ALJ/BMD/tcg Mailed 5/26/2006
Decision 06-05-034 May 25, 2006
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
In the Matter of the Application of SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) for Approval of a Power Purchase Agreement Between the Utility and an Affiliate and for Authority to Recover the Costs of Such Power Purchase Agreement in Rates. |
Application 05-12-030 (Filed December 23, 2005) |
(See Appendix A for list of appearances.)
OPINION APPROVING SETTLEMENT
Summary
Today, we approve a settlement agreement entered into by Southern California Edison Company (SCE) and all active parties in this proceeding.1 The approved settlement agreement (Settlement Agreement)2 resolves all disputed issues in Application (A.) 05-12-030 (Application), an application to approve a contract between SCE and Kern River Cogeneration Company (KRCC).
Although we adopt the Settlement Agreement as proposed by parties, we have modified two of the provisions. First, although the Settlement Agreement requests that we leave this proceeding open, or designate or open another proceeding for approval of similar QF contracts, we decline to do so. Instead, we direct SCE to file separate applications for Eligible QF3 Party's non-standard contracts to the Commission for approval. Second, the Settlement Agreement provides that any above-market costs4 associated with the KRCC Contract be allocated to SCE's ongoing Competition Transition Charge (CTC) revenue requirement. As explained below, we will not adopt this provision as not all parties who bear responsibility in paying ongoing CTC charges are represented in this proceeding. Therefore, SCE is directed to present its recommendation for the treatment of any above-market costs associated with the KRCC Contract, or similar QF contracts, in its annual Energy Resource Recovery Account (ERRA) and ongoing CTC revenue requirements proceedings.
Because the Settling Parties suggested these modifications at the request of the assigned Administrative Law Judge (ALJ), we believe the Settling Parties will agree to them. The Settling Parties should indicate in their comments to the proposed decision if they accept the modifications. If the modifications are unacceptable, we will send this matter back to the ALJ for further hearings.
1 Active parties are the Division of Ratepayer Advocates (DRA); Aglet Consumer Alliance (Aglet); The Utility Reform Network (TURN); The California Cogeneration Council (CCC); and The Cogeneration Association of California (CAC). (Settling Parties.) (See, Appendix A.)
2 See, Attachment A.
3 As defined in the Settlement Agreement, Eligible QF parties are existing QFs located in SCE's service territory and whose firm capacity power sales contracts with SCE are set to expire before January 1, 2007, or have already expired.
4 Market costs provide a benchmark for evaluating the reasonableness of utility procurement costs. (See, D.06-02-018, p. 6.)
