STATE OF CALIFORNIA GRAY DAVIS, Governor
PUBLIC UTILITIES COMMISSION
505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3298
March 21, 2001
TO: PARTIES OF RECORD IN RULEMAKING 99-11-022
Enclosed is the revised draft decision of Commissioner Wood that was previously mailed to all parties. The Commissioner has substantively revised this decision but is providing the parties with the opportunity to comment on these revisions. This decision will be on the Commission's agenda at the March 27, 2001 regular meeting.
When the Commission acts on the decision, it may adopt all or part of it as written, amend or modify it, or set it aside and prepare its own decision. Only when the Commission acts does the decision become binding on the parties.
Parties to the proceeding may file comments on the revised draft decision as provided in the Commission's "Rules of Practice and Procedure," which were previously mailed to you. Comments are limited to 15 pages, pursuant to Rule 77.3. Comments on the revised draft decision are due no later than March 23, 2001 by 4:00 p.m. Parties need not repeat their previous comments to the draft decision. The decision presented to the Commission will include a consideration of both sets of comments. Comments should be served electronically.
/s/ Lynn T. Carew
Lynn T. Carew, Chief
Administrative Law Judge
LTC:avs
Attachments
COM/CXW/avs ** DRAFT H-10
3/27/2001
Decision REVISED DRAFT DECISION OF COMMISSIONER WOOD
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking into Implementation of Pub. Util. Code § 390. |
Rulemaking 99-11-022 (Filed November 18, 1999) |
DECISION MODIFYING DECISION 96-12-028
Payments to private producers of electricity who have the status of "qualifying facilities" (QFs) are governed by orders of this commission establishing standard rates for purchases that are just and reasonable to the electric consumers, consistent with regulations adopted by the Federal Energy Regulatory Commission (FERC). 18 CFR Part 292, subpart C. This decision resolves the petition to modify an element of the formula for calculating QF energy payments adopted in Decision (D.) 96-12-028 filed by Southern California Edison Company (SCE). The Administrative Law Judge (ALJ) further expanded the scope of the proceeding to consider modifications to the natural gas price indices adopted in D.96-12-028.
This decision adopts a formula, to be updated periodically, to revise SCE's factor adopted in D.96-12-028 and establishes a procedure to replace the Topock index adopted in D.96-12-028. The formula presently applies to the energy payments for all QFs, including those who do not use natural gas a fuel. This decision does not change that practice. Pending completion of the procedure, the Consumer Transition Price (CTP) of $79 per megawatt, described below, will be used for QF postings.
Through its investigative audits in the Rate Stabilization Proceedings, A. 99-01-016 et alia, the commission is aware that utilities have not been paying QFs for deliveries for the past several months, while accumulating cash. Effective with the approval of this order, the utilities are ordered to make payments to QFs for energy deliveries made on and after the effective date of this order at the Consumer Transition Price ($79/mwh), within 15 days after delivery of the energy. The commission proposes a significant penalty for failure to make payments going forward.
This decision also establishes a Consumer Transition Price (CTP) for "all in" payments to qualifying facilities of $ 79 per megawatt-hour (MWh) based on the reasonableness standard described by the Federal Energy Regulatory Commission in 93 FERC ¶ 61,294 and the average price of the portfolio of supply developed by the California Department of Water Resources for the next five years. The CTP applies to the sum of the energy and the capacity payments, including the capacity payments specified in a contract between the purchasing utility and the QF. The CTP may be modified from time to time based on evolving conditions affecting electric energy prices and costs. Utilities and QFs who have supply arrangements that establish incentives for peak season and peak hour performance may apply to the commission for a variant payment arrangement that reflects deliveries shaped to meet customer load.
QFs which choose to do so may modify their supply arrangements with utilities, including contracts, to adopt a long term fixed price based on the CDWR portfolio. They may adopt the Transition price of $79 per megawatt as the contract price for a period of five years, during which time the price will remain fixed. They may adopt a ten-year fixed price option of $69 per megawatt for ten years, also based on the CDWR portfolio price. A QF making this election must do so within 30 days from the effective date of this order.
Procedural Background
D.96-12-028 governs short-run avoided cost (SRAC) payments made by SCE, San Diego Gas & Electric Company (SDG&E), and Pacific Gas and Electric Company (PG&E) to qualifying facilities (QFs). The avoided cost posting is based on a Transition Formula adopted in D.96-12-028 that incorporates various border price indices for natural gas. Each Transition Formula contains a utility specific "factor" designed to relate SRAC prices to gas border prices for that utility. Although explicitly intended to be "transitional," i.e. short-lived, the formulas have been in place for over four years, during which time significant changes have occurred in both the gas and electric markets. It is time that they be revisited.
On July 28, 2000, SCE filed a petition to modify D.96-12-028 to revise its Transition Formula. On August 28, 2000, in comments on SCE's petition, the Office of Ratepayer Advocates (ORA) recommended that the Commission review the border gas indices used in SCE's Transition Formula on an emergency basis. In addition, ORA referenced a complaint filed by this Commission at the Federal Energy Regulatory Commission (FERC) that seeks rescission of certain contracts that the Commission contends have permitted natural gas suppliers and their affiliates to increase prices through the withholding of capacity. On September 1, 2000, the Assigned ALJ issued a ruling adding the question of the reliability and validity of the border prices to the issues raised in SCE's petition to modify D.96-12-028. Comments and replies were filed on September 27, 2000 and October 30, 2000, respectively, on these issues. Comments on additional options for border prices were solicited by ruling on December 1, 2000. Comments and reply comments on these additional options were received on December 11 and 15, 2000, respectively.
On August 31, 2000, SCE filed an emergency motion seeking authorization for a provisional qualifying facility avoided cost posting for September 2000 and future months while the underlying petition was pending. That motion was denied in D.00-10-030. On November 28, 2000, SCE filed a second emergency motion, this time seeking an order modifying D.96-12-028 in several respects and requesting an expedited schedule for Commission action on the underlying petition to modify. The Commission has not addressed the November 28, 2000 emergency motion.
