOA is executed. Appendix B of the CREST PPA requires a producer to have a completed interconnection study and IFFOA before the producers or developers can enter into the CREST PPA.

Notably, with the exception of the CREST PPA and SDG&E standard tariff and contract, other IOU renewable programs or contracts do not require producers or developers to have progressed so far toward completing the interconnection process before being eligible for a PPA. Based on our review of other RPS-related contracts, including the SPVP contract and the RAM contract, we understand that producers and developers need to execute a contract at some point during the project development process rather than at the end of the process. The timing is critical because producers and developers need a guaranteed buyer for the electricity before investing a significant amount of capital in the project. An executed contract is a key to reduce uncertainty and obtain financing.

Interestingly, those Feed-in Tariff programs that require significant progress toward a completed interconnection study before executing a PPA have smaller programs. Since the CREST program began in February 2008, SCE has executed three contracts: one with an existing facility and two with new solar PV facilities.¹² SDG&E has a similar requirement as SCE and has not executed a Feed-in Tariff contract with any new project.¹³ In contrast, PG&E does not require any interconnection milestones prior to contract execution and currently has 95 executed contracts.¹⁴

We find that SCE's existing requirement that a producer or developer have completed all interconnection studies and have an IFFOA before a PPA is executed hinders investment and contract execution. We recently addressed interconnection requirements in the context of small renewable generation in Resolution E-4414, which the Commission approved on August 18, 2011. This resolution represents the latest Commission direction on interconnection requirements and requires a producer or developer to have completed the System Impact Study, or the Phase I Cluster Study, passed the Fast Track screens in order to be eligible for the RAM program.¹⁵ SCE's SPVP program has the same requirements as the RAM program.

Accordingly, today we adopt the specific requirement that SCE provide a producer or developer with the option of entering into a CREST PPA when that producer or developer has completed the System Impact Study, or the Phase 1 Cluster Study, passed the Fast Track screens, or passed the Supplemental Review. This requirement is consistent with our actions in other more recently approved renewable programs. We do not adopt Clean Coalition's recommendation that SCE provide a producer or developer with the option of entering into a CREST PPA during the time the project is still undergoing a system impact interconnection study.

With regard to Clean Coalition's second requested modification that producers and developers be given the option to execute alternative existing SCE interconnection agreements in lieu of the IFFOA, some clarification is necessary. First, SCE is correct that Clean Coalition's motion does not identify a specific interconnection agreement it would want in lieu of the IFFOA.

Second, as explained above, SCE's comments clarified that the IFFOA is not an interconnection agreement, and that for CREST participants, the interconnection agreement is contained in the PPA. The IFFOA is generator-specific and contains technical and cost information relevant to that specific interconnection.

Third, existing alternative stand-alone SCE interconnection agreements include three agreements available to generators interconnecting through SCE's FERC-jurisdictional Wholesale Distribution Access Tariff (WDAT). The interconnection agreement executed under WDAT is dependent upon the WDAT study process applied to the generator. There is one for the Fast Track process, another for the Independent Study Process, and another if the generator is studied through a cluster process.

Fourth, to our knowledge, there are limited interconnection agreements available through SCE's Rule 21 process. Historically, interconnection terms have been included within PPAs, as is the case here.

Fifth, the utilities and other interested parties are currently engaged in a Rule 21 settlement process under the auspices of the Commission's R.11-09-011. We anticipate that Rule 21 reform will include development and approval of stand alone Rule 21 interconnection agreements.

Given these clarifications, we find that using the CREST PPA (which includes the interconnection agreement) is appropriate for the interim, understanding that, as explained above, SCE will provide a producer or developer with the option of entering into a CREST PPA (including the interconnection agreement) when that producer or developer has completed the System Impact Study, or the Phase 1 Cluster Study, or passed the Fast Track screens. The Appendix B to the IFFOA would be added to the CREST PPA once the interconnection study is completed and the relevant details have been agreed to between the parties.

However, once alternative Rule 21 interconnection agreements become available through the Rule 21 settlement or rulemaking process, generators who do not already have an IFFOA may elect to execute one of those stand alone agreements in lieu of applying the interconnection terms in the CREST PPA.¹⁶

Also, to the extent that an executed CREST PPA containing a generator's interconnection agreement is terminated, for whatever reason, but a generator still seeks interconnection with SCE, the Commission expects SCE to work cooperatively with the generator to transition the generator onto an alternative interconnection agreement which essentially preserves the benefit of the bargain struck in the initial interconnection agreement. Among other things, we would expect that the transaction should not trigger additional technical study or upgrades, even if the generator is not yet interconnected. The transition should be a "paper transaction" to the greatest extent possible. To this end, under no circumstances would we expect for an interconnected generator to be required to disconnect and reapply for interconnection simply because a CREST PPA (or any other PPA) has been terminated.

⁸ Silverado Power LLC describes itself as having over 2,000 mw of projects currently under development in California and the western United States, including projects that are attempting to make their way through the SCE CREST interconnection queue. It states that these projects will be directly impacted by the modifications to the existing CREST program set forth in the proposed decision.

⁹ The language adopted in D.10-12-048 has been slightly modified to reflect the fact that, while RAM contracts require Commission approval, SCE's CREST PPA contracts do not.

¹⁰ SCE opening comments at 9.

¹¹ SCE opening comments, footnote 24.

¹² See SCE's CREST program webpage, which reflects that SCE has executed contracts with 3.35 MW: http://www.sce.com/EnergyProcurement/renewables/crest.htm.

¹³ See SDG&E's Feed-in Tariff webpage to download a list of executed contracts: http://www.sdge.com/regulatory/AB1969.shtml.

¹⁴ See PG&E's Feed-in Tariff webpage to download a list of executed contracts: http://www.pge.com/b2b/energysupply/wholesaleelectricsuppliersolicitation/standardcontractsforpurchase.

¹⁵ The System Impact Study is the first of two interconnection studies in a serial study process. The Phase I study is name of the first study in the cluster study process, which is essentially a system impact study. The Fast Track is a process to determine if a producer has such a minimal impact that it can avoid the interconnection study process. The Fast Track contains a set of 10 screens that a producer must pass in order to avoid the interconnection studies.

¹⁶ In developing the Rule 21 interconnection agreement(s), parties may need to consider revisions to the CREST PPA interconnection terms to address this issue.