8. Assignment of Proceeding

Mark J. Ferron is the assigned Commissioner and Regina M. DeAngelis is the assigned ALJ in this proceeding.

1. SCE has an existing backlog in completing interconnection studies that is impacting CREST project ability to come online in a timely manner.

2. SCE, producers and developers were engaged in an informal process to address hurdles experienced by developers and producers in obtaining the financing needed to develop small scale renewable generation for interconnection to SCE's distribution system.

3. SCE suspended this informal process on July 21, 2011.

4. If allowed to proceed without modification, SCE's management of its CREST program may render certain small renewable generators ineligible for certain federal cash grants under § 1603 of the American Recovery and Reinvestment Tax Act, which expire at the end of 2011.

5. Obtaining an executed PPA with SCE continues to be a lengthy process, in part because SCE requires all interconnection studies to be complete before a CREST PPA is executed.

6. SCE's CREST PPA has several terms and conditions which are not consistent with the terms and conditions in PPAs more recently approved by the Commission, and which significantly limit the ability of developers and producers to obtain financing for CREST projects.

7. These CREST PPA terms and conditions are not included in other utilities' programs that are similar to the CREST program.

8. The Commission recently addressed a contract extension issue in D.10-12-048, the RAM decision.

9. In D.10-12-048 and D.07-07-027, the Commission found that a defined period of time for small renewable projects to come online, such as the 18-month provision, is appropriate because it imposes strict time limits on processing and, in turn, attracts the most viable projects.

10. In D.10-12-048, the Commission also recognized that "legitimate delays can occur relative to any timeline."

11. Section 4 of the CREST PPA provides SCE with excessive control over termination of the PPA in the event of changes.

12. Contract language approved by the Commission for other standard Renewable Portfolio Standard contracts, such as SCE's 2010 SPVP contract, provides a process to resolve issues associated with potential changes in the law governing the contract.

13. SCE's 2010 SPVP contract in general, and Section 6 of the 2010 SPVP contract in particular, can essentially be described as a more updated and refined version of Section 4 of the CREST PPA.

14. 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.

15. Lenders need sufficient stability in the terms and conditions of a Commission-approved PPA and a process to resolve potential Commission changes.

16. SCE's CREST PPA contains restrictions on assignment of the PPA that are more burdensome than other more recently-approved renewable contracts.

17. 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 due to the restrictions placed on assignment of the contract.

18. The language adopted by the Commission for Section 18 (Assignment) in Resolution E-4299 recognizes the need of lenders for more flexibility in the terms and conditions related to assignment.

19. The 2010 SPVP contract does not contain provisions similar to Sections 14.2 and 14.4 of the existing CREST PPA. Those sections, in certain circumstances, might be interpreted to permit the Commission to unilaterally amend the PPA to materially change the economics of the contract and adversely impact the financial positions of the producer and lender.

20. Multiple parties reviewed and commented upon SCE's initial proposal for the 2010 SPVP contract and, based on SCE's proposed contract and these initial comments, the Commission decided not to include terms and conditions similar to Sections 14.2 and 14.4 of the CREST PPA in the approved version of the 2010 SPVP.

21. The existing SCE CREST PPA does not contain provisions for Force Majeure and Indemnification.

22. SCE's 2010 SPVP contract and the majority of similar more recently-approved renewable PPAs include provisions for Force Majeure and Indemnification.

23. The addition of the language to the CREST PPA from Sections 9 (Force Majeure) and 16 (Indemnification) of the 2010 SPVP will provide needed clarity to producers and lenders and, as a result, financing may proceed more smoothly.

24. SCE's delays in the processing of interconnection requests are impacting generators' investment decisions and eligibility for federal grants under § 1603 of the American Recovery and Reinvestment Tax Act.

25. Under the current SCE procedure, producers and developers cannot enter into a PPA with SCE until they have completed the required interconnection studies and submitted the executed IFFOA.

26. Resolution E-4414, which the Commission approved on August 18, 2011, 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. SCE's SPVP program has the same requirement as Resolution E-4414.

27. SCE has represented that the CREST PPA is a combined PPA and interconnection agreement.

28. It is reasonable to require SCE to allow producers and developers to execute the combined PPA and interconnection agreement once they have completed the System Impact Study, or the Phase I Cluster Study, have passed the Fast Track screens, or passed the Supplemental Review.

29. The execution of the IFFOA, which is included as Appendix B to the CREST PPA, should occur some time after execution of the CREST PPA, once the interconnection studies are complete.

30. Producers and developers who do not yet have an IFFOA should be allowed to choose an alternative Rule 21 interconnection agreement once such alternative are available.

31. The contract term start date requires clarification for purposes of calculating the newly adopted 18-month timeline.

32. The term "execution" as used in D.07-07-027 requires clarification to mean the date signed by the seller.

33. Conclusion of Law 15 in D.07-07-027 is clarified to mean that the applicable rate (Market Price Referent) is determined by the execution date of the contract or the date signed by the seller.

34. The CREST PPA requires clear provisions governing producer's obligations during a curtailment, including how such an emergency curtailment should work, under exactly what circumstances it is allowed, and who bears the economic costs when it occurs.

35. Given the possibility that new contracts may be entered into based on today's contract modifications, now is the appropriate time to also consider incorporating a collateral requirement into the CREST PPA for the purpose of, among other things, discouraging nonviable projects.

1. Recognizing that legitimate delays can occur relative to any timeline, the language providing for an 18-month online date plus one six-month extension for regulatory delays, as discussed in D.10-12-048, should be incorporated into the CREST PPA.

2. Replacing Section 4 of the CREST PPA (Term and Termination) with language from Section 6 of the SPVP contract is reasonable because lenders need a sufficient level of stability in the terms and conditions of a Commission-approved PPA and a process to resolve potential Commission changes.

3. It is reasonable to replace Section 12 of the CREST contract (Assignment) with language from Section 18 of the SPVP contract based on the need for more flexibility in the terms and conditions related to assignment to lenders of Commission-approved contracts.

4. Based on our recent consideration of SCE's 2010 SPVP contract, it is reasonable to find that the existing language in the SCE CREST PPA at Sections 14.2 (future modifications) and 14.4 (application for modifications by SCE) introduces excessive uncertainty into the future financial risks of the producer and the lender. To resolve this uncertainty, it is reasonable to remove Sections 14.2 and 14.4 from the CREST PPA.

5. It is reasonable to add language regarding Force Majeure and Indemnification from the 2010 SPVP contract to the CREST PPA as the majority of similar renewable PPAs now include this language, and the addition of this language will provide needed clarity to producers and lenders and, as a result, financing may proceed more smoothly.

6. Consistent with other renewable programs, such as RAM and the SPVP program, producers and developers need the ability to enter into a PPA with SCE earlier in the process when the producer or developer has completed the System Impact Study, the Phase I Cluster Study, passed the Fast Track screens, or passed the Supplemental Review because a PPA is often needed to make the necessary investments in preparing for construction and for the purpose of preserving eligibility for the federal cash grants under § 1603 of the American Recovery and Reinvestment Tax Act.

7. By offering developers and producers additional contract options for interconnection, delays in processing may be shortened.

8. In D.07-07-027, the Commission intended for the term "execution" as the date the seller signs the CREST PPA.

9. In D.07-07-027, the Commission intended for the rate for the CREST PPA to be determined by the execution date, the date signed by the seller.

10. To enable timely project development and preserve eligibility for federal cash grants, today's decision should be made effective immediately.

11. It is reasonable to add language to the CREST PPA regarding curtailment as such language will assist with ensuring the reliability of the electric grid.

12. It is reasonable to adopt a collateral requirement of $20/kW consistent with the Commission's treatment of projects less than 5 MW in D.10-12-048 (the Renewable Auction Mechanism) to discourage non-viable projects.

ORDER

IT IS ORDERED that:

1. Within 10 days of the effective date of this decision, Southern California Edison Company shall file a Tier 1 advice letter, effective immediately, incorporating into its California Renewable Energy Small Tariff Power Purchase Agreement the language set forth below, including any non-substantive changes 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.

2. Within 10 days of the effective date of this decision, Southern California Edison Company shall file a Tier 1 advice letter, effective immediately, removing Section 4 of the existing California Renewable Energy Small Tariff Power Purchase Agreement and inserting the below noted language, Section 6 of the 2010 Solar Photovoltaic Program contract, including any non-substance changes 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 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.

3. Within 10 days of the effective date of this decision, Southern California Edison Company shall file a Tier 1 advice letter, effective immediately, removing Section 12 of its existing California Renewable Energy Small Tariff Power Purchase Agreement and inserting the below noted language, Section 18 of the 2010 Solar Photovoltaic Program contract, including any non-substance changes needed to align internal references.

18. ASSIGNMENT

4. Within 10 days of the effective date of this decision, Southern California Edison Company shall file a Tier 1 advice letter, effective immediately, removing Sections 14.2 and 14.4 of the existing California Renewable Energy Small Tariff Power Purchase Agreement.

5. Within 10 days of the effective date of this decision, Southern California Edison Company shall file a Tier 1 advice letter, effective immediately, adding the language set forth in Sections 9 (Force Majeure) and 16 (Indemnification) of its 2010 Solar Photovoltaic Program contract, which is reproduced below, to the California Renewable Energy Small Tariff Power Purchase Agreement, including any non-substantive changes 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.

6. Southern California Edison Company shall 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, past the Fast Track screens, or passed the Supplemental Review.

7. Southern California Edison Company shall determine the rate for purposes of the California Renewable Energy Small Tariff Power Purchase Agreement on the date the Agreement is executed, meaning the date the Agreement is signed by the seller.

8. Within 10 days of the effective date of this decision, Southern California Edison Company shall file a Tier 1 advice letter, effective immediately, adding the language set forth below, which is a simplified version of curtailment language approved in Decision 11-04-030 (the Decision conditionally accepting 2011 RPS Procurement Plans), to the California Renewable Energy Small Tariff Power Purchase Agreement, including any non-substantive changes needed to align internal references.

CURTAILMENT

1. Producer shall promptly curtail the production of the Generating Facility: (i) upon Notice from SCE that SCE has been instructed by the CAISO or the Transmission Provider to curtail energy deliveries; (ii) upon Notice that Producer has been given a curtailment order or similar instruction in order to respond to an Emergency; (iii) if no Schedule was awarded in either the Day-Ahead Market or the Real-Time Market; or (iv) if SCE issues an OSGC Order.

2. For each day of the Term, if no Schedule is awarded for the Forecasted energy in both the Day-Ahead Market and Real-Time Market for such day, and the Generating Facility has not been curtailed pursuant to Section 1(i), (ii) or (iii), then, so long as Producer's actual availability establishes that the Generating Facility would have been able to deliver but for the fact a Schedule was not awarded, SCE shall pay Producer the Product Price, as adjusted by Exhibit G, for the amount of energy Producer would have been able to deliver but for the fact that Producer did not receive a Schedule. The amount of energy that could have been delivered will be determined in accordance with Section 4.

3. If SCE bids the energy from the Generating Facility into the Day-Ahead Market or Real-Time Market and the CAISO awards a Schedule as a result of that bid, SCE shall have the right, but not the obligation, to order Producer to curtail the delivery of energy (an "Over-Schedule Generation Curtailment Order" or "OSGC Order") in excess of a Schedule awarded pursuant to this Section 3 (the "Over-Schedule Generation Curtailment Quantity" or "OSGC Quantity"). SCE shall pay Producer the Product Price, as adjusted by Exhibit G, for the OSGC Quantity Producer would have been able to deliver but for the fact that SCE issued an OSGC Order. The amount of energy that could have been delivered will be determined in accordance with Section 4.

4. SCE shall estimate the amount of energy the Generating Facility would have been able to deliver under Sections 2 and 3. SCE shall apply accepted industry standards in making such an estimate and take into consideration the actual availability of the Photovoltaic Modules, past performance of the Generating Facility, meteorological data, solar irradiance data, and any other relevant information. Producer shall cooperate with SCE's requests for information associated with any estimate made hereunder. SCE's estimates under this Section 4 for the amount of energy that the Generating Facility would have been able to deliver under Sections 2 and 3 will be determined in SCE's sole discretion.

9. Within 10 days of the effective date of this decision, Southern California Edison Company shall file a Tier 1 advice letter, effective immediately, adding collateral language set forth below, to the California Renewable Energy Small Tariff Power Purchase Agreement, including any non-substantive changes needed to align internal references.

4. DEVELOPMENT SECURITY

4.1. On or before the thirtieth (30'" day following the Effective Date, Producer shall post and thereafter maintain a development fee (the "Development Security") equal to twenty dollars ($20) for each kilowatt of the Gross Power Rating. The Development Security will be held by SCE and must be in the form of either a cash deposit or the Letter of Credit. If Producer establishes the Development Security in the form of a cash deposit, SCE shall make monthly Simple Interest Payments to Producer in accordance with the terms of this Agreement.

4.2. If, on or before the Term Start Date, Producer:

4.2.1. Demonstrates to SCE's satisfaction that Producer has installed all of the equipment or devices necessary for the Generating Facility to satisfy the Gross Power Rating of such Generating Facility, SCE shall return the Development Security to Producer within thirty (30) days of the Term Start Date;

4.2.2. Has not installed any of the equipment or devices necessary for any Generating Facility to satisfy any of the Gross Power Rating, Producer shall forfeit, and SCE shall have the right to retain, the entire Development Security and terminate this Agreement; or

4.2.3. Has installed only a portion of the equipment or devices necessary for a Generating Facility to satisfy the Gross Power Rating of such Generating Facility, SCE shall return, within thirty (30) days of the Term Start Date, only the portion of the Development Security equal to the product of twenty dollars ($20) per kW DC of the portion of the Gross Power Rating available to deliver the Product to SCE at the Delivery Point. This Section 4.2 is subject to Producer's right to extend the Term Start Date as a result of a Force Majeure as to which Producer is the Claiming Party (subject to Section 9.4).

10. Service of this decision will be provided to the electronic service list for General Order 96-B, attached hereto as Attachment A, and the electronic service list for this proceeding.

11. Rulemaking 11-05-005 remains open.

This order is effective today.

Dated November 10, 2011, at San Francisco, California.

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