Comments on Proposed Decision

The proposed decision of ALJ Brown in this matter was mailed to the parties in accordance with Public Utilities Code Section 311(d) and Rule 77.1 of the Rules of Practice and Procedure.

Comments were received on May 30, 2006 from CPUC, MID, and PG&E on behalf of the Settling Parties.

EPUC urged the Commission to approve the DD, with the 10-year and not the 30-year NBC, because the record does not indicate that the CC8 facility has any extra-ordinary benefits, or risks, that would justify departing from the 10-year default NBC.

MID also supports the PD, but suggest some clarifying modifications. In particular, MID does not believe that the economics of CC8 justify an NBC of any length, and if the Commission is going to consider an NBC, R.06-02-013 is the appropriate proceeding. If the Commission does adopt an NBC for CC8, MID asks that the decision reflect the fact that it is without prejudice to issues concerning NBCs in R.06-02-013.

MID also thinks the Commission should order PG&E to collect all CC8 costs, not just stranded costs, in 10 years. Most importantly for MID, however, is the fact that MID does not think it is appropriate for MID customers to pay for CC8 at all for a number of reasons. To begin, Settling Parties admitted in post-hearing briefs that CC8 will be "operate[d] for the benefit of [PG&E's] customers . . ."¹¹ Second, new MID customers may be in a position of taking power from a location never before served by any utility, so it would not be any benefit to those customers for PG&E to add CC8 as a resource. Finally, an MID customer who either never takes power from CC8, or leaves after CC8 goes into commercial service, benefits from CC8. Therefore, MID customers should not have to pay for CC8.

Settling Parties argue again that the PD does not come to "grip with the fundamental unfairness to bundled ratepayers of an NBC limited to 10 years."¹² PG&E, on behalf of the Settling Parties again argues that Commission precedent from D.04-12-048 allows utilities on a case-by-case basis to argue for an NBC of longer than ten years. PG&E asks the Commission to examine the evidence for a 30-year for CC8.

On June 5, 2006, reply comments were received from CARE, EPUC, CCSF, and MID. In addition, Baykeeper,¹³ a member of the public, submitted comments through the Commission's Public Advisor's Office.

CARE and Baykeeper are both concerned that the CEQA review done by the CEC in 2001 is no longer timely. They both argue that circumstances surrounding the plant and the environment have changed due to the passage of time, and that it would be appropriate to conduct a supplemental EIR. In particular, both CARE and Baykeeper ask the Commission to waive its claim of exemption and update the environmental review to include an analysis of the impacts of the project on the delta and longfin smelt populations. CARE also raises again its claim that CARE and its members are being denied their civil and constitutional rights to a comprehensive CEQA review of the project. Without addressing the merits of the claims raised by CARE and Baykeeper, we confirm our finding that we do not have concurrent responsibility with the CEC to conduct a CEQA review of CC8.

MID, EPUC, and CCSF all support the PD and its determination that a 10-year, and not a 30-year, NBC is appropriate. Each one individually replies to Settling Parties' comments, but there is a theme through each reply: PG&E did not make a record that supports a longer NBC.

In order to address Settling Parties' arguments that the PD is incorrect, the Commission again reviewed the record to see if PG&E had presented any evidentiary basis for reaching a different decision. We did not find any. It is particularly telling that Settling Parties did not refer to any evidence in their comments, except to "Tr., pp. 177 et seq." This reference in the transcript is to PG&E's witness Wan. The Commission agrees with MID, CCSF, and EPUC that these pages do not present any real evidence to justify a longer NBC.

What is in the record is that CC8 is a "fantastic deal" that "should not be uneconomic."¹⁴ And what is also in the record is PG&E's concern that uneconomic costs should not be borne by its bundled ratepayers alone. But, PG&E did not present any evidence supporting any customer migration issues that are unique or different from those facing all three IOUs. We understand that in today's regulatory climate, the IOUs do not have certainty as to their customer bases and that the IOUs do not want their bundled customers bearing an unjust burden of paying for new generation. As we stated in the PD, this is why we adopted the 10-year NBC for SDG&E and Edison for their new resources and created the 10-year default provision in D.04-12-048. It is appropriate that we follow Commission precedent in the absence of a record justifying a different NBC term.

We therefore do not change our decision and the term of the NBC remains at ten years. We did make a few minor corrections and clarifying modifications to the decision in response to the comments, and did include a complete copy of the Settlement Agreement as an Attachment to the decision.

¹¹ MID comments, p. 5, quoting Settling Parties Opening Brief, dated March 30, 2006, p. 2.

¹² Joint Comments, p. 2.

¹³ Baykeeper refers to Baykeeper, Baykeeper's Deltakeeper Chapter and the California Coastkeeper Alliance.

¹⁴ CCSF's Reply comments, p. 2, citing TR., pp. 166,191.