XVII. Incentives

The PPA has two incentive mechanisms built in: the heat rate incentive and the availability incentive mechanisms. The heat rate incentive is designed to motivate MVL to maintain the plant in a reasonable condition so that the heat rate does not unreasonably degrade and the plant functions at an efficient heat rate. Edison revised Section 12.01 of the PPA to specify that the target full load heat rate for the Facility is 7,000 Btu/kWh HHV at a "new & clean" condition, and the heat rate should not exceed 7,210 Btu/kWh HHV.

The availability incentive mechanism, section 12.03 of the PPA, is designed to encourage efficient operation of the plant for the entire expected operating life of the plant.

We find the heat rate and availability incentive mechanisms to be in the public interest as they encourage MVL to produce efficient power at the lowest heat rate that translates into lower rates for ratepayers, and we adopt them.