Background

QF energy under long-term contracts represents a significant component of energy provided by utilities to customers. Non-payment results in a significant hardship for these generators. In D.01-03-067, the Commission ordered utilities to resume payment for deliveries going forward. The Commission also modified-on an interim basis-the method for calculating SRAC prices for QFs. One of the significant changes was that the gas input element of the formula for payment for energy is determined in relation to the price of gas at Malin, rather than the price at Topock. The Commission has continued to review the appropriate method for setting SRAC and conducted a workshop on potential changes on May 1, 2001. The Commission's Energy Division issued a workshop report describing the positions of the parties at the workshop.

In addition, the Commission issued I.01-04-027, pursuant to which SCE, SDG&E and PG&E were required to submit reports on the status of QF operations. The utilities have reported that a number of QFs have reduced the amount of electricity they generate. In addition, some QFs have sought, in a variety of forums, to suspend their contractual commitments to sell power to utilities under contract prices, and instead be allowed to sell to any buyer at market prices.