XII. The PPA Does Not Confer Any Unfair Competitive Advantage

PUCHA requires that the CPUC find that the PPA does not provide any unfair competitive advantages to MVL as a result of its affiliation with Edison. Edison argues that the proposed transaction clearly does not give any unfair competitive advantages to MVL since (1) MVL does not currently compete in the wholesale market and is precluded by the PPA from selling energy to third parties; and (2) completion of the construction of the facility will proceed pursuant to construction contracts negotiated at arms' length between Sequoia and Intergen and the original equipment manufacturer and contractor that pre-existed any relationship between Edison and MVL. In addition, the PPA precludes MVL from exercising any control of the output of the facility and MVL will only receive compensation on a cost-of-service basis. Edison is adamant that there is no possibility of a competitive advantage for MVL.

Edison further argues that the absence of a RFP does not affect the Commission's ability to make the determination that MVL does not have a competitive advantage. There is no requirement in Section 32(k) of PUHCA that a competitive solicitation be conducted in order to avoid conferring an unfair competitive advantage of an affiliate.

EPUC and CAC disagree. They view the PPA as providing an unfair competitive advantage to MVL over other potential providers of power, impairing wholesale competition. In sum, MVL will make power sales to Edison, with no other competitor having the same opportunity; MVL is assured of future cost recovery for everything but the initial CRC; MVL may unilaterally go to FERC for changes in the agreement; and the preferential treatment to MVL may negatively affect the incentive for new merchant generators to invest in new facilities in the market.

In addition, EPUC and CAC are concerned that if the Commission finds that either the ATRs are not applicable, or that Edison is entitled to an exemption, that will further discriminate against other entities and give MVL an unfair competitive advantage. The only way to correct this is to provide the same treatment for all Edison affiliates so that they may participate in the market in a nondiscriminatory manner consistent with the treatment afforded MVL.

We find that the PPA does not provide MVL with any unfair competitive advantage because MVL does not compete in the competitive market and is prohibited from doing so for the 30-year term of the contract. Another important fact is under the PPA MVL only receives compensation on a cost-of-service basis, not market price. While we are aware of the arguments presented by the other market participants that the PPA is unfair to them, Mountainview will not supply all of Edison's resource needs; Edison will still need to purchase power from QFs and cogeneration facilities, and MVL will not be competing against those sources in the market place.