V. Comments on Draft Decision

The draft decision of ALJ Simon in this matter was mailed to the parties in accordance with Pub. Util. Code § 311(g)(1) and Rule 77.7 of the Rules of Practice and Procedure. Comments were filed on November 29, 2005 by the CalWEA group, Green Power, PG&E, ORA, and SCE. Reply comments were filed on December 5, 2005 by PG&E and Solargenix.65

CalWEA Group

The CalWEA group supports the use of TODs, arguing that although the six to nine TOD periods used by the utilities do not provide the most accurate information, they do constitute the behavior of the relevant market participants. The CalWEA groups also notes what it characterizes as an inconsistency in the draft decision's treatment of the use of TODs. Whereas the draft decision identifies the goal as consistent application of TODs throughout the procurement process, it appears to allow the TODs to be "refreshed" during the bid evaluation process. The CalWEA group asserts that this undermines the effective use of TODs and urges that, if any refreshing is allowed, it be required to be at least ten business days before bids are submitted.

The intent of the draft decision was not to allow changes in the TODs themselves. The TODs may not and do not change throughout the solicitation process-from RFO through contract. Rather, the intent was to acknowledge the practice of PG&E (at least) to refresh its valuation of the energy delivered in a TOD period with more current market price information. This section of the draft decision has been revised to clarify this distinction.

The CalWEA group also agrees with SCE's position, discussed in more detail below, that the costs of stopping and starting the proxy CCGT should be considered in developing the capacity factor for the proxy plant. The CalWEA group contends that this position is nevertheless impractical for the MPR, since it would require more complex simulation modeling than necessary. We revise the draft decision to reflect the complexity of the start/stop issue.

Green Power

Green Power continues to support the use of TODs and continues to urge that greater granularity of TODs is desirable. As noted above, since the current market participants use the smaller number of TODs, the MPR should do so as well.

ORA

ORA makes two objections to the use of the utilities' TODs. First, ORA notes that while the TODs are public, the information underlying them is not. We will not reject the use of the existing TODs on that basis, but we make more explicit our intention to develop benchmarks based on publicly available information with which to compare TODs. Second, ORA asserts that use of the TODs in determining the capacity factor for the proxy CCGT could create an incentive to manipulate the TODs. ORA has not supported this assertion, which assumes that TODs used throughout a utility's procurement activities would be altered to affect one parameter of the MPR. To the extent that such possibilities might exist, the benchmarking process noted above should deter or detect them.

ORA also reargues its view that the MPR should incorporate a greenhouse gas adder. We expand the discussion of this point to clarify the relationship of the MPR to greenhouse gas concerns.

Finally, ORA urges that Finding of Fact 32 be eliminated. Although we do not agree with ORA's assertion that there is no record to support this finding, we also consider it not necessary to the decision and will remove it.

PG&E

PG&E points out that releasing the MPR after the development of the last utility's short list has the potential to delay release, since the utilities may take differing lengths of time to develop their short lists. Since the RPS statute only requires us to "make specific determinations of market prices after the closing date of a competitive solicitation. . .," (§ 399.14(a)(2)(A)), this delay is not necessary. We agree, and make this change. We also append an updated timeline for RPS solicitations, reflecting the current process, adapted from that in D.04-07-029.

PG&E continues to urge that the MPR be adjusted to reflect differences in the market value of the output of the proxy plant and of the renewable resource. We remain unpersuaded that this is an appropriate approach to the MPR, but note more clearly that this issue could be addressed in any review of the least cost/best fit methodology. PG&E argues that, if we do not make its suggested adjustment, we should justify it with reference to the statute. Although we do not believe that the draft decision needs to be revised either with respect to the valuation or the justification issue, we expand the discussion of the foundations of the MPR to provide a better context for the subsequent discussion.

Finally, PG&E asks us to clarify the characterization of its position on the cost of capital for the proxy plant. We revise the draft decision to make this change.

SCE

SCE requests that we not require it to conform its TOD methodology to that of PG&E and SDG&E for the 2005 RPS solicitation, but allow it to make the change for 2006. Although this will result in an anomaly among the utilities for 2005, we are persuaded that, as CalWEA suggests, consistency of application of TODs within one utility's solicitation is more important than consistency across utilities for 2005. We therefore revise the draft decision to alter SCE's compliance obligations with respect to TODs.

SCE also argues that we should take account of the impact of the costs of starting and stopping the proxy CCGT if the capacity factor is less than 92%. As CalWEA notes, it would be useful but difficult to implement this suggestion. We revise the draft decision to direct staff to consider making such an adjustment, within certain parameters.

In addition to revisions made in response to comments, we have made other minor corrections and clarifications to the draft decision.

Findings of Fact

1. The 2004 MPR methodology provides a reasonable basis for development of an MPR methodology for 2005 and subsequent years.

2. It is not necessary for the Commission to construct a 20-year forward gas contract for the MPR calculation.

3. The Gas Stipulation entered into by PG&E, California Cogeneration Council, CalWEA, Central California Power, SDG&E, and SCE is supported by the record.

4. Modifications to the 2004 MPR gas forecast outlined in the Gas Stipulation are appropriate for Years 1-6 in the MPR gas forecast for 2005.

5. The annual escalation approach used after the last year of NYMEX data, part of the 2004 MPR gas forecasting methodology, potentially distorts the gas prices forecasted for Years 7- 20.

6. It is reasonable to modify the 2004 gas forecast methodology to reflect a three-year straight line blending between the near-term (Years 1-6) and the long-term (Years 7-20), effectively retaining the absolute value of gas price forecasts from fundamentals-based sources.

7. The use of TOD profiles developed by each utility will improve the accuracy and effectiveness of the MPR.

8. The use of TOD profiles will eliminate the need to calculate an MPR for a peaker proxy plant.

9. The use of TOD profiles will eliminate the need to calculate a "blended" MPR for a proxy product that is neither baseload nor peaking.

10. The methods used by PG&E and SDG&E to calculate their TODs are appropriate for use for the MPR.

11. SCE's proposed method of using a QF-based TOD is not appropriate for use for the MPR.

12. SCE should revise its TODs in future solicitations using forward market data in a manner similar to that of PG&E and SDG&E.

13. It is reasonable to use TODs consistently throughout the RPS procurement process, including bid prices, least cost/best fit bid evaluation, and SEP determination.

14. It is reasonable to develop a method for benchmarking and evaluating the utilities' TODs, using publicly available data.

15. The "mid-point" approach is appropriate for selecting an input value from a reasonable range of values for the 2005 MPR.

16. It is reasonable to use market survey data, as relevant, to determine appropriate inputs for use in the MPR calculation.

17. It is reasonable to use secondary market data related to costs for the proxy plant in the MPR calculation only if the data have been reviewed in a formal Commission proceeding.

18. It is reasonable to limit the data on installed capital costs for the MPR calculation to costs in California.

19. It is reasonable to adopt the General Electric F-Series gas turbine as a statewide CCGT proxy.

20. It is reasonable to allow staff to consult published sources of information about operational characteristics of the proxy plant (e.g., the proxy plant turbine) that may include information about facilities outside California.

21. It is reasonable to assume balance sheet financing for the MPR proxy plant.

22. It is reasonable to treat the MPR proxy plant as having a ratio of debt to equity of 50%/50%.

23. It is reasonable to assume that the risk profile of the proxy plant falls somewhere between that of a merchant generator (selling into the market without a long-term contract) and a utility.

24. It is reasonable to use a survey of industrial companies in the Standard and Poor's 500 index having risk factors similar to those of independent power producers to determine the weighted average cost of capital for the proxy plant.

25. It is reasonable to use an averaging of utility-specific TOD profiles to calculate a statewide capacity factor for the proxy plant.

26. It is reasonable to assign some heat rate penalty (measured in Btu) for dry cooling for the proxy plant.

27. It is reasonable to consider whether to assign some heat rate penalty (measured in Btu) for a capacity factor less than 92% for the proxy plant.

28. It is reasonable to assign some heat rate penalty (measured in Btu) for degradation of performance of the proxy plant.

29. It is reasonable to calculate nominal MPRs reflecting different project on-line dates.

30. It is reasonable to assume that capital costs fo r the proxy plant should be escalated until 2010 and then held constant to reflect the fact that increased efficiencies will offset incremental capital costs.

31. The greenhouse gas adder identified in D.04-12-048 was developed to allow comparisons among procurement options.

32. The greenhouse gas adder is not currently an element of the long-term market price of electricity in California.

33. The most efficient way to release the MPR for 2005 is by staff preparation of a draft resolution, including relevant supporting documentation.

Conclusions of Law

1. The methodology developed for the 2004 MPR, with the improvements set forth in this decision, should be used in 2005.

2. The Gas Stipulation is supported by the record, consistent with law, and in the public interest.

3. A method for benchmarking and evaluating the utilities' TODs, using publicly available data, should be developed.

4. The greenhouse gas adder developed in D.04-12-048 should not be an element of the MPR calculation for 2005.

5. The calculation of the 2005 MPR should be released by staff preparation of a draft resolution after all utility solicitations have been closed.

6. In order to allow the calculation of the 2005 MPR to proceed expeditiously, this order should be effective immediately.

INTERIM ORDER

IT IS ORDERED that:

1. The Stipulation Regarding Guiding Principles and Short-Term Gas Price Forecast Methodology for the 2005 Market Price Referent (MPR) Calculation entered into September 7, 2005, by Pacific Gas and Electric Company (PG&E), California Cogeneration Council, California Wind Energy Association, Central California Power, San Diego Gas & Electric Company, and Southern California Edison Company (Edison) is adopted.

2. The 2005 calculation of the MPR shall be undertaken by staff in accordance with the directives in this decision.

3. The 2005 calculation of the MPR shall be released by staff preparation of a draft resolution after all utility solicitations have been closed, and the last utility short list is developed.

4. Not later than January 10, 2006, Edison shall file and serve its 2006 time of delivery (TOD) profiles calculated by the method used by PG&E for its TOD profiles.

5. The Assigned Commissioner and assigned administrative law judge shall set a schedule for developing a method for benchmarking and evaluating the utilities' TOD profiles, using publicly available data.

This order is effective today.

Dated December 15, 2005, at San Francisco, California.

Commissioner Dian M. Grueneich recused herself

from this agenda item and was not part of the

quorum in its consideration.

APPENDIX A

STIPULATION REGARDING
SHORT-TERM GAS PRICE FORECAST METHODOLOGY FOR
2005 MARKET PRICE REFERENT
IN RULEMAKING 04-04-026

I. AGREEMENT

In accordance with Rule 51 et seq. of the Rules of Practice and Procedure of the California Public Utilities Commission (Commission), the parties to this stipulation (Stipulating Parties) file this document and recommend that the Commission adopt the agreed-upon methodology for establishing the short-term natural gas price forecast for use in calculating the 2005 Market Price Referent (MPR).  The parties' stipulation to the general principles proposed in the Administrative Law Judge's Ruling of August 9, 2005 is set out in Table 1.66  The parties' stipulation regarding proposed sources and methodologies to shape the 1-6 year short-term period is summarized in Table 2.  Both tables are an integral part of this stipulation as to the methodology for setting the price of natural gas during the Years 1 through 6 as an input to the 2005 MPR (Short-Term Gas Price Stipulation). 

II. PARTIES

The parties to the Short-Term Gas Price Stipulation are California Cogeneration Council and California Wind Energy Associates (collectively, CCC), Central California Power (CCP), San Diego Gas & Electric Company (SDG&E), Southern California Edison (SCE), and Pacific Gas and Electric Company (PG&E).

III. CONDITIONS

The Stipulating Parties agree to the following conditions:

1. This embodies the entire understanding and agreement of the Stipulating Parties with respect to the matters described, and it supersedes prior oral or written agreements, principles, negotiations, statements, representations, or understandings among the Stipulating Parties with respect to those matters. 

2. This Short-Term Gas Price Stipulation represents a compromise among the Stipulating Parties' respective litigation positions, not an agreement to or an endorsement of disputed facts and law presented by the Stipulating Parties in this proceeding. 

3. Except where noted, the Stipulating Parties agree that this Short-Term Gas Price Stipulation is reasonable in light of the parties' assertions, consistent with law, and in the public interest, in accordance with Rule 51.1(e).

4. The Stipulating Parties agree that no provision of this Short-Term Gas Price Stipulation shall be construed against any Stipulating Party because that Stipulating Party or its counsel or advocate drafted the provision.

5. This Short-Term Gas Price Stipulation may be amended or changed only by a written agreement signed by the Stipulating Parties.

6. Except where noted, the Stipulating Parties shall jointly request and actively support timely Commission approval of this Short-Term Gas Price Stipulation.  Active support shall include written and oral testimony if testimony is required, briefing if briefing is required, comments on the proposed decision, advocacy to Commissioners and their advisors as needed, and other appropriate means as needed to obtain the requested approval. 

7. The Stipulating Parties intend the Short-Term Gas Price Stipulation to be interpreted and treated as a unified, integrated agreement.  In the event the Commission rejects or modifies this Short-Term Gas Price Stipulation, the Stipulating Parties reserve their rights under Rule 51.7.

IV. HISTORY

The objective of this phase of R.04-04-026 is to identify the appropriate inputs and methodology for the calculation of the 2005 MPR.  The Administrative Law Judge's (ALJ) Ruling Setting Schedule for Consideration of 2005 Market Price Referent (MPR) Issues (May 24, 2005), identified the issue of gas inputs as a matter of highest priority for the calculation of the 2005 MPR and provided that information about gas price inputs and gas price forecast modeling would be presented for the Commission's consideration at a workshop held on June 20 and 21, 2005.  Parties accordingly filed pre-workshop briefs on June 10. 

After the workshop was held, in a ruling dated July 7, the ALJ observed, "As a result of the workshops, it appears that the process of setting the 2005 MPR would benefit from more detailed suggestions to the parties about topics that could be covered in the briefs."  The ruling requested the parties to consider whether the Commission's adoption of gas inputs and the gas price forecast methodology should be guided by certain principles.  It also asked parties to explain in detail the basis for previously made assertions about gas price inputs.   In accordance with the ALJ's schedule, parties filed opening and reply briefs on July 29 and August 12, respectively.  The schedule also suggested that any stipulations regarding workshop issues should be filed on August 10.  

After providing notice to all parties pursuant to Rule 51.1(b) on August 8, 2005, PG&E hosted an initial conference to discuss the potential settlement of gas inputs on August 15, 2005, from 2:30 p.m. to 5:00 p.m. at PG&E's office in San Francisco; free access was also provided for parties to participate by phone.  A similar follow-up conference was held on September 1, 2005.  Copies of the notices are attached. 

As a result of these discussions, on September 1, 2005, the Stipulating Parties (CCC, CCP, SCE, SDG&E, and PG&E) reached an agreement on the short term gas price inputs for the 2005 MPR. 

V. TERMS

1. The Stipulating Parties, with the exception of SCE, agree that the Commission should observe the general principles stated in Table 1 to formulate the 2005 MPR gas price forecast.  As shown by Table 1, SCE stipulates to the general principle that market data should be used to the extent possible, but does not agree that the other general principles in Table 1 should be observed in formulating the 2005 MPR gas price forecast.
///
///

Table 1 - General Principles to be Used in Formulating the

2005 MPR Natural Gas Price Forecast

(proposed principles in bold.  Changes to original July 7 principles in bold italics,):

As originally proposed in the July 7, 2005 ALJ Ruling following June 2005 MPR Workshops

As agreed to by participating Parties in August 15, 2005 Rule 51.1 Conference

Stipulating Parties

1.  Reflects behavior of market participants.

1.  Reflects behavior of market participants.

CCC/CalWEA, SDG&E, PG&E, CCP.

SCE does not.

2.  Market data should be used to the extent possible.

2.  Market data should be used to the extent possible.

CCC/CalWEA, SCE, SDG&E, PG&E, CCP.

3. For longer term contracts that extend beyond available market data, forecasts should exhibit a clear relationship to fundamental costs.

3. For shorter-term contracts, forecast data should be verified against forward market data; for longer-term contracts that extend beyond available market data, forecasts should be benchmarked against fundamental costs and/or historical market data.

CCC/CalWEA, SDG&E, PG&E, CCP.

SCE does not.

4.  Methodology should be consistent with evaluation of other products.

4.  Methodology should be consistent with evaluation of other products.

CCC/CalWEA, SDG&E, PG&E, CCP.

SCE does not.

5.  Methodology should be verifiable using historical data.

   

6.  Methodology should be consistent with previous regulatory decisions.

6.  Methodology should be consistent with previous regulatory decisions.

CCC/CalWEA, SDG&E, PG&E, CCP.

SCE does not.

Legend of Stipulating Parties

2. The Stipulating Parties agree that the inputs contained in Table 2 should be used to calculate the gas prices forecast for Years 1 through 6 of the 2005 MPR. 

Table 2
Proposed Sources and Methodologies to Shape the
1 to 6 year Short Term Period

(Bold indicates changes from 2004 methodology for Years 1 through 6)

Issue

2004 MPR Methodology

Proposed 2005 MPR Methodology

Stipulating Parties

Surcharges (e.g., generator gas transmission fee, franchise fee, shrinkage)

Gas prices should be estimated at the proxy power plant burner tip (per CPUC Staff Report on 2004 MPR, February 10, 2005, page 6)

Gas prices should be estimated at the proxy power plant burner tip (per CPUC Staff Report on 2004 MPR, February 10, 2005, page 6)

CCC/CalWEA, SDG&E, SCE, PG&E, CCP.

Hedging costs-now known as Transaction Costs

$0.082/MMBtu, consisting of one-half the bid/ask spread and a collateral carrying cost ($0.071 + $0.011, respectively) (per D.04-06-015, page 27)

$0.082/MMBtu, consisting of one-half the bid/ask spread and a collateral carrying cost ($0.071 + $0.011, respectively) (per D.04-06-015, page 27)

CCC/CalWEA, SDG&E, SCE, PG&E, CCP.

Basis (location differential)

o 50% SoCal Border plus generator transport

o 50% PG&E Citygate plus generator transport

NYMEX ClearPort (~2 years), then extend last year of actual basis quotes as a constant for remaining years.

NYMEX ClearPort (~2 years), then extend last year of actual basis quotes as a constant for remaining years.

CCC/CalWEA, SDG&E, SCE, PG&E. CCP abstains. CCC/CalWEA recommends monitoring the long-term basis adjustment to ensure consistency of short term and long term trends.

Primary Data Source of Commodity Price

NYMEX Henry Hub futures

NYMEX Henry Hub futures

CCC/CalWEA, SDG&E, SCE, PG&E. CCP abstains.

Time Length / Tenor

Minimum 5 years of NYMEX Henry Hub futures, with CPUC staff discretion on the sixth year.

Minimum 5 years of NYMEX Henry Hub futures, with CPUC staff discretion on the sixth year.

CCC/CalWEA, SDG&E, SCE, PG&E, CCP.

Averaging Period and Calculation Start Date

60-trading-day averaging period, ending with bid due date of PG&E, calculated once for all IOUs.

22-trading-day averaging period, ending with short-list date of the last IOU to report, calculated for all 3 IOUs.

CCC/CalWEA, SDG&E, SCE, PG&E, CCP.

Legend of Stipulating Parties

3. Except where noted, the Stipulating Parties agree that this outcome is reasonable, consistent with law, and in the public interest.

VI. EXECUTION

This Short-Term Gas Price Stipulation shall become effective among the Stipulating Parties on the date the last Stipulating Party executes the Short-Term Gas Price Stipulation as indicated below.  In witness whereof, intending to be legally bound, the Stipulating Parties hereto have duly executed this Short-Term Gas Price Stipulation on behalf of the Stipulating Parties they represent.  This Short-Term Gas Price Stipulation is executed in counterparts, each of which shall be deemed an original.  The undersigned represent that they are authorized to sign on behalf of the Stipulating Party represented.

CALIFORNIA COGENERATION COUNCIL AND CALIFORNIA WIND ENERGY ASSOCIATION

By: /s/ R. Thomas Beach by E. Lee

Name: R. Thomas Beach_________

Title: Crossborder Energy for CCC and CalWEA

Date: ___September 7, 2005

CENTRAL CALIFORNIA POWER

By: _/s/ Joseph Langenberg by E. Lee_

Name: __Joseph Langenberg_________

Title:___Principal_________________

Date: ___September 7, 2005

SAN DIEGO GAS & ELECTRIC COMPANY

By: _/s/ Meredith Allen by E. Lee ___

Name: ___Meredith Allen__________

Title:_____Attorney________________

Date: ____September 6, 2005

 

SOUTHERN CALIFORNIA EDISON COMPANY

By: __/s/ Cathy Karlstad by E. Lee __

Name: __Cathy Karlstad__________

Title:_____Attorney______________

Date: ___September 7, 2005

PACIFIC GAS AND ELECTRIC COMPANY

By: _______/s/ Evelyn C. Lee________

Name: _______Evelyn C. Lee_________

Title:_________Attorney __________

Date: _____ September 7, 2005

Appendices Follow

Appendix 1

Notice for August 15 conference

______________________________________________

From:                     Ryzhaya, Katherine 

Sent:                     Monday, August 08, 2005 5:26 PM

To:                         Livingston-nunley, Grace; 'jmckinney@thelenreid.com'; 'lennyh@evomarkets.com'; Kolb, Marc E; Winn, Valerie J; 'jonwelner@paulhastings.com'; 'info@tobiaslo.com'; 'cem@newsdata.com'; 'snuller@ethree.com'; 'robertgex@dwt.com'; Law CPUC Cases; Barry, Donna L; 'nprocos@alamedapt.com'; 'keithwhite@earthlink.net'; 'robert.boyd@ps.ge.com'; 'dietrichlaw@earthlink.net'; 'ramonag@ebmud.com'; 'ceyap@earthlink.net'; 'mrw@mrwassoc.com'; 'bepstein@fablaw.com'; 'dweisz@cera.com'; 'rschmidt@bartlewells.com'; 'rhwiser@lbl.gov'; 'derek@denniston.com'; 'brbarkovich@earthlink.net'; 'rmccann@umich.edu'; 'vwood@smud.org'; 'cmkehrein@ems-ca.com'; 'e-recipient@caiso.com'; 'e-recipient@caiso.com'; 'grosenblum@caiso.com'; 'lpark@navigantconsulting.com'; 'vfleming@navigantconsulting.com'; 'karly.mccrory@rweschottsolar.us'; 'dougdpucmail@yahoo.com'; 'kevin@solardevelop.com'; 'mclaughlin@braunlegal.com'; 'dkk@eslawfirm.com'; 'kdw@woodruff-expert-services.com'; 'wwwesterfield@stoel.com'; 'rroth@smud.org'; 'karen@klindh.com'; 'dws@r-c-s-inc.com'; 'LAdocket@cpuc.ca.gov'; 'as2@cpuc.ca.gov'; 'ajo@cpuc.ca.gov'; 'aes@cpuc.ca.gov'; 'dil@cpuc.ca.gov'; 'dsh@cpuc.ca.gov'; 'jf2@cpuc.ca.gov'; 'ltr@cpuc.ca.gov'; 'lp1@cpuc.ca.gov'; 'mrl@cpuc.ca.gov'; 'nao@cpuc.ca.gov'; 'psd@cpuc.ca.gov'; 'pva@cpuc.ca.gov'; 'pha@cpuc.ca.gov'; 'sed@cpuc.ca.gov'; 'rmiller@energy.state.ca.us'; 'skorosec@energy.state.ca.us'; 'JMcMahon@navigantconsulting.com'; 'hraitt@energy.state.ca.us'; 'kzocchet@energy.state.ca.us'; 'wsm@cpuc.ca.gov'; 'garson_knapp@fpl.com'; 'doug.larson@pacificorp.com'; 'msimmons@sierrapacific.com'; 'PUCservice@manatt.com'; 'msnow@manatt.com'; 'msnow@manatt.com'; 'pucservice@manatt.com'; 'klatt@energyattorney.com'; 'douglass@energyattorney.com'; 'berj.parseghian@sce.com'; 'fortlieb@sandiego.gov'; 'meallen@sempra.com'; 'wiebe@pacbell.net'; 'hal@rwitz.net'; 'sara@oakcreekenergy.com'; 'cpc1993@hotmail.com'; 'jaturnbu@ix.netcom.com'; 'pepper@cleanpowermarkets.com'; 'wblattner@semprautilities.com'; 'joe.como@sfgov.org'; 'mzafar@semprautilities.com'; 'freedman@turn.org'; 'kpp@cpuc.ca.gov'; 'rsa@a-klaw.com'; 'jpross@votesolar.org'; 'placourciere@thelenreid.com'; Lee, Evelyn C (Law); 'bcragg@gmssr.com'; 'jkarp@whitecase.com'; 'meganmmyers@yahoo.com'; 'ssmyers@att.net'; 'jhamrin@resource-solutions.org'; 'jchamberlin@sel.com'; 'lsherif@calpine.com'; 'jackp@calpine.com'; 'wbooth@booth-law.com'; 'bill.chen@constellation.com'; 'gmorris@emf.net'; 'jgalloway@ucsusa.org'; 'clyde.murley@comcast.net'; 'nrader@calwea.org'; 'tomb@crossborderenergy.com'; 'arno@energyinnovations.com'; 'johnrredding@earthlink.net'; 'janmcfar@sonic.net'; 'steven@iepa.com'; 'tomstarrs@b-e-f.org'; 'cynthia.schultz@pacificorp.com'; 'bshort@ridgewoodpower.com'; 'csmoots@perkinscoie.com'; 'rberliner@manatt.com'; 'obrienc@sharpsec.com'; 'porter@exeterassociates.com'; 'mcollins@icc.state.il.us'; 'abiecunasjp@bv.com'; 'pletkarj@bv.com'; 'meyertm@bv.com'; 'kjsimonsen@ems-ca.com'; 'dsaul@solel.com'; 'dnorris@sppc.com'; 'jgreco@caithnessenergy.com'; 'jozenne@semprautilities.com'; 'steve@energyinnovations.com'; 'jackmack@suesec.com'; 'case.admin@sce.com'; 'j.eric.isken@sce.com'; 'gary.allen@sce.com'; 'woodrujb@sce.com'; 'lizbeth.mcdannel@sce.com'; 'lwrazen@sempraglobal.com'; 'tcorr@sempra.com'; 'ygross@sempraglobal.com'; 'liddell@energyattorney.com'; 'amabed@semprautilities.com'; 'scott.anders@sdenergy.org'; 'susan.freedman@sdenergy.org'; 'centralfiles@semprautilities.com'; 'jcervantes@sandiego.gov'; 'jleslie@luce.com'; 'bill.owen@adelphia.net'; 'csteen@bakerlaw.com'; 'jleblanc@bakerlaw.com'; 'mjskowronski@inlandenergy.com'; 'olsen@avenuecable.com'; 'thunt@cecmail.org'; 'mdjoseph@adamsbroadwell.com'; 'diane_fellman@fpl.com'; 'nsuetake@turn.org'; 'mhyams@sfwater.org'; 'dbachrach@nrdc.org'; 'filings@a-klaw.com'; 'dickerson07@fscgroup.com'; Lucha, Ed; 'dgulino@ridgewoodpower.com'; 'keith.mccrea@sablaw.com'

Cc:                         Ryzhaya, Katherine

Subject:                 2005 MPR: Notice of Conference pursuant to Rule 51.1 (b)

Notice to Parties to Rulemaking (R.)  04-04-026 at the request of Energy Division staff, California Public Utilities Commission:

Notice of Conference pursuant to Rule 51.1 subsection (b) of the CPUC's

Rules of Practice and Procedure

On August 15, 2005, Pacific Gas and Electric (PG&E) will host a breakout session to identify and discuss the appropriate methodology for Establishing Short-term Gas Inputs for Proxy Plant for use in the development of the 2005 Market Price Referent (MPR) natural gas price methodology. This session augments the recently convened workshops and post-workshop briefs on the Methodology to Modify the 2004 Market Price Referent (MPR) for use in the 2005 Renewable Portfolio Standard (RPS) procurement process.   The goal of the session is to facilitate and document consensus on as many assumptions as possible prior to the filing of the reply briefs, which are due on August 19th, as required by ALJ Simon's July 7th Ruling. In the event that parties stipulate to one or more material issues in the proceeding, the stipulation would be proposed for adoption by the Commission in accordance with Rule 51.1.

Participants interested in presenting a proposal are encouraged to circulate materials to the service list prior to the session.

A detailed agenda is provided below for your review.  For security reasons, advance registration is required by August 11, 2005; it is better to register even if your attendance is not absolutely certain.  Please contact Marc Kolb [415-973-0206 or MEKd@pge.com] with any questions.

August 15, 2005

2:30-5:00 P.M.

Pacific Gas and Electric Company

245 Market Street, Room 1411

San Francisco, CA 94105

(Participants will be greeted in the Lobby)

 

Agenda for 2005 MPR 

Short-term Gas Price Forecast Methodology 

Rule 51.1 Conference 

Facilitator:

Harold Pestana, PG&E

Purpose:

 

This breakout session (or conference) is intended to produce consensus on the MPR short-term gas price forecast methodology. It is anticipated that many, if not most, outstanding issues will be resolved through the breakout session (or conference) process. Parties should consider a mechanism for identifying agreed-upon issues and solutions.[1]

[1] For example, a stipulation pursuant to Rule 51.1 of the Commission's Rules of Practice and Procedures.

I. Introductions


II. Identifying the scope of subgroup deliverables.  At a minimum these deliverables should include:

III. Proposals:

IV. Group to discuss results / next steps. 

Katherine Ryzhaya

(415) 972-5011

KARp@pge.com

Appendix 2

Notice for September 1, 2005 Conference

 

"Kolb, Marc E" <MEKd@pge.com>

08/29/2005 07:46 PM

To

"Tom Beach" <tomb@crossborderenergy.com>, "Livingston-nunley, Grace" <GXL2@pge.com>, <jmckinney@thelenreid.com>, <lennyh@evomarkets.com>, "Winn, Valerie J" <VJW3@pge.com>, <jonwelner@paulhastings.com>, <info@tobiaslo.com>, <cem@newsdata.com>, <snuller@ethree.com>, <robertgex@dwt.com>, "Law CPUC Cases" <CPUCCases@pge.com>, "Barry, Donna L" <DLBf@pge.com>, <nprocos@alamedapt.com>, <keithwhite@earthlink.net>, <robert.boyd@ps.ge.com>, <Michael.Whatley@SCE.com>, "Patrick McGuire \(Patrick McGuire\)" <patrickm@crossborderenergy.com>, <dietrichlaw@earthlink.net>, <ramonag@ebmud.com>, <ceyap@earthlink.net>, <mrw@mrwassoc.com>, <bepstein@fablaw.com>, <dweisz@cera.com>, <dsh@cpuc.ca.gov>, <Cathy.Karlstad@SCE.com>, <rschmidt@bartlewells.com>, <rhwiser@lbl.gov>, <derek@denniston.com>, <richard.davis@SCE.com>, <brbarkovich@earthlink.net>, <james.read@brattle.com>, <rmccann@umich.edu>, <vwood@smud.org>, <cmkehrein@ems-ca.com>, <e-recipient@caiso.com>, <e-recipient@caiso.com>, <grosenblum@caiso.com>, <lpark@navigantconsulting.com>, <vfleming@navigantconsulting.com>, <karly.mccrory@rweschottsolar.us>, <dougdpucmail@yahoo.com>, <kevin@solardevelop.com>, <mclaughlin@braunlegal.com>, <dkk@eslawfirm.com>, <kdw@woodruff-expert-services.com>, <wwwesterfield@stoel.com>, <rroth@smud.org>, <karen@klindh.com>, <dws@r-c-s-inc.com>, <LAdocket@cpuc.ca.gov>, <as2@cpuc.ca.gov>, <ajo@cpuc.ca.gov>, <aes@cpuc.ca.gov>, <dil@cpuc.ca.gov>, <dsh@cpuc.ca.gov>, <jf2@cpuc.ca.gov>, <ltr@cpuc.ca.gov>, <lp1@cpuc.ca.gov>, <mrl@cpuc.ca.gov>, <nao@cpuc.ca.gov>, <psd@cpuc.ca.gov>, <pva@cpuc.ca.gov>, <pha@cpuc.ca.gov>, <sed@cpuc.ca.gov>, <rmiller@energy.state.ca.us>, <skorosec@energy.state.ca.us>, <JMcMahon@navigantconsulting.com>, <hraitt@energy.state.ca.us>, <kzocchet@energy.state.ca.us>, <wsm@cpuc.ca>

cc

<gmorris@emf.net>, <psd@cpuc.ca.gov>, <rmm@cpuc.ca.gov>, <nao@cpuc.ca.gov>, <mrl@cpuc.ca.gov>, <derek@denniston.com>, <cathy.karlstad@SCE.com>, <Michael.Whatley@SCE.com>, <james.read@brattle.com>, <patrickm@crossborderenergy.com>, "Lee, Evelyn C \(Law\)" <ECL8@pge.com>, "Pestana, Harold \(GES\)" <HJP5@pge.com>, "Strauss, Todd \(PCERD\)" <TxSq@pge.com>, "Hatton, Curtis A \(PCERD\)" <CAH9@pge.com>, <ren@ethree.com>, <mjskowronski@inlandenergy.com>, <rpurves@semprautilities.com>, <meallen@sempra.com>

Subject

RE: 2005 MPR: Aug 15th Conference **new conf call date/time** pursuant to Rule 51.1 (b) -- Summary of Agreement / Invitation to Join Stipulation

 

In light of conflicting activities noted below by Tom Beach, we propose to reschedule the conference call for Thursday, September 1st from 1:00 P.M. to 2:30 P.M.
 

Conf call number: 1-877-241-3594
Participant Code
: 305947

If interested in joining in the conference call or this stipulation, please contact Katherine Ryzhaya, <karp@pge.com> 415-972-5011 or Marc Kolb <mekd@pge.com>, 415-973-0206 by Tuesday, August 30.

From: Tom Beach [mailto:tomb@crossborderenergy.com]
Sent:
Friday, August 26, 2005 12:52 PM
To:
 
  Kolb, Marc E; Livingston-nunley, Grace; jmckinney@thelenreid.com; lennyh@evomarkets.com; Winn, Valerie J; jonwelner@paulhastings.com; info@tobiaslo.com; cem@newsdata.com; snuller@ethree.com; robertgex@dwt.com; Law CPUC Cases; Barry, Donna L; nprocos@alamedapt.com; keithwhite@earthlink.net; robert.boyd@ps.ge.com; Michael.Whatley@SCE.com; 'Patrick McGuire (Patrick McGuire)'; dietrichlaw@earthlink.net; ramonag@ebmud.com; ceyap@earthlink.net; mrw@mrwassoc.com; bepstein@fablaw.com; dweisz@cera.com; dsh@cpuc.ca.gov; Cathy.Karlstad@SCE.com; rschmidt@bartlewells.com; rhwiser@lbl.gov; derek@denniston.com; richard.davis@SCE.com; brbarkovich@earthlink.net; james.read@brattle.com; rmccann@umich.edu; vwood@smud.org; cmkehrein@ems-ca.com; e-recipient@caiso.com; e-recipient@caiso.com; grosenblum@caiso.com; lpark@navigantconsulting.com; vfleming@navigantconsulting.com; karly.mccrory@rweschottsolar.us; dougdpucmail@yahoo.com; kevin@solardevelop.com; mclaughlin@braunlegal.com; dkk@eslawfirm.com; kdw@woodruff-expert-services.com; wwwesterfield@stoel.com; rroth@smud.org; karen@klindh.com; dws@r-c-s-inc.com; LAdocket@cpuc.ca.gov; as2@cpuc.ca.gov; ajo@cpuc.ca.gov; aes@cpuc.ca.gov; dil@cpuc.ca.gov; dsh@cpuc.ca.gov; jf2@cpuc.ca.gov; ltr@cpuc.ca.gov; lp1@cpuc.ca.gov; mrl@cpuc.ca.gov; nao@cpuc.ca.gov; psd@cpuc.ca.gov; pva@cpuc.ca.gov; pha@cpuc.ca.gov; sed@cpuc.ca.gov; rmiller@energy.state.ca.us; skorosec@energy.state.ca.us; JMcMahon@navigantconsulting.com; hraitt@energy.state.ca.us; kzocchet@energy.state.ca.us; wsm@cpuc.ca.gov; garson_knapp@fpl.com; doug.larson@pacificorp.com; msimmons@sierrapacific.com; PUCservice@manatt.com; msnow@manatt.com; msnow@manatt.com; pucservice@manatt.com; klatt@energyattorney.com; douglass@energyattorney.com; berj.parseghian@SCE.com; fortlieb@sandiego.gov; meallen@sempra.com; wiebe@pacbell.net; hal@rwitz.net; sara@oakcreekenergy.com; cpc1993@hotmail.com; jaturnbu@ix.netcom.com; pepper@cleanpowermarkets.com; wblattner@semprautilities.com; joe.como@sfgov.org; mzafar@semprautilities.com; freedman@turn.org; kpp@cpuc.ca.gov; rsa@a-klaw.com; jpross@votesolar.org; placourciere@thelenreid.com; Lee, Evelyn C (Law); bcragg@gmssr.com; jkarp@whitecase.com; meganmmyers@yahoo.com; ssmyers@att.net; jhamrin@resource-solutions.org; jchamberlin@sel.com; lsherif@calpine.com; jackp@calpine.com; wbooth@booth-law.com; bill.chen@constellation.com; gmorris@emf.net; jgalloway@ucsusa.org; clyde.murley@comcast.net; nrader@calwea.org; arno@energyinnovations.com; johnrredding@earthlink.net; janmcfar@sonic.net; steven@iepa.com; tomstarrs@b-e-f.org; cynthia.schultz@pacificorp.com; bshort@ridgewoodpower.com; csmoots@perkinscoie.com; rberliner@manatt.com; obrienc@sharpsec.com; porter@exeterassociates.com; mcollins@icc.state.il.us; abiecunasjp@bv.com; pletkarj@bv.com; meyertm@bv.com; kjsimonsen@ems-ca.com; dsaul@solel.com; dnorris@sppc.com; jgreco@caithnessenergy.com; jozenne@semprautilities.com; steve@energyinnovations.com; jackmack@suesec.com; case.admin@SCE.com; j.eric.isken@SCE.com; gary.allen@SCE.com; woodrujb@SCE.com; lizbeth.mcdannel@SCE.com; lwrazen@sempraglobal.com; tcorr@sempra.com; ygross@sempraglobal.com; liddell@energyattorney.com; amabed@semprautilities.com; scott.anders@sdenergy.org; susan.freedman@sdenergy.org; centralfiles@semprautilities.com; jcervantes@sandiego.gov; jleslie@luce.com; bill.owen@adelphia.net; csteen@bakerlaw.com; jleblanc@bakerlaw.com; mjskowronski@inlandenergy.com; olsen@avenuecable.com; thunt@cecmail.org; mdjoseph@adamsbroadwell.com; diane_fellman@fpl.com; nsuetake@turn.org; mhyams@sfwater.org; dbachrach@nrdc.org; filings@a-klaw.com; dickerson07@fscgroup.com; Lucha, Ed; dgulino@ridgewoodpower.com; keith.mccrea@sablaw.com
Cc:
gmorris@emf.net; psd@cpuc.ca.gov; rmm@cpuc.ca.gov; nao@cpuc.ca.gov; mrl@cpuc.ca.gov; derek@denniston.com; cathy.karlstad@SCE.com; Michael.Whatley@SCE.com; james.read@brattle.com; patrickm@crossborderenergy.com; Lee, Evelyn C (Law); Pestana, Harold (GES); Strauss, Todd (PCERD); Hatton, Curtis A (PCERD); ren@ethree.com; mjskowronski@inlandenergy.com; rpurves@semprautilities.com; meallen@sempra.com
Subject:
RE: 2005 MPR: Aug 15th Conference pursuant to Rule 51.1 (b) -- Summary of Agreement / Invitation to Join Stipulation


Marc -

 

A number of the parties that are involved in the MPR case are also working hard to produce avoided cost testimony by next Wednesday in R. 04-04-025 and R. 04-04-003.  We are among those parties, and are unlikely to be able to review this stipulation in any detail until Thursday.  I am hopeful that CCC / CalWEA / CBEA can join a stipulation on this component of the MPR calculation, but we will need at least a few more days to review it.

 

Thanks for your consideration,

 

Tom Beach

 
-----Original Message-----
From:
Kolb, Marc E [mailto:MEKd@pge.com]
Sent:
Friday, August 26, 2005 11:30 AM
To:
Livingston-nunley, Grace; jmckinney@thelenreid.com; lennyh@evomarkets.com; Winn, Valerie J; jonwelner@paulhastings.com; info@tobiaslo.com; cem@newsdata.com; snuller@ethree.com; robertgex@dwt.com; Law CPUC Cases; Barry, Donna L; nprocos@alamedapt.com; keithwhite@earthlink.net; robert.boyd@ps.ge.com; Michael.Whatley@SCE.com; Patrick McGuire (Patrick McGuire); dietrichlaw@earthlink.net; ramonag@ebmud.com; ceyap@earthlink.net; mrw@mrwassoc.com; bepstein@fablaw.com; dweisz@cera.com; dsh@cpuc.ca.gov; Cathy.Karlstad@SCE.com; rschmidt@bartlewells.com; rhwiser@lbl.gov; derek@denniston.com; richard.davis@SCE.com; brbarkovich@earthlink.net; james.read@brattle.com; rmccann@umich.edu; vwood@smud.org; cmkehrein@ems-ca.com; e-recipient@caiso.com; e-recipient@caiso.com; grosenblum@caiso.com; lpark@navigantconsulting.com; vfleming@navigantconsulting.com; karly.mccrory@rweschottsolar.us; dougdpucmail@yahoo.com; kevin@solardevelop.com; mclaughlin@braunlegal.com; dkk@eslawfirm.com; kdw@woodruff-expert-services.com; wwwesterfield@stoel.com; rroth@smud.org; karen@klindh.com; dws@r-c-s-inc.com; LAdocket@cpuc.ca.gov; as2@cpuc.ca.gov; ajo@cpuc.ca.gov; aes@cpuc.ca.gov; dil@cpuc.ca.gov; dsh@cpuc.ca.gov; jf2@cpuc.ca.gov; ltr@cpuc.ca.gov; lp1@cpuc.ca.gov; mrl@cpuc.ca.gov; nao@cpuc.ca.gov; psd@cpuc.ca.gov; pva@cpuc.ca.gov; pha@cpuc.ca.gov; sed@cpuc.ca.gov; rmiller@energy.state.ca.us; skorosec@energy.state.ca.us; JMcMahon@navigantconsulting.com; hraitt@energy.state.ca.us; kzocchet@energy.state.ca.us; wsm@cpuc.ca.gov; garson_knapp@fpl.com; doug.larson@pacificorp.com; msimmons@sierrapacific.com; PUCservice@manatt.com; msnow@manatt.com; msnow@manatt.com; pucservice@manatt.com; klatt@energyattorney.com; douglass@energyattorney.com; berj.parseghian@SCE.com; fortlieb@sandiego.gov; meallen@sempra.com; wiebe@pacbell.net; hal@rwitz.net; sara@oakcreekenergy.com; cpc1993@hotmail.com; jaturnbu@ix.netcom.com; pepper@cleanpowermarkets.com; wblattner@semprautilities.com; joe.como@sfgov.org; mzafar@semprautilities.com; freedman@turn.org; kpp@cpuc.ca.gov; rsa@a-klaw.com; jpross@votesolar.org; placourciere@thelenreid.com; Lee, Evelyn C (Law); bcragg@gmssr.com; jkarp@whitecase.com; meganmmyers@yahoo.com; ssmyers@att.net; jhamrin@resource-solutions.org; jchamberlin@sel.com; lsherif@calpine.com; jackp@calpine.com; wbooth@booth-law.com; bill.chen@constellation.com; gmorris@emf.net; jgalloway@ucsusa.org; clyde.murley@comcast.net; nrader@calwea.org; tomb@crossborderenergy.com; arno@energyinnovations.com; johnrredding@earthlink.net; janmcfar@sonic.net; steven@iepa.com; tomstarrs@b-e-f.org; cynthia.schultz@pacificorp.com; bshort@ridgewoodpower.com; csmoots@perkinscoie.com; rberliner@manatt.com; obrienc@sharpsec.com; porter@exeterassociates.com; mcollins@icc.state.il.us; abiecunasjp@bv.com; pletkarj@bv.com; meyertm@bv.com; kjsimonsen@ems-ca.com; dsaul@solel.com; dnorris@sppc.com; jgreco@caithnessenergy.com; jozenne@semprautilities.com; steve@energyinnovations.com; jackmack@suesec.com; case.admin@SCE.com; j.eric.isken@SCE.com; gary.allen@SCE.com; woodrujb@SCE.com; lizbeth.mcdannel@SCE.com; lwrazen@sempraglobal.com; tcorr@sempra.com; ygross@sempraglobal.com; liddell@energyattorney.com; amabed@semprautilities.com; scott.anders@sdenergy.org; susan.freedman@sdenergy.org; centralfiles@semprautilities.com; jcervantes@sandiego.gov; jleslie@luce.com; bill.owen@adelphia.net; csteen@bakerlaw.com; jleblanc@bakerlaw.com; mjskowronski@inlandenergy.com; olsen@avenuecable.com; thunt@cecmail.org; mdjoseph@adamsbroadwell.com; diane_fellman@fpl.com; nsuetake@turn.org; mhyams@sfwater.org; dbachrach@nrdc.org; filings@a-klaw.com; dickerson07@fscgroup.com; Lucha, Ed; dgulino@ridgewoodpower.com; keith.mccrea@sablaw.com
Cc:
Kolb, Marc E; gmorris@emf.net; psd@cpuc.ca.gov; rmm@cpuc.ca.gov; nao@cpuc.ca.gov; mrl@cpuc.ca.gov; derek@denniston.com; cathy.karlstad@SCE.com; Michael.Whatley@SCE.com; james.read@brattle.com; patrickm@crossborderenergy.com; Lee, Evelyn C (Law); Pestana, Harold (GES); Strauss, Todd (PCERD); Hatton, Curtis A (PCERD); ren@ethree.com; mjskowronski@inlandenergy.com; rpurves@semprautilities.com; meallen@sempra.com
Subject:
2005 MPR: Aug 15th Conference pursuant to Rule 51.1 (b) -- Summary of Agreement / Invitation to Join Stipulation
 

RPS participants,

On August 15, 2005, PG&E convened a meeting to encourage the parties to agree on the gas price methodology to be used in establishing the 2005 market price referent (MPR).  As outlined in the meeting announcement and in the PowerPoint presentation circulated to the parties before the meeting, the objective was to reach agreement on the following:

1) Guiding Principles outlined in the ALJ's July 7th Ruling and

2) Implementation details of the short-term (i.e., Years 1 through 6) gas price methodology to use in the MPR proxy.

The methodology for establishing gas prices for the remainder of the MPR period (Years 7-20) was not addressed.

Based on the workshop results, PG&E hopes that participants will agree to stipulate to matters contained in Tables 1 and 2 found below, so that a record of the parties' agreement can be presented to the Commission pursuant to Rule 51 of the Commission's Rules of Practice and Procedure.

Table 1 - Agreements Reached on the General Principles to be Used in Formulating the 2005 MPR Natural Gas Price Forecast:

As originally proposed in the July 7, 2005 ALJ Ruling following June 2005 MPR Workshops As agreed to by participating Parties in August 15, 2005 Rule 51.1 Conference  
1.  Reflects behavior of market participants.   1.  Same as original.  
2.  Market data should be used to the extent possible.  2.  Same as original.  
3. For longer term contracts that extend beyond available market data, forecasts should exhibit a clear relationship to fundamental costs.      3.  modified as follows:  "For shorter-term contracts, forecast data should be verified against forward market data; for longer-term contracts that extend beyond available market data, forecasts should be benchmarked against fundamental costs and/or historical market data."    
4.  Methodology should be consistent with evaluation of other products. 4.  Same as original.  
5.  Methodology should be verifiable using historical data.     5.  combined with #3 above.    
6.  Methodology should be consistent with previous regulatory decisions.        6.  Same as original.  

Table 2 -- Agreement Reached with Participating Parties on the Sources and Methodologies to Shape the 1 to 6 year Short Term Period.

Issue   2004 MPR Methodology    Proposed 2005 MPR Methodology  
Surcharges (e.g., generator gas transmission fee, franchise fee, shrinkage)     Gas prices should be estimated at the proxy power plant burner tip (per CPUC Staff Report on 2004 MPR, February 10, 2005, page 6)       Same as 2004.  
Hedging costs-gas (originally, transaction costs to hedge expected spot price forecast prices, now just transaction costs)      $0.082/MMBtu, consisting of one-half the bid/ask spread and a collateral carrying cost ($0.071 + $0.011, respectively) (per D.04-06-015, page 27)       Same as 2004.  
Basis (location differential)


·        50% SoCal Border plus generator transport
·        50% PG&E Citygate plus generator transport      NYMEX ClearPort (~2 years), then extend last year of actual basis quotes as a constant for remaining years.     Two data sources for market basis quotes-NYMEX Clearport, and EnergyCurves/LIM.  To the extent that market basis quotes do not cover the full 6 years, extend basis quotes as in E3's methodology adopted  in D.04-05-024, Phase 1 Avoided Cost proceeding. [Note, subsequent to meeting, SDG&E and Crossborder expressed disagreement with the assumption of the basis equal to zero.]
Data Sources of Commodity Price NYMEX Henry Hub futures Same as 2004.

       
Time Length / Tenor     Minimum 5 years of NYMEX Henry Hub futures, with CPUC staff discretion on the sixth year.       Same as 2004.

       
Averaging Period and Calculation Start Date     60-trading-day averaging period, ending with bid due date of PG&E, calculated once for all IOUs.        22-trading-day averaging period, ending with short-list date of the last IOU to report, calculated for all 3 IOUs      

Attached is a revised summary of agreement from the August 15th Meeting held at PG&E and via conference call on Short-Term Gas Price Methodology and Guiding Principles for the 2005 MPR. [A prior summary had been circulated to meeting participants on August 19th, and this document reflects participant feedback].

Each party may review the revised summary of agreement shown in Tables 1 and 2, and notify PG&E by Tuesday, August 30, if it wishes to join in a stipulation under rule 51.1 to propose to the ALJ.  

Considering the concern raised by SDG&E and Crossborder subsequent to the meeting over the proposed basis adjustment, please indicate if you support 1) continuing the 2004 methodology (i.e. extending last basis quote); 2) using the E3 Methodology some other alternative for the basis adjustment.  

PG&E proposes a follow-up conference call for Wednesday, August 31 at 9:00 A.M. PST to coordinate the submission of a joint party Stipulation pursuant to Rule 51.1 by September 2.

Conf call number: 1-877-241-3594
Participant Code
: 305947

If interested in joining in the conference call or this stipulation, please contact Katherine Ryzhaya, <karp@pge.com> 415-972-5011 or Marc Kolb <mekd@pge.com>, 415-973-0206 by Tuesday, August 30.

Marc Kolb
Energy Revenue Requirements
PG&E
415-973-0206
<<Revised Summary of Agreement at 8-15 conference.doc>>

(END OF APPENDIX A)

APPENDIX B

RPS SOLICITATION TIMELINE

Updated from D.04-07-029

· Utilities file annual RPS procurement plans and RFOs.

· CPUC approves procurement plans and RFOs.

· CPUC reviews advice letters submitting contracts.

· Contracts are approved by adoption of Commission resolution.

(END OF APPENDIX B)

65 On December 5, 2005, Solel Inc. filed a Motion to Intervene of Solel Inc., with proposed Reply Comments attached. On December 8, 2005 the Solar Energy Industries Association filed a Motion to Intervene of the Solar Energy Industries Association and a Motion of the Solar Energy Industries Association for Leave to File Late-Filed Reply Comments, with the proposed Reply Comments attached. The motions were denied in an Administrative Law Judge's Ruling Denying without Prejudice Motions to Intervene and Denying Motion for Leave to File Late-Filed Reply Comments (December 13, 2005). We therefore do not consider these proposed reply comments.

66 Southern California Edison Company only stipulates to one of the general principles proposed in the Administrative Law Judge's Ruling of August 9, 2005 as set out in Table 1 - that market data should be used to the extent possible. Southern California Edison Company does not stipulate to the other general principles proposed in the Administrative Law Judge's Ruling of August 9, 2005, and does not agree that these principles should be used in formulating the 2005 MPR gas price forecast.

67 CPUC staff are not allowed to see the results of the RPS solicitations until the MPR is calculated and released in a draft resolution.

68 Utility evaluation process may begin prior to MPR release and adoption.

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