Parties' Positions
CAC and EPUC suggest that the Commission extend the availability of the five-year SO1 contract provided to QFs with expiring contracts in D.04-01-050, until a final, unappealable decision is issued in this combined docket. They also propose that if the Commission adopts a revised QF pricing policy in the combined dockets, the pricing terms of any contract extended should be modified to reflect the revised QF pricing policy on the effective date of a new Commission decision. CAC/EPUC argue that they need the certainty of the five-year SO1 contracts to obtain financing to make upgrades because they are at a decided disadvantage in competitive Request for Proposal (RFP) bidding situations. CAC/EPU claim that since the QFs are not fully dispatchable, the IOUs are not inclined to enter into bilateral contracts with the QFs, and the QFs have no other viable options for long term contracts.
CCC also urges the Commission to allow contracts that have expired, or will expire in 2006, to be extended with five-year SO1 contracts, extending the terms set forth in D.04-01-050 until a new Commission decision issues. CCC qualifies its proposal as follows: the utilities should be required to offer five-year SO1 contracts to any QF (1) that was in operation and under contract with a utility at any point between January 1, 1998 and the effective date of the Commission's new QF decision, and (2) whose contract already expired or will expire on or before the earlier of December 31, 2006 and the effective date of the Commission's new QF decision.
MID, a publicly-owned utility providing service to over 103,000 customers, some of whom are in a joint distribution service area with PG&E, is concerned with an ongoing competition transition charge that is paid by some of its load. MID wants to insure that if the Commission does extend any of the QF contracts, that the cost of the extension is not be carried by its customers. MID is resigned to the fact that its customers must pay for some portion of the uneconomic QF costs, but MID's position is that such payments are only for the duration of the existing contracts, and not for any extensions. MID is not taking a position on whether or not, or under what terms and conditions, existing QF contracts should be extended; rather MID is arguing that its customers should not bear any financial obligation for extended contracts.
Since MID filed its comments and recommendations, the Commission has addressed the issue of costs associated with extended QF contracts and D.05-10-0462 determined that these costs will be included in ongoing competition transition charge.
ORA did not file comments, but did file a reply in which it recommended that for QFs with contracts expiring in 2006, one-year SO1 contracts should be available to the QFs along with other opportunities the QFs have to participate in the energy market.
PG&E advocates taking "temporary" measures until the Commission issues its final decision on pricing changes and recommends one-year contracts with the QFs selling energy at market-based prices using the Edison Electric Institutes's Master Agreement. Only three of SCE's 11 QF contracts that expire in 2006 will expire before July 1, 2006. Therefore, SCE proposes that the Commission extend the availability of a one-year SO1 contract to QFs with contracts expiring prior to March 31, 2006,3 subject to a retroactive true-up of pricing terms. SDG&E has only one small QF contract that is set to expire before the Commission issues its QF decision and the utility is currently in negotiations on that contract and needs no direction from the Commission. SDG&E does recommend against adopting any interim treatment for new QF contracts.
In summary, the utilities are either indifferent or opposed to any long-term interim treatment for QF contracts that expire in 2006. The reasons for this resistance run the spectrum from concern over pricing to anticipation that the Energy Policy Act may change the IOUs' obligations to take QF energy. PG&E, in particular, opines that QFs should function as any other energy provider does and submit bids in response to IOU RFPs, negotiate bi-lateral contracts with the IOUs, sell into the competitive market or sell directly to other wholesale power purchasers. PG&E does not recommend that the Commission offer the QFs any long-term treatment while the Commission is working on the QF decision.
2 D.05-10-046 disposed of applications for rehearing of D.05-01-031.
3 At the time SCE prepared its comments, it was anticipated that the Commission would issue a final QF decision before the end of the first quarter 2006.
