IX. PUHCA Section 32(k) Findings

When Congress passed the Energy Policy Act of 1992, it amended the Public Utilities Holding Company Act (PUHCA) to create EWGs and to allow an EWG to sell power to its affiliated utility only if the State commission makes specific determinations in advance of the electric utility company entering into such a contract. Under Section 32(k) of PUHCA, the Commission must determine that it has sufficient regulatory authority, resources and access to books and records of the electric utility company (Edison) and that the transaction between the EWG (MVL) and its affiliated utility (Edison): (1) will benefit customers, (2) does not violate any state law, (3) would not provide the EWG any unfair competitive advantage, and (4) is in the public interest.

In its application, Edison stated that it would only go on and seek Federal Energy Regulatory Commission (FERC) approval of the PPA with MVL if the CPUC approves the framework of the transaction as proposed, explicitly finds that the PPA satisfies the PUHCA requirements, and the CPUC agrees to support Edison's filing of the PPA at the FERC under Section 205 of the Federal Power Act (FPA).

TURN recommends that the Commission only issue the PUHCA 32(k) findings sought by Edison if the conditions proposed by TURN are incorporated into the PPA.

ORA's position is that the Mountainview should only be approved as a utility owned project, then no PPA is necessary, and no PUHCA findings are required.

The Navajo Nation assert that the record does not support a finding by this Commission that Edison's PPA fulfills any of the PUHCA requirements. Specifically, there is inconclusive evidence as to the need for the generation; whether the PPA provides MVL with an unfair competitive advantage; and whether considering Mountainview before fully considering Mohave is in the public interest.

IEP does not believe that the Commission can make the required PUCHA findings because the transaction violates the ATRs and the project was not undertaken as part of the long-term procurement planning process. Of most concern to IEP is the fact from their perspective that the transaction provides MVL with an unfair competitive advantage. The PPA is a self-generated non-negotiated contract that contains terms that are more favorable than would likely follow from any solicitation process. IEP opines that Edison is unlikely to extend similar terms to any other non-affiliated entity. And IEP does not think Edison was straight forward with the Commission in the procurement rulemaking since Edison did not reveal the steps it was taking to procure Mountainview.

CAC and EPUC do not see that the record supports a finding by the Commission that the PPA complies with PUHCA Section 32(k).

Sequoia believes Edison made its case that the proposed PPA, as modified by Edison, justifies the specific findings required under Section 32(k) of PUHCA. In summary, the Commission has sufficient oversight, it will benefit consumers by providing needed and efficient capacity, the application complies with State law, since it is cost-of-service based it does not provide any unfair competitive advantage to MVL, and is in the public interest.

Again, as already discussed, the Commission would prefer to approve Mountainview as a straight utility-owned generation facility and then there would be no necessity for PUCHA findings. However, since we have found that Edison has met its burden of showing that there is a need for Mountainview and it is cost-effective, we will find that the PPA, as modified, satisfies the requirements of Section 32(k) of PUCHA.