3. Description of the Proposed Amendments
The three QF facilities for which PG&E requests amendment approvals are Yuba City Cogen and Greenleaf 1, both located in Yuba City, California, and KES Kingsburg, which is located in Kingsburg, California. The Yuba City Cogen facility is a 49 megawatt (MW) natural gas fired facility currently operating under an existing interim Standard Offer 4 (ISO4) QF contract that was executed on April 16, 1985 and expires on April 16, 2021. Yuba City Cogen provides 46 MW of firm capacity, and the owner is paid energy prices at Commission-determined short-run avoided cost1 (SRAC) as well as Commission-determined firm and as-delivered capacity payments.
The Greenleaf 1 facility is a 49.5 MW natural gas fired facility currently operating under an existing ISO4 contract that was executed on December 12, 1984 and expires on March 10, 2019. The Greenleaf 1 facility provides 49.2 MW of firm capacity, and the owner is paid SRAC energy prices and firm capacity payments.
The KES Kingsburg facility is a 34.5 MW natural gas fired facility currently operating under an existing Standard Offer 2 contract that was executed on October 26, 1987 and expires on April 7, 2021. The KES Kingsburg facility provides 34.5 MW of firm capacity, and the owner is paid SRAC energy prices and firm capacity payments.
PG&E asserts that the Amendments are just and reasonable, in large part, because they provide PG&E with the contractual right to schedule these facilities as needed, rather than being required to accept energy at times that it may not be needed or cost-effective.2 Both the Yuba City and KES Kingsburg facilities typically operate during the peak and partial peak hours of the month while the Greenleaf 1 facility typically operates in a baseload manner Monday through Friday. PG&E currently does not have scheduling rights under the existing contracts and is required to take and pay for energy that is delivered, regardless of need or cost. Furthermore, PG&E receives limited scheduling information from these facilities, which makes scheduling into the California Independent System Operator (CAISO) markets difficult. PG&E anticipates significant customer savings resulting from the right to schedule the above facilities ($14 million over the remaining terms of the contracts). Furthermore, PG&E asserts that these amendments are consistent with the QF/CHP Settlement approved in D.10-12-0353 and will provide customer benefits including operational benefits and possible greenhouse gas (GHG) emissions reductions towards the GHG targets under the QF/CHP Settlement4 by allowing PG&E to consider GHG emissions and costs when making dispatch decisions. The Amendments are conditioned on (1) Commission approval of the Amendments; and (2) the QF/CHP Settlement becoming effective.
1 See Decision (D.) 07-09-040 and Resolution E-4246 for a description of current SRAC prices. Modified SRAC prices will go into effect as stipulated in the Qualifying Facility and Combined Heat and Power Settlement Agreement (QF/CHP Settlement) approved in D.10-12-035.
2 Absent these amendments, the three QF generation facilities would remain must-take resources pursuant to the Public Utilities Regulatory Policy Act of 1978 (PURPA). Approval of these amendments would result in the facilities operating as "Utility Prescheduled Facilities" as defined in § 4.8 of the QF/CHP Settlement.
3 Rehearing Applications were timely filed by the City and County of San Francisco, the California Municipal Utilities Association, and jointly filed by the Marin Energy Authority, the Alliance for Retail Energy Market, and the Direct Access Customer Coalition. On March 24, 2011, the Commission issued D.11-03-051, the Order Modifying D.10-12-035 and Denying Rehearing of D.10-12-035.
4 See QF/CHP Settlement § 4.8.1.3 for GHG targets. GHG emissions reductions will ultimately be determined using the methodology described in § 7.3.1.3 for Utility Prescheduled Facilities. GHG costs will not be incurred by buyer or seller until Assembly Bill 32 (Stats. 2006, Ch. 488) is fully implemented.
