6. Comments on Proposed Decision

Comments to the PD were received from DRA, TURN, IEP, WPTF/AReM, SDG&E, CUE and PG&E. Reply comments were received from IEP, PG&E and WPTF/AReM.

All the comments and replies were read and carefully considered. Some changes were made to the PD in response to the comments and the changes have been incorporated into the final decision. In general, however, many parties repeated the arguments for or against the Tesla project that they had presented to the Commission in protests to the application or in the moving papers or the responses to the motions to dismiss.

TURN's position on the PD is that they are disappointed that ratepayers lost an opportunity for what TURN perceived to be a good deal. However, TURN does not recommend a different outcome at this juncture since TURN argues that the issuance of the PD itself, denying PG&E's request for authority for interim payments for equipment orders, caused PG&E to cancel the order. Without the interim payments for the equipment, Tesla can not be developed for the price PG&E proposed in the application, and therefore the issue as to the existence of Tesla is moot. TURN suggests dismissing the application without a decision. Since PG&E did not chose to withdraw the application after the interim payment authority was denied, we are going forward with the decision granting the motion to dismiss the application in order to close the proceeding.

IEP urges the Commission to adopt the PD without modification. As a moving party for the Motion to Dismiss, IEP argues that the PD correctly finds that PG&E failed to make a showing that "holding a competitive RFO is infeasible."⁷⁹ While IEP is supportive of the PD, IEP argues that the problems with the Tesla application just highlight the problems with the hybrid market and again argue in support of an Investigation. As discussed above, IEP's Motion for an Investigation was denied and IEP's Motion for Reconsideration is also denied.

In its Reply Comments, IEP raises some arguments to PG&E's allegations that referring to SCE's RFO in 2006 for resources for 2013 is proof that a RFO for resources needed in less than seven years is not feasible. The Commission is familiar with SCE's RFOs and the projects chosen in both the Summer 2007 and the Fast-Track RFOs, and we agree with IEP that the date when projects come on-line is not always indicative of the length of time necessary for a RFO or for development of the project, but rather is often a question of when the utility needs the resource.

WPTF/AReM, who also brought a Motion to Dismiss the Tesla application, urges the Commission to approve the PD on the same grounds argued by IEP: that PG&E did not adequately establish that "conducting a request for offer is infeasible . . . ."⁸⁰

DRA also supports the PD's granting of the motions to dismiss, but suggests that the Commission explain how the IOUs are to evaluate UOG opportunities in a competitive solicitation. DRA's comments are persuasive and the Commission has changed the language in the final decision to specify that when an IOU is evaluating both Power Purchase Agreements (PPAs) and UOGs in a competitive solicitation, there is no preference for the PPAs. We agree with DRA that the decision should be clear that in a competitive solicitation we are not establishing a "higher bar" for a UOG project. We clarify that UOG must overcome a "high bar" when solicited outside of a competitive bidding process,⁸¹ but in a competitive solicitation there is no preference for a PPA over a UOG project.

CUE argues against the PD, and instead asks the Commission to "recognize that new UOG is an essential part of California's future energy portfolio."⁸² From CUE's perspective, the Commission should reevaluate Tesla in light of the "failed ideology of deregulation" and prohibiting UOG except in "extraordinary circumstances" is supporting that failed ideology. CUE, instead, urges the Commission to evaluate Tesla under current market conditions, and is confident that Tesla will be found to be in the best interest of ratepayers. We do not disagree with CUE that with changing market conditions we may be asked to approve more UOG projects. What this decision finds, however, is that when an IOU choses a UOG project outside of a competitive solicitation, the IOU must make an affirmative showing that conducting an RFO is infeasible and the project meets an exception to the Commission's stated preference for projects chosen via the competitive market.

Both SDG&E and PG&E also contend that the PD is flawed and must be revised. SDG&E argues that the PD sets an unrealistically high bar for consideration of a UOG project. SDG&E is concerned that in the current financial and economic market that UOG projects are important options for the utilities and the Commission must ensure that they can be examined fairly and promptly by the utilities. SDG&E asks that the Commission give PG&E a full and fair opportunity to show why Tesla would fit the Commission's high standards for a UOG project.

PG&E, as the applicant, strongly urges the Commission to reject the PD and issue a final decision that gives PG&E the opportunity to develop a full record showing that the Tesla project would provide a low-cost, reliable supply source for PG&E customers by summer 2012 when it is needed. PG&E contends, as does SDG&E, that the PD is "legally erroneous" because it grants the motion to dismiss "based on a disputed issue of material fact."⁸³ PG&E argues that it presented sufficient evidence and facts in its testimony to demonstrate that an RFO is infeasible, and presents a litany of those facts in its Comments to the PD. We disagree with SDG& and PG&E that the fact that PG&E's showing in the Tesla application would have proved unpersuasive even if accepted as true constitutes a disputed issue of material fact.

PG&E, IEP and WPTF/AReM filed reply comments addressing arguments advanced in the comments. IEP and WPTF/AReM again urge the Commission to adopt the PD and ignore comments suggesting that the PD should be rejected. PG&E recommends that the Commission reject the PD and consider the Tesla project on its merits. Nothing in the reply comments persuades the Commission to veer from its position that the motions to dismiss the application should be granted.