2. Procedural Background
In Decision (D.) 07-12-052, the Commission approved the three
investor-owned utilities' (IOU) long-term procurement plans for the term 2006 through 2015 and authorized Pacific Gas and Electric Company (PG&E) to procure 800 - 1,200 megawatts (MW)2 of new capacity by 2015. PG&E was authorized to issue requests for offers (RFOs) to obtain and execute long-term power purchase agreements (PPAs) for this new capacity.3 This number was subsequently increased to 928 - 1,328 MW to adjust for previously approved projects that were to be cancelled after D.07-12-052.
In Application (A.) 09-09-021, PG&E sought approval of its 2008
Long-Term Request for Offer (LTRFO) results and adoption of a cost recovery and ratemaking mechanism related thereto. In particular, PG&E sought approval of: (1) a PPA with Mirant Marsh Landing for the net output of the Marsh Landing Generating Station, a new natural gas-fired combustion turbine facility that is expected to produce 719 MW beginning May 1, 2013; (2) a PPA with Mirant Delta LLC for 18 months contingent on the closure of the Contra Costa units 6 and 7, which rely on once-through cooling technologies, at the conclusion of the PPA term;4 (3) a purchase and sale agreement (PSA) with Contra Costa Generating Station LLC for the Oakley Project, a new
state-of-the-art natural gas-fired combined cycle facility that was expected to produce 586 MW of generation beginning June 4, 2014; and (4) a PPA with Midway Sunset Cogeneration Company (Sunset) for the partial output of an existing natural gas-fired cogeneration plant that will deliver 129 MW of Qualifying Facility generation under peak July conditions for five years beginning at Commission approval, and 61 MW through September 30, 2016, when the contract expires. D.10-07-045 approved all but the Oakley Project. In denying the Oakley Project, D.10-07-045 concluded that the project was not needed at the time.5 In a separate proceeding, PG&E sought Commission approval of power purchase agreements with GWF Energy LLC, for the Tracy Transaction (Tracy) and Calpine Corporation, for the Los Esteros Critical Energy Facility Transaction (Los Esteros) that were originally solicited through PG&E's LTRFO process.6 These new PPAs would result in PG&E procuring 254 MW of additional new capacity. In D.10-07-042, we conditionally approved these transactions. As set forth in OP 2 of D.10-07-042:
If the Commission rejects the proposed Marsh Landing Project and/or the Oakley Project in Application (A.) 09-09-021, Pacific Gas and Electric Company shall proceed immediately with both the Tracy Transaction described in A.09-10-022 and the Los Esteros Critical Energy Facility Transaction described in A.09-10-034.
Consistent with the language above, on August 4, 2010, PG&E filed a Tier-1 Advice Letter (AL). Copies of the executed contracts comprising the Tracy and the Los Esteros Transactions were included in PG&E's advice letter filing.
On August 23, 2010, PG&E filed a Petition for Modification (PFM) of
D.10-07-045 seeking to modify D.10-07-045 to approve a revised Oakley Project. On August 24, 2010, the Division of Ratepayer Advocates (DRA) filed a protest to PG&E's AL. DRA's AL protest asked the Commission to either reject PG&E's advice letter without prejudice or suspend it and hold it in abeyance until PG&E's PFM in this proceeding is resolved. The Commission's Energy Division responded to DRA's protest on September 1, 2010. Energy Division noted that General Order (GO) 96-B, Section 7.6.1 allows it to approve an advice letter that has been protested if the protest is not made on proper grounds as set forth in General Rule 7.4.2 of GO 96-B. Energy Division denied DRA's protest on claims that the protest was improper because PG&E's advice letter was filed in compliance with OP 2 of D.10-07-042.7
2 MW values are expressed in July peak operating conditions.
3 See D.07-12-052, Ordering Paragraph (OP) 4 at 300.
4 The PPA with Mirant Delta LLC is an 18-month tolling agreement that allows PG&E to dispatch the facility as needed.
5 D.10-07-045, at 53, Finding of Fact Number 18.
6 See A.09-10-022 and A.09-10-034, filed October 16, 2009 and October 22, 2009, respectively.
7 As stated in a September 1, 2010 letter from Energy Division: "Rejecting the advice letter would require Energy Division to treat rejection of the Oakley Project in
D.10-07-045 as if it was invalid, in contravention of a CPUC decision."
