2. Background and Procedural History

Decision (D.) 07-12-052, the 2006 Long Term Procurement Planning Decision (LTPP), authorized Pacific Gas and Electric Company (PG&E) to procure 800 to 1,200 megawatts (MW) of new generation capacity by 2015. This amount was later increased to 1,112-1,512 MW to adjust for projects that failed after D.07-12-052 was issued.¹ To obtain the new capacity by 2015, PG&E held a competitive solicitation and brought before the Commission five contracts totaling 1,743 MW of new capacity from gas-fired combustion turbines for consideration. These five contracts are summarized below:

2.1. The Mariposa Power Purchase Agreement (Mariposa PPA)

The first project to be proposed by PG&E and approved by the Commission was the Mariposa PPA. PG&E filed A.09-04-001 on April 1, 2009, seeking an expedited order by November 2009 in order to ensure that the Mariposa Energy Center would be on line by 2012. CAlifornians for Renewable Energy, Inc. (CARE) and the Division of Ratepayer Advocates (DRA) timely filed protests. PG&E properly noticed and convened a settlement conference on April 28, 2009. PG&E, DRA, CARE, The Utility Reform Network, and California Unions for Reliable Energy filed a motion for approval of a proposed all-party Settlement Agreement on September 3, 2009. No party contested the Mariposa Settlement Agreement (Settlement Agreement), and no evidentiary hearings were convened. The Commission approved the Settlement Agreement in D.09-10-017 without modification, which included several key conditions. The relevant conditions, Condition A and Condition B, that are the subject of CARE's petition for modification are as follows:

A. The total need to be procured from the 2008 Long-Term Request for Offers (LTRFO) will be limited to 1,512 MW under peak July conditions, inclusive of the 184 MW included in the Mariposa PPA.

B. The balance of PG&E's need authorization (1,328 MW) will be met, but not exceeded, by one application for approval of additional agreements resulting from PG&E's 2008 LTRFO.

2.2. Additional Procurement Pursuant to the 2006 LTPP

In D.10-07-042, the Commission rejected the PPAs for the Tracy and the LECEF upgrades (Upgrade PPAs) and explained that approval of these PPAs, along with approval of the Marsh Landing and Oakley projects requested in A.09-09-021, would result in procurement of more MWs than authorized by D.07-12-052 through 2015 and therefore would not comply with the 1,512 MW limit adopted in the Mariposa Settlement Agreement. Furthermore, D.10-07-042 found that the MWs attributable to the Upgrade PPAs should count toward the MWs specified in that settlement.³ Therefore, D.10-07-042 granted PG&E permission to proceed with the second-ranked Tracy Project and LECEF Project only if future circumstances created an unfilled need for the new capacity authorized by D.07-12-052. If the first-ranked Oakley or Marsh Landing projects were rejected by the Commission, D.10-07-042 directed PG&E to proceed immediately with both the Tracy Project and the LECEF Project by filing a Tier 1 compliance advice letter.⁴

In D.10-07-045, issued in A.09-09-021, the Commission approved the 719 MW PPA for the Marsh Landing project but rejected the 586 MW PPA for the Oakley Project.⁵ Therefore, as ordered by D.10-07-042, PG&E filed Advice Letter 3711-E on August 4, 2010, to proceed immediately with the Tracy and LECEF Projects. The Tier 1 advice letter was approved by the Energy Division on September 1, 2010. Thus, out of a total of 1,743 MW requested by PG&E, the Commission had approved 1,157 MW in new generation procurement (184 MW approved in the Mariposa Settlement Agreement in D.09-10-017, 245 MW approved by Advice Letter 3711-E, and 719 MW approved in D.10-07-045). On August 23, 2010, PG&E filed a petition to modify D.10-07-045 in which PG&E requested approval of the 586 MW PPA for Oakley Project with a new online date of 2016. The original on-line date was 2014. The Commission approved the Oakley Project in D.10-12-050 for the period 2016 and beyond.⁶

¹ D.07-12-052 at 300, Ordering Paragraph (OP) 4, and D.10-07-042 at 17.

² The above chart includes the original Oakley purchase and sale agreement that was brought before us in A.09-09-021 with an online date of 2014. That purchase and sale agreement was rejected in D.10-07-045, and, as discussed later in this decision, the total number of MWs approved towards PG&E's 2006-2015 need authorization was 1,157 MW.

³ D.10-07-042 at 53.

⁴ D.10-07-042, OP 2.

⁵ D.10-07-045 at 55, OP 3.

⁶ D.10-12-050 denied PG&E's petition to modify D.10-07-045, but treated, sua sponte, the petition as an application and approved the Oakley Project for the period of 2016 and beyond. In D.11-05-049, the Commission modified D.10-12-050 and denied rehearing of D.10-12-050, as modified. Several typographical and clerical errors in D.11-05-049 were corrected by D.11-06-003.