4. Assignment of Proceeding
President Michael R. Peevey is the assigned Commissioner and Amy C.
Yip-Kikugawa is the assigned ALJ in this proceeding.
1. Rule 16.4(b) of the Commission's Rules of Practice and Procedure requires a petition for modification "concisely state the justification for the requested relief."
2. The Energy Division conducted a workshop on November 14-15, 2007, to implement D.07-09-040. At the workshop, the parties came to various agreements, some of which appeared inconsistent with D.07-09-040, and thus would require modification of the decision.
3. The "12-month rolling average" as stated in D.07-09-040 is calculated by taking the mean of forward data over a 12-month time period, which is recalculated on a monthly basis.
4. The results of the workshop on the TOU/TOD factors are contested by the various parties.
5. The intrastate transportation rate changes on a monthly basis.
6. Increasing the number of data sets used to determine forward market data would likely result in SRAC energy price that more closely reflects utility avoided cost.
7. Parties have not provided any persuasive evidence that any publications other than Platts Megawatt Daily and the ICE contain forward market price data that is reliable for use in determining SRAC energy prices.
8. Use of actual on-peak and off-peak hours instead of a fixed percentage allocation provides better accounting of month-to-month consumption patterns.
9. QFs should not be disqualified from being classified as a small QF if their annual energy deliveries are below 131,400 MWh.
10. The phrases "annual energy deliveries" and "annual energy production" are not equivalent.
11. MRTU has not yet become fully operational.
12. Post-MRTU implementation issues may be considered and addressed after MRTU becomes operational.
13. The reference to a simplified version of the EEI contract for Small QFs is a clerical error.
1. References to an agreement made by parties in the course of a workshop or to an email from Energy Division do not meet the requirements of Rule 16.4(b).
2. It would be unreasonable to modify the components of the MIF unless the modifications are consistent with PURPA.
3. It is reasonable to modify the MIF if the modification will result in an SRAC energy price that better reflects utility avoided cost.
4. It is reasonable to allow Energy Division to hold a separate workshop to consider post-MRTU implementation issues after MRTU is operational.
5. The petition for modification should be granted, in part, and denied, in part, as further described herein.
IT IS ORDERED that:
1. The Joint Petition for Modification of Decision (D.) 07-09-040, filed
March 3, 2008, by the Cogeneration Association of California, the Energy Producers and Users Coalition and the Independent Energy Producers Association is granted in part, as ordered below.
2. D.07-09-040 is modified as follows:
a. On p. 64, the sentence "Table 3 illustrates a sample derivation of the market heat rate using a 12-month rolling average of forward SP15 prices." shall be changed to "Table 3 illustrates a sample derivation of the market heat rate using a 12-month average of forward SP15 prices." The following footnote is inserted immediately thereafter:
"The 12-month average, i.e., the mean over a rolling time period, is calculated based on the mean of the implicit heat rate derived from forward market prices for the next 12 months in the trading month prior to the SRAC posting. This average would be recalculated on a monthly basis."
b. On p. 70, the second full sentence "We will allow San Diego
Gas & Electric Company and the other utilities to annually update the intrastate transportation rate to the most recent value in their gas tariffs, as necessary." shall be changed to "We will allow SDG&E and the other utilities monthly to update the intrastate transportation rate to the most recent value in their gas tariffs, as necessary."c. Footnote 6 is deleted and replaced with the following: "The monthly weighted average forward power price is determined by weighting the monthly average on-peak and off-peak power prices based on the actual on-peak and off-peak hours in the applicable month."
d. The sentence beginning on the bottom of page 6, "The forward market prices will be based on a weighted average price19 of the forward market prices for North of Path 15 (NP15) or South of Path 15 (SP15), as reported in Platts Megawatt Daily and/or the Intercontinental Exchange (ICE)."20 is deleted and replaced with the following:
The forward market prices will be based on a weighted average price21 of the forward market prices for North of Path 15 (NP15) or South of Path 15 (SP15) as reported in a minimum of three (3) publications. The publications shall be selected from a list of publications approved by the Energy Division. Any publication included on Energy Division's list must be found reliable and appropriate for use in the MIF. Energy Division shall have the discretion to update the list as necessary. We recognize that Energy Division will need some time to determine which publications to include in its list. Therefore, the IOUs shall use Platts-ICE Forward Curve-Electricity (North America) for forward market prices until Energy Division establishes its approved list of publications.
Once Energy Division has established its list of publications, each IOU may select from the list the three publications it will use for forward market price data, provided: (1) the IOU demonstrates that use of the selected publications is necessary in order to best reflect its avoided costs; and (2) at least one of the selected publications must be either Platts-ICE Forward Curve-Electricity (North America) or ICE. The IOUs shall select its publications through the filing of a Tier 2 Advice Letter.
e. The last sentence on page 3 "Small QFs are defined as QFs under 20 MW or that offer equivalent annual energy deliveries of 131,400 MWh and that consume at least 25% of the power internally and sell 100% of the surplus to the utilities." shall be changed to "Small QFs are defined as QFs under 20 MW or that offer equivalent annual energy deliveries of less than or equal to 131,400 MWh and that consume at least 25% of the power internally and sell 100% of the surplus to the utilities."
f. In the first full paragraph on page 118, the sentence "This limit is defined as QF that are 20 MW or less, or that offer equivalent annual energy deliveries of 131,400 MWh, and that consume at least 25% of the power internally and sell 100% of the surplus to the utilities." shall be changed to "This limit is defined as QFs that are 20 MW or less, or that offer equivalent annual energy deliveries of less than or equal to 131,400 MWh, and that consume at least 25% of the power internally and sell 100% of the surplus to the utilities."
g. On p. 65, the sentence "This advice letter should also include a description of how the IER will be calculate once MRTU is operational and the administrative heat rate component of the calculation is eliminated, as described below." is deleted and replaced with the following:
"We further direct Energy Division to host a workshop to address post-MRTU issues within 60 days after MRTU is operational. This workshop will include issues related to calculating the MIF once the administrative heat rate component is eliminated, as described below. PG&E, SCE and SDG&E shall file a joint advice letter specifying the exact data sets used to calculate the revised MIF within 30 days of the workshop."
h. In the middle of page 3, the sentence "The EEI contract22 will be the basis for our Prospective QF Program contract options, however, a simplified version of the EEI contract shall be utilized for Small QFs." shall be changed to "The EEI contract23 will be the basis for our Prospective QF Program contract options, however, a simplified version of the standard offer contracts adopted for Large QFs shall be utilized for Small QFs."
3. Ordering Paragraph 3 is modified as follows:
PG&E, SCE, and SDG&E shall file a joint Tier 3 advice letter implementing the Market Index Formula, and specifying the data sets and formula used to calculate the Market Index Formula
30 days after the workshop mentioned in OP2. PG&E, SCE, and SDG&E shall each file a Tier 3 advice letter with standard offer contracts for large QFs within 60 days of the workshop. Within
30 days after a resolution adopting these standard offer contracts is issued, PG&E, SCE and SDG&E shall each file a Tier 3 advice letter proposing how these adopted standard offer contracts would be simplified for small QFs.
4. The following new ordering paragraph shall be inserted after Ordering Paragraph 3:
Energy Division shall schedule and hold a workshop to consider issues concerning the implementation of the Market Index Formula (MIF) once the California Independent System Operator's (CAISO) Market Redesign and Technology (MRTU) is operational, including the data sets and formula to be used once the Administrative Heat Rate component of the MIF is removed. This workshop shall be held within 60 days after MRTU is operational. PG&E, SCE and SDG&E shall file a joint Tier 3 advice letter specifying the data sets and formula that will be used to calculate the MIF once the AHR is removed, no later than 30 days after that workshop.
5. With the exception of the modifications made above, all other modifications requested in the Petition for Modification are denied.
6. Rulemaking (R.) 04-04-003 and R.04-04-025 remain open.
This order is effective today.
Dated September 18, 2008, at San Francisco, California.
MICHAEL R. PEEVEY
President
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
TIMOTHY ALAN SIMON
Commissioners
19 The monthly weighted average forward power price is determined by weighting the monthly average on-peak and off-peak power prices based on the actual on-peak and off-peak hours in the applicable month.
21 The monthly weighted average forward power price is determined by weighting the monthly average on-peak and off-peak power prices based on the actual on-peak and off-peak hours in the applicable month.
22 Electric Edison Institute (EEI) contract, http://www.eei.org/industry_issues/legal_and_business_practices/master_contract/OptionalProvisions.htm.
23 Electric Edison Institute (EEI) contract, http://www.eei.org/industry_issues/legal_and_business_practices/master_contract/OptionalProvisions.htm.
