5. Comments on Proposed Decision

The proposed decision of ALJ Darling in this matter was mailed to the parties in accordance with Pub. Util. Code § 311 and comments were allowed under Rule 14.3 of the Commission's Rules of Practice and Procedure. Comments were filed by the Joint Parties on August 9, 2010, and Reply Comments were filed by CAlifornians for Renewable Energy on August 13, 2010. To the extent Reply Comments exceeded the scope permitted by Rule 14.3(a), they were given no weight. No changes to the proposed decision have been made.

1. The Final Prevention of Significant Deterioration permit for Russell City Energy Center, LLC (RCEC) was issued by the Bay Area Air Quality Management District to RCEC on February 3, 2010 after numerous procedural delays.

2. The Petition for Modification of Decision (D.) 09-04-010 filed on June 22, 2009 by Group Petitioners does not set forth grounds to justify any modifications to D.09-04-010.

3. The proposed changes in the First Amendment to the Second Amended Power Purchase Agreement contained in the Petition for Modification of D.09-04-010, as modified by D.10-02-033, filed on April 15, 2010 by Pacific Gas and Electric Company, Russell City Energy Company, LLC, Division of Ratepayer Advocates, California Unions for Reliable Energy, and The Utility Reform Network, are reasonable, consistent with the purposes of D.09-04-010, and in the public interest.

1. The Commission should deny the Petition for Modification of D.09-04-010 filed on June 22, 2009 by Group Petitioners.

2. The Commission should approve the Petition for Modification of D.09-04-010, as modified by D.10-02-033, filed on April 15, 2010 by Pacific Gas and Electric Company, Russell City Energy Company, LLC, Division of Ratepayer Advocates, California Unions for Reliable Energy, and The Utility Reform Network in the form remaining after the cost recovery mechanism issue is removed.

O R D E R

IT IS ORDERED that:

1. The Petition for Modification of Decision 09-04-010 filed by Group Petitioners is denied.

2. The Petition for Modification of Decision 09-04-010, as modified by Decision 10-02-033, filed by Pacific Gas and Electric Company, Russell City Energy Company, LLC, Division of Ratepayer Advocates, California Unions for Reliable Energy, and The Utility Reform Network is approved, in the form remaining after the cost recovery mechanism issue is removed and as set forth in Attachment A.

3. Application 08-09-007 is closed.

This order is effective today.

Dated September 2, 2010, at San Francisco, California.

ATTACHMENT A

Modifications to D.09-04-010

Findings of Fact

4. The 1st Amendment to the 2nd APPA is a revision of the 2nd APPA original Power Purchase Agreement executed by PG&E and RCEC that arose out of the PG&E's 2004 LTRFO process to acquire future capacity and ensure future reliability.

5. The Commission has previously determined the need for the project and that the 1st Amendment to the 2nd APPA will satisfy that new resource need.

6. PG&E and RCEC renegotiated the PPA because of unforeseen permit delays and unexpected cost increases which have delayed the RCEC project start and on-line dates by three two years.

7. An amendment to price from the original PPA and 2nd APPA is justified.

12. The 1st Amendment to the 2nd APPA provides an opportunity for PG&E's customers to receive 601 MW of power beginning in 2013.2012, and PG&E elects to not use the CAM/Energy Auction for this resourse.

Conclusions of Law

2. The 1st Amendment to the 2nd APPA should be approved.

Ordering Paragraphs

2. PG&E is authorized to recover costs associated with the 1st Amendment to the 2nd APPA through its Energy Resource Recovery Account.

(END OF ATTACHMENT A)

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