Bundled Customer Need

SDG&E's LTPP shows a base case bundled need for 900 - 1,900 MW of capacity between 2010 and 2012. This bundled customer need exists after accounting for renewables procurement, and SDG&E's LTPP also explains that it will deduct any capacity approved in the 2008 peaker RFO from the amount approved in this LTPP (D.07-09-010 approved approximately 130 MW as a result of SDG&E's 2008 peaker RFO). Adding these resources in 2010 and beyond will allow SDG&E to replace expiring contracts, including DWR contracts, and meet forecasted load growth. For each of the three scenarios described in the LTPP, SDG&E has determined a resource need for its bundled load to meet system and local resource adequacy. Depending on the case, SDG&E has a bundled customer need for resource additions as early as 2008 (thus, the 2008 peaker RFO was issued), as well as in 2010, at which point the need grows substantially when existing DWR and other contracts terminate.

For resource adequacy purposes, the CAISO considers all of SDG&E's service territory to be a single load pocket. SDG&E's bundled customers therefore also have a requirement that a portion of their generation capacity be located within the load pocket. The necessary amount is determined each year as part of a local resource adequacy requirement. The local capacity need identified in the LTPP creates specific limitations on where a portion of the total need identified in the LTPP can be procured.

SDG&E's LTPP shows bundled customers' local capacity need with and without the Sunrise Powerlink. These values represent the minimum that SDG&E would need locally to meet the resource adequacy requirement. SDG&E procurement may end up with local capacity in excess of these values. In all cases, with or without Sunrise, SDG&E will need additional local capacity in its portfolio starting in 2010. In the base and high need scenarios, a need exists as early as 2008. Without the Sunrise Powerlink, the LTPP shows the same local resource adequacy requirement through 2009 as with the Sunrise Powerlink. Starting in 2010, however, without the Sunrise Powerlink, the local resource adequacy need increases substantially. SDG&E's bundled customer local resource adequacy need actually exceeds its total incremental resource need in 2010 without Sunrise.

SDG&E expects the vast majority of its identified need will be met by peaking or intermediate facilities given SDG&E's existing resource mix and the large amount of must-take power from nuclear and renewable sources and the portfolio's three combined cycle plants, which can provide most of SDG&E's bundled customer energy needs through 2011. In addition to peaking facilities, SDG&E's plan shows additional renewable power and a combined cycle plant in 2012 to replace the DWR-allocated combined cycle plant that SDG&E currently has.

SDG&E plans to fill this non-renewable bundled customer need through a series of competitive solicitations, including the one that was issued in March 2007 that is currently in process (the 2010-2012 RFO). SDG&E has an application pending (A.07-08-006) from that RFO seeking authority to exercise an option to acquire in 2011 from a Sempra Energy affiliate at depreciated book value the El Dorado Power Plant located in Nevada. This option was the result of a settlement of litigation between SDG&E and the CPUC, among other parties. SDG&E's LTPP bundled need showing also supports the approximately 130 MW of new peaking units with on-line dates in 2008 approved in D.07-09-010. As noted above, SDG&E will deduct from its forecasted range of capacity need adopted in this proceeding the amounts the Commission has approved or will approve from these RFOs.