2. Group Petition
On June 22, 2009, Group Petitioners timely filed a petition to modify D.09-04-010 to reverse the Commission's approval of the 2nd APPA by seeking to establish that "Calpine [RCEC] already is in default and will not meet its contractual obligations."5 The alleged bases of default arise from various claimed delays related to issuance of the Final Prevention of Significant Deterioration (PSD) permit by the Bay Area Air Quality Management District (BAAQMD).
Group Petitioners supported the petition by its counsel's declaration and three motions for official notice of facts that purport to relate in some way to (1) actions by or before the United States Environmental Protection Agency (EPA) involving a stay to issuance of certain air permits,6 and (2) California Energy Commission (CEC) consideration of a petition to amend the permit to construct the underlying Russell City power plant. However, in the June 18, 2010 ruling, the ALJ denied official notice to nearly all of the "facts" requested on the grounds that the documents were either not shown to be relevant to the proceeding or not suitable for official notice.
The one "fact" that was accepted for "official notice" was a "Notice of Public Hearing and Notice Inviting Written Public Comment on Draft Federal Prevention of Significant Deterioration Permit for Russell City Energy Center (Public Notice)" issued by BAAQMD. Group Petitioners claimed the "fact" of the Public Notice was relevant because the public hearing would be held, and public comments would be due, after September 1, 2009. Therefore, RCEC was, according to Group Petitioners, unable to obtain the PSD permit in a final, non-appealable form on or before September 1, 2009 and thus provided a basis to reverse D.09-04-010.
Group Petitioners point to several provisions of the 2nd APPA, filed under seal, which refer to events of default and critical milestones, and argue that, based on the new fact of the PSD permit delay, the 2nd APPA is no longer reasonable, consistent with the law, or in the public interest. A contract subject to termination and liquidated damages cannot be reasonable, argues Group Petitioners, and thus cannot meet the standards for approval of a settlement. Therefore, they seek a complete reversal of the findings of fact, conclusions of law, and orders of D.09-04-010.
2.1. Response to the Group Petition
A Joint Response (public and confidential versions) was filed on July 22, 2010 by PG&E, RCEC, and CURE. The Joint Response argued that the Group Petition did not set forth grounds to justify any modifications to D.09-04-010 and, instead, was "the latest of several attempts by the Group Petitioners to collaterally attack the Commission's approval" of the 2nd APPA by trying to introduce siting and permitting issues that are outside the scope of the proceeding.7
The Joint Response stated that Group Petitioners have mischaracterized the actions of the EPA, the issuance of the PSD permit was not directly implicated by the EPA's actions, and BAAQMD was continuing to move the processing of RCEC's PSD permit. Furthermore, the Joint Response contended that the sections in the 2nd APPA allegedly affected by delay of the PSD permit do not implicate D.09-04-010 because contingent rights and liabilities under the terms of the agreement are a contract issue between the parties rather than the subject of the power purchase itself.
As noted above, the Joint Response also took significant issue with Group Petitioners' identification of several provisions within the 2nd APPA filed under seal in this proceeding, which were also the subject of a Non-Disclosure Agreement. This matter has been resolved by the June 18, 2010 ruling by the ALJ and need not be further discussed here.
2.2. Discussion
The Group Petition was timely filed because, pursuant to Rule 16.4(d) of the Commission's Rules of Practice and Procedure (Rules), a petition should be filed within one year of the effective date of the decision proposed to be modified.
Group Petitioners rest their petition on the "new" fact that RCEC did not receive its PSD permit before September 1, 2009, a claimed default date under the 2nd APPA which, they speculate, renders the 2nd APPA "unreasonable" and unqualified to meet the standard for adoption of a settlement. Without opining on all the potential rights and liabilities of the contracting parties under the 2nd APPA, we disagree because this singular, and temporary, "fact" is not crucial to the overall settlement approved in D.09-04-010. The PSD permit has now been issued, and the extension of performance dates has been corrected in the First Amendment to the 2nd APPA contained in the Joint Petition filed in April 2010 which is granted below.
Group Petitioners assert relevance of the permit delay by reference to the Scoping Memo which inquired about the status of RCEC's PSD permit. PG&E had requested expedited hearings on its original application but other parties questioned whether this was necessary. Therefore, the Commission requested information about the status of the air permit, which PG&E said was the last pending permit needed prior to commencement of construction. It was not established that a delay of the PSD permit was also relevant to the analysis in D.09-04-010 which considered whether an amended power purchase contract, proposed in settlement, was reasonable in light of the whole record, consistent with the law, and in the public interest.
We also note that in its opposition to the 2nd APPA, Group Petitioners similarly questioned the viability of the RCEC project and alleged that the Joint Parties had misled the Commission by failing to accurately describe the potential for further delays in getting the PSD permit or that CEC might reopen the site permit. The Commission rejected these arguments, acknowledged the future physical and financial viability of RCEC was "unknown,"8 and said that RCEC was in an "advanced position"9 to complete the project. Therefore, the Commission has previously considered the approval status of the one final, pending permit for operation of the RCEC power plant and found it to be inconsequential when considering the overall value of the power purchase agreement.
The importance of the 2nd APPA is the potential for ten years of energy capacity and energy, rather than certain contractual rights and liabilities designed to keep the project on track or compensate the parties upon possible default. Thus, the Commission has already decided that the delayed issuance of the PSD permit is insufficiently relevant to justify rejection of the 2nd APPA approved in D.09-04-010 as unreasonable or unsuitable for approval under the standards for settlement.
Moreover, even if the PSD permit had not yet been issued, and the parties' contingent rights upon occurrence of certain events were found to be substantially relevant, the matter is now moot. The permit has been issued as of February 3, 2010 with an effective date of March 22, 2010.10 In addition, the Joint Parties promptly thereafter filed the Joint Petition to adopt an amendment to the 2nd APPA to conform certain performance dates to the timeline driven by the newly issued PSD permit and to modify some contingent performance rights and liabilities. We approve the Joint Petition below and thus, the date-driven provisions in the 2nd APPA of concern to Group Petitioners are no longer viable. Therefore, the Group Petition is moot.
5 Group Petition at 2.
6 BAAQMD is the regional agent for the U.S. EPA for issuing the PSD permits.
7 Joint Response at 1.
8 D.09-04-010 at 20.
9 Id. at 21.
10 BAAQMD website: http://www.baaqmd.gov/Divisions/Engineering/Public-Notices-on-Permits/2009/080309-15487/Russell-City-Energy-Center.aspx
