Mirant

Mirant's primary concern for the LTPPs is implementaton of AB 1576 and Mirant proposes that the Commission adopt a specific policy to facilitate investment in the replacement and repowerng of the State's aging generation facilities. Although AB 1576 was passed by the Legislature in 2005, Mirant notes that little progress has been made to develop plants meeting the statutory criteria and being eligible for the rate treatment established by the legislation. As more fully discussed in the AB 1576 Repowering section (Section XX) and the Transmission section (Section XX) the problem may be related to both the lack of implementation details in the legislation as well as the fact that currently the IOUs do not have a way to evaluate the transmission costs/benefits that a repowering project might bring due to its locality and how it would allow planned transmission upgrades to be deferred or avoided.

Mirant worked tirelessly throughout the LTPP proceeding trying to engage other parties in discussions concerning proposals for implementing AB 1576, including establishing a separate procurement path for projects that the Commission confirms meet the statutory criteria and are eligible for the statutory cost recovery. As the proceeding progressed, and Mirant led AB 1576 Working Group sessions, Mirant compromised and refined its recommendations, suggesting a precertification process by the Commission and the development of criteria for valuing the benefit of certified AB 1576 projects.

The AB 1576 Repowering Working Group did not reach a consensus on recommendations to present to the Commission, but Mirant is still urging the Commission to adopt its compromise proposal. In summary, Mirant's recommendation is as follows:

There would be a precertification process developed by the ACISO and the Commission to review and confirm that a proposed project met the AB 1576 statutory criteria;

¬ If a project was bid into a RFO, the utility would be required to give the AB 1576 project special consideration and preference as compared with other projects. For example, the utilities would be directed to select AB 1576 projects unless there is a demonstrably or measurably superior economic alternative and the benefits of the AB 1576 project do not outweigh its higher costs;

¬ The transmission cost savings associated with local generation would be considered in evaluating AB 1576 projects against other competing bids; and

¬ All bidders in an RFO should be permitted to submit a bid for capacity-only contract structure as an alternative to a tolling agreement.²⁴

The IOUs all presented a position on AB 1576 projects. SCE suggests an alternative process whereby it could elect to negotiate and enter into a ten-year cost-based PPA with a fully permitted AB 1576 project if the CAISO says that the project is needed to serve a unique reliability need. Mirant argues that this approach is not likely to facilitate investment in AB 1576 projects, and in fact could create even larger hurdles for AB 1576 projects. PG&E and SDG&E argue that no additional policies are needed to implement AB 1576.

In summary, Mirant believes the Legislature intended for some action to be taken to facilitate investment in replacement and repowering projects when it enacted AB 1576, and urges the Commission to adopt its recommendations for implementation of the statute.

²⁴ Mirant's Opening Brief, pp. 2-3.