2. The Purchase Power Agreement

Bear Valley Electrical Service Division (BVES) is a subdivision of Golden State Water Company (GSWC). BVES provides retail electric service to the Big Bear Lake resort area in the San Bernardino Mountains. The BVES service territory is comprised primarily of residential customers. BVES provides service to approximately 21,500 full-time and part-time residents, and approximately 1,400 commercial, industrial, or public-authority customers. BVES also provides service to two ski resorts in its territory.

BVES' loads and energy requirements have remained fairly constant since 2004; BVES' peak load has had an annual growth rate of 2.4 percent (an increase of only 6 megawatts (MW)). In 2008 and 2009 BVES' annual energy requirements declined. BVES' most recent projections reflect annual energy requirement increases for 2010 through 2014, but at a slower rate than projections in BVES' most recent Integrated Resource Plan (IRP). BVES' current resources include the BVES Power Plant (a 8.4 MW capacity power plant comprised of seven 1.2 MW natural gas-fired generating units), a master power purchase agreement with Shell Energy North America L.P. (Shell PPA), plus four separate confirmation agreements for four distinct power purchase products, with an effective date of January 1, 2009.¹

Los Angeles County Sanitation District No. 2 (LACSD) operates a landfill gas-to-energy facility at the Palos Verdes Landfill in Rolling Hills Estates, California (the Project). LACSD has owned and operated the Project for over 20 years, using conventional Rankine Cycle Steam Power Plants and landfill gas as fuel to generate electricity. LACSD and BVES entered into bilateral negotiations in early 2009 and executed a PPA in the fall of 2009.² Under the PPA, BVES will purchase all of the output of the Project, up to three MWs per hour, for a term of 10 years.³

¹ The Shell PPA and four confirmations were approved by the Commission in Decision (D.) 09-05-025.

² An amended PPA was entered into on May 1, 2010 to add standard terms and conditions required by the Commission in D.10-03-021.

³ Application at 6.