4. Discussion
The central issue raised by CARE's petition is whether PG&E violated the Mariposa Settlement Agreement, and if so, what remedies should be invoked. After careful consideration of CARE's petition, we make the following findings:
1. CARE's petition for modification is timely filed and is not prejudicial.
2. PG&E has not violated Condition A of the Mariposa Settlement Agreement.
3. PG&E has violated Condition B of the Mariposa Settlement Agreement.
4. An adjudicatory inquiry into monetary fines or penalties is not warranted here. However, certain future conditions are imposed on PG&E, as discussed below.
4.1. CARE's Petition for Modification is Timely Filed and is not Prejudicial
PG&E in its filings several times argues that CARE's petition for modification is untimely and prejudicial. PG&E asserts that the appropriate place to raise issue with the Marsh Landing, Oakley, Tracy, and LECEF Projects was in those respective proceedings. Furthermore, PG&E argues that because CARE waited so long to file a petition for modification of the Mariposa Settlement Agreement, the filing is prejudicial because both PG&E and Mariposa, LLC have expended time and resources and incurred costs in proceeding with the development of the Mariposa Project.
As PG&E acknowledges in its filings, while CARE filed its petition for modification just short of a year from the approval of the Mariposa Settlement Agreement, CARE did indeed file within the one year timeframe allowed for under Rule 16.4. Therefore, while PG&E would have preferred for CARE to file its petition for modification earlier, CARE's petition for modification is timely. Furthermore, by exercising the due process afforded it under Rule 16.4, CARE's filing cannot be seen as prejudicial despite the outlay of time, resources and money by PG&E and Mariposa LLC.
4.2. PG&E has not Violated Condition A of the Mariposa Settlement Agreement
Condition A of the Mariposa Settlement Agreement states:
The total need to be procured from the 2008 Long-Term Request for Offers will be limited to 1,512 MW under peak July conditions, inclusive of the 184 MW included in the Mariposa Power Purchase Agreement (PPA).
Consistent with previous Commission decisions, we find that PG&E has not violated Condition A of the Mariposa Settlement Agreement because this Commission approved less than 1,512 MW of new generation in PG&E's service territory in the 2006-2015 timeframe. CARE points to D.10-07-042 to support its argument that, by requesting approval for more than 1,512 MW, PG&E has violated the Mariposa Settlement Agreement. D.10-07-042 finds:
PG&E has signed contracts to procure a total of 1,743 MW of new capacity from the 2008 LTRFO (254 MW from the Upgrade PPAs, 1305 MW from the Marsh Landing and Oakley projects, and 184 MW from the Mariposa project). Consequently, we conclude the Upgrade PPAs do not comply with the Mariposa Settlement Agreement and D.09-10-017.8 Conclusion of Law # 2 further states: "(t)he Upgrade PPAs do not comply at this time with D.07-12-052, D.09-10-017, and the Mariposa Settlement Agreement."
However, in D.10-07-042, the Commission did not approve the Upgrade PPAs and in fact rejected them in part because approval would have resulted in a violation of the Mariposa Settlement Agreement and D.07-12-052. PG&E could proceed with the Upgrade PPAs only if the Commission rejected either the Marsh Landing or the Oakley projects, resulting in approval of fewer than 1,512 MW. By rejecting the Oakley Project in D.10-07-045 and allowing the approval of the Upgrade PPAs through Advice Letter 3711-E, the total MW approved by this Commission prior to the approval of D.10-12-050 was 1,157 MW; below the total need authorization granted to PG&E of 1,512 MW.
4.2.1. The Oakley PPA
In D.10-12-050, as modified by D.11-05-049, the Commission approved the Oakley Project. Both CARE and DRA argue that by approving the Oakley PPA, the Commission has approved more than the 1,512 MW of new generation authorized to PG&E in D.07-12-052. However, as PG&E notes in its response, the amended Oakley Project as approved in D.10-12-050 has an online date of 2016. In D.11-07-012, we found that the Oakley project, with an amended online date in 2016, did not exceed the new capacity authorized in the 2006 LTPP:
Importantly, the new capacity approved by D.10-12-050 will not come online until 2016, which is after the 2015 timeframe for the new capacity authorized by D.07-12-052. Consequently, the Commission's approval of the Oakley Project, in addition to the (other projects approved), does not cause PG&E to exceed the new capacity authorized by D.07-12-052.9
In fact, D.10-12-050, as modified by D.11-05-049 explicitly acknowledges that, from time to time, the Commission has approved projects prior to the need determination in an LTPP.10 Therefore, because we have only authorized PG&E to procure 1,157 MW of new generation pursuant to its authority under D.07-12-052, PG&E has not violated Condition A of the Mariposa Settlement Agreement.
4.3. PG&E has Violated Condition B of the Mariposa Settlement Agreement
Condition B of the Mariposa Settlement Agreement states:
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 Long-Term Request for Offers.
The principle question before us in finding a violation of Condition B is whether the Upgrade PPAs resulted from PG&E's 2008 LTRFO. Both CARE and DRA argue that, by requesting approval of the Marsh Landing and Oakley PPAs in A.09-09-021 followed by PG&E's request for approval of the Upgrade PPAs in A.09-10-022 and A.09-10-034, PG&E has violated Condition B of the Mariposa Settlement Agreement by submitting three additional applications for approval of MWs from PG&E's 2008 LTRFO. We agree with CARE and DRA and reject PG&E's argument that the Upgrade PPAs, which resulted from the novation of certain existing Department of Water Resources PPAs, somehow fell outside of the 2008 LTRFO process and therefore were not subject to Condition B of the Mariposa Settlement Agreement. In D.10-07-042 at 53, we rejected a similar argument made by Calpine in regards to the LECEF Upgrade project. In that decision we stated:
The LECEF Upgrade was bid into the 2008 LTRFO by Calpine, was evaluated extensively by PG&E during the 2008 LTRFO process, and was placed on PG&E's shortlist of offers from the 2008 LTRFO. Given the provenance of the LECEF Upgrade, we conclude that it is subject to the Mariposa [S]ettlement's limit on procurement from the 2008 LTRFO.
While the language in D.10-07-042 is focused primarily on the number of MWs resulting from the 2008 LTRFO process, which we address above, and not the number of applications filed, it demonstrates that we previously rejected the argument that the Upgrade PPAs were evaluated outside the 2008 LTRFO process. Thus PG&E, by filing three separate additional applications for resources evaluated as part of its 2008 LTRFO process, has violated Condition B of the Mariposa Settlement Agreement, which required the filing of only one additional application for approval of additional agreements resulting from PG&E's 2008 LTRFO.
PG&E argues that, in D.10-12-063 at 7, which denies CARE's request for rehearing of D.10-07-042, we acknowledge that the Upgrade PPAs were not winning bids in PG&E's LTRFO. Although PG&E brought the Upgrade PPAs before the Commission as novation contracts, the fact remains that the Upgrade PPAs were evaluated as part of the 2008 LTRFO process. In that same decision, we acknowledge that the Upgrade PPAs were "the next best offers after the Mariposa, Marsh Landing, and Oakley Projects."11 We therefore find that the Upgrade PPAs were evaluated as part of PG&E's 2008 LTRFO process and are subject to the limitations imposed by Condition B of the Mariposa Settlement Agreement.
8 D.10-07-042 at 55.
9 D.11-07-012 at 5.
10 D.11-05-049 at OP 1d.
11 D.10-12-063 at 7.
