4. Discussion of the Requested Relief
For purposes of this decision, we shall consider the modifications regarding the J-Power peaker and Wellhead peaker separately, so that we may consider granting the modifications related to the J-Power PPA without delay.
4.1. J-Power Orange Grove Peaker
The J-Power Agreements have been impacted by unforeseen delays in construction of the J-Power peaker. These delays are the result of changes made to the project in response to the California Energy Commission (CEC), local businesses and CalTrans.1 The modifications to the J-Power Agreements occur in the online date as well as the confidential terms, and do not fundamentally change the nature of the original J-Power Agreements.
The requested modifications have been reviewed by Commission Energy Division staff (Staff) and by an independent evaluator (R.W. Beck), and have been found to be reasonable and prudent. Therefore, we shall modify D.07-09-010 as shown in Attachment 1 to this decision to authorize the requested modifications in the J-Power PPA, Option Agreement and Ground Lease, as well as authorize a change of the online date to October 1, 2009.
4.2. Wellhead Margarita Project
The Wellhead Agreements have also been impacted by unforeseen delays. However, unlike with the J-Power peaker unit, the Wellhead peaker faces substantial uncertainty. SDG&E notes that it may either be completed at the existing site or at another location.2
If the Wellhead peaker is relocated to a different location which is no longer on SDG&E property, the approved fundamental nature of the original Wellhead Agreements project will change. The project as approved would have SDG&E lease land to Wellhead for 25 years, for Wellhead to construct and operate the peaker unit and sell the output to SDG&E under defined terms, and then for SDG&E to assume ownership of the peaker unit upon expiration of the lease. If the project is moved to a new location not on SDG&E property, then the ownership of the peaker will not transfer to SDG&E at the expiration of the lease.3
SDG&E contends that the lost value from not taking ownership of the peakers in 25 years is less than the value received by relocating the project. However, this does not change the fact that the peaker project as constructed will be fundamentally different than the project as described in D.07-09-010. A number of modifications to the Decision will be needed so that the nature of the Wellhead Margarita peaker project is described correctly. At present, the information in the Petition is inadequate to clearly and comprehensively make the necessary modifications.
Fundamentally, the problem is that the request regarding the Wellhead Margarita peaker is premature, as SDG&E has not finalized the location of the project. This is understandable, as SDG&E is interested in obtaining the modifications for the J-Power Orange Grove peaker Agreements as quickly as possible, and SDG&E sought to avoid duplication by having separate requests for the two projects. Unfortunately, the Wellhead Margarita peaker's details are still too speculative to allow us to make the necessary changes to the Decision.
Therefore we order SDG&E to amend the Petition within 90 days to clarify the relief requested, or we will dismiss the request regarding the Wellhead Margarita project without prejudice. We will allow the assigned Commissioner or Administrative Law Judge (ALJ) to extend this period upon showing of good cause. Furthermore, if the Petition is either dismissed or withdrawn by SDG&E and later refiled, we will accept the amended Petition as meeting the timeliness requirements of Rule 16.4(d) and will not require a showing of cause for filing beyond one year from issuance of the Decision.
1 Petition, pages 7-8.
2 Petition, pages 11-12.
3 Petition, page 12.
