4. Cost Recovery

Section 13.1.2 of the QF/CHP Settlement provides that the Commission shall select one of two specified methods for allocation of CHP procurement costs to all electric service providers and community choice aggregators. In approving the QF/CHP Settlement, D.10-12-035 approved the allocation method set forth in Section 13.1.2.2 of the settlement, which provides that net capacity costs and all resource adequacy benefits associated with PPAs entered into pursuant to the settlement shall be proportionately allocated annually to all bundled, electric service provider, community choice aggregator and departing load customers (as defined in Section 17 of the settlement) on a non-bypassable basis.

Section 13.2.1 of the QF/CHP Settlement provides that the utilities shall recover the cost of all payments made pursuant to PPAs entered into pursuant to the settlement in their respective Energy Resources Recovery Accounts, subject only to their reasonable administration.

The proposed PPAs at issue here are consistent with, and entered into pursuant to, the QF/CHP Settlement. Accordingly, PG&E should allocate net capacity costs and all resource adequacy benefits associated with them pursuant to Section 13.1.2.2 of the settlement, and recover the cost of all payments made under them pursuant to Section 13.2.1 of the settlement.