13. Comments on Proposed Decision

The proposed decision of the Assigned Commissioner in this matter was mailed to the parties in accordance with Section 311 of the Public Utilities Code and comments were allowed under Rule 14.3 of the Commission's Rules of Practice and Procedure. Comments were filed on December 6, 2010 by FCE, DRA, TURN, CCDC, SDG&E, and jointly by PG&E and SCE. Reply comments were flied on December 13, 2010 by San Joaquin, FCE, DRA, CCDC, and jointly by PG&E and SCE. In this section we address the major issues addressed by the parties.

The Joint Utilities have argued in their comments to the proposed decision that the price offered under this program is not reflective of avoided costs. The Commission has previously found, in D.09-12-042 and D.10-04-055, that a combined cycle gas turbine is a reasonable proxy for the marginal unit avoided by an eligible CHP facility under this program and that the MPR-based price is reflective of this proxy.⁶⁴ The AB 1613 price also includes a location bonus for AB 1613 CHPs located in Local RA areas. Commission staff had estimated the avoided costs to be approximately 10% of the sales to the utility to the extent the AB 1613 CHP avoids congestion and the potential cost of upgrading transmission and distribution facilities. Other parties supported this estimate as we noted in D.10-04-055.⁶⁵ We recognize that these are estimates of the avoided costs, because each of the utilities have filed for further increases in transmission rate cases at FERC and for higher distribution rates in Commission proceedings. Therefore, some of the avoided costs of further upgraded distribution and transmission facilities may be higher. Nevertheless, the Commission has determined that there is a need to have a legal obligation upfront to encourage CHP facilities to locate in constrained areas, consistent with AB 1613 and PURPA. Accordingly, this 10% location bonus is a reasonable and conservative estimate of the avoided costs of the upgraded facilities.

Nevertheless, we recognize the value in further clarifying our positions on these issues, and we do so here in Sections 7 and 12.

With respect to determining the price paid to Sellers who choose to procure their own GHG allowances by utilizing a publically available index, CCDC suggests that the Commission modify the Proposed Decision to provide that Energy Division shall determine the appropriate index with input from stakeholders. We agree that such input would help to ensure the index is credible and publicly available.

⁶⁴ See, for example, D.09-12-042 at 35.

⁶⁵ See D.10-04-055 at 10.