Background

On June 17, 2005, PG&E filed an application seeking Commission authorization for approval of an Asset Transfer Agreement (ATA) for a new combined cycle, 530 megawatt (MW) electric generating facility known as CC8. PG&E wants to accept, complete construction of, and operate CC8 and requests funding and cost recovery mechanisms to accomplish this. CC8 is available to PG&E pursuant to a settlement agreement approved by the Commission on January 14, 2005, regarding the resolution of matters and claims related to Mirant Delta LLC (Mirant).

At the initial prehearing conference (PHC), it was evident that there was little opposition to the CC8 project, but some protesting parties had concerns over other related issues, including the recovery of stranded costs from an NBC. PG&E was requesting authorization for an NBC for 30 years to parallel the 30-year amortization schedule proposed for cost recovery of the project. CCSF and MID protested the proposed 30-year NBC. The Independent Energy Producers (IEP) and Californians for Renewable Energy, Inc. (CARE) protested other aspects of the CC8 project that are discussed further in this decision.

Following the PHC, PG&E, DRA, TURN, and CURE stipulated that the scope of the proceeding could focus solely on whether the 10-year NBC approved in D.04-12-048 should be extended to 30 years for CC8. Evidentiary hearings on the length of the NBC were scheduled for December 5, 2005.

In preparation for the December 5, 2005 hearings, DRA, MID, CCSF and CARE served testimony. During this same time frame, PG&E, DRA, CURE and TURN engaged in settlement discussions. On November 28, 2005, pursuant to Rule 51.1(b) of the Commission's Rules of Practice and Procedure,² PG&E filed a Notice of Settlement Conference for December 5, 2005. On December 2, 2005, a Settlement Agreement was circulated to the service list.

On December 5, 2005, the Commission opened and suspended the evidentiary hearings and set dates for comments and reply comments to the Settlement Agreement. The non-settling parties met with the settling parties, but no other parties joined in the Settlement. Following the comment cycle it was evident that there was just one factual issue in dispute: whether the 10-year NBC established in previous Commission decisions should be extended to 30 years.

Evidentiary hearings were rescheduled and were held on March 1 and 2, 2006. Before the hearings commenced, the Energy Producers and Users Coalition (EPUC) filed a motion to intervene in the proceeding so it could participate in the hearings. The only issue developed during the hearings was the Settlement Agreement and whether the proposed 30-year NBC should be adopted by the Commission.

² Unless otherwise indicated, references to Rules refer to the Commission's Rules of Practice and Procedure and references to Code Sections refer to the California Public Utilities Code.