California Cogeneration Council (CCC)

The CCC recommends that the Commission adopt Mirant's proposal for implementation of AB 1576, but asks that the Commission clarify that the proposal applies to all generators, including combined heat and power (CHP) qualifying facilities (QFs), and modify the proposal to account for the specific needs of CHP QFs. The testimony of CCC's witness, Mr. Beach outlined why many CHP QFs will qualify for AB 1576 contract to support a repowered or replacement project. While the CCC continues to make arguments vis-à-vis QF contracts and avoided cost pricing, many of these arguments have been supplanted by the Commission's decision, D.07-09-044 in R.04-04-003/R.04-04-025. As of the date of this decision, numerous Petitions for Modification and Applications for Rehearing have been filed, so there is no closure on the QF/avoided cost issues, but this proceeding is not the proper forum to address them.

However, CCC's arguments related to AB 1576 projects are within scope. The CCC begins by stating its support for Mirant's position, and the suggestion that the Commission ensure that the IOUs make reasonable assumptions in their LTPPs about repower/replacement projects and not make procurement decisions that would displace AB 1576 projects. The CCC also supports Mirant's proposal that SCE's Mountainview PPA approved in D.03-12-059 (as modified by D.04-03-037)¹⁶ generally provides a reasonable template for the development of a cost-based contracts for AB 1576 projects.

In addition, the CCC supports the Mirant proposal to the extent that it preserves the right for CHP QFs to enter into bilateral contracts with the IOUs. On its own, the CCC asks that the Commission tailor its procedures to account for the fact that a CHP project includes thermal energy sales to an on-site or nearby host and often includes the sale of power to this host. The CCC asks that the additional revenue from these sales be considered as part of the efficiency and economic benefits of a repowered AB 1576 CHP project. And finally, the CCC asks the Commission to account for the differences between a PPA for a repowered CHP project and a standard AB 1576 contract for a combined-cycle merchant project.

In summary, the CCC urges the Commission to adopt Mirant's proposal for implementing the repowering and restructuring legislation, but to make appropriate adjustments to it to account for the unique features of a CHP QF project.

¹⁶ The Mountainview project was located on a Brownfield site and the Mountainview PPA was a cost-based contract providing for cost recovery over the 30-year life of the contract.