STATE OF CALIFORNIA ARNOLD SCHWARZENEGGER, Governor
PUBLIC UTILITIES COMMISSION
505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3298
December 23, 2003
TO: ALL PARTIES OF RECORD IN APPLICATION 03-07-032
Decision 03-12-059 is being mailed without the Concurrence of Commissioner Brown. The Concurrence will be mailed separately.
Very truly yours,
/s/ ANGELA K. MINKIN by PSW
Angela K. Minkin, Chief
Administrative Law Judge
ANG:sid
Attachment
ALJ/CAB/sid Mailed 12/23/2003
Decision 03-12-059 December 18, 2003
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
In the Matter of the Application of Southern California Edison Company (U 338-E) for Approval of a Power Purchase Agreement under PUHCA Section 32(k) Between the Utility and a Wholly-owned Subsidiary and for Authority to Recover the Costs of Such Power Purchase Agreements in Rates. |
Application 03-07-032 (Filed July 21, 2003) |
(See Appendix A for a list of appearances.)
OPINION GRANTING SOUTHERN CALIFORNIA EDISON COMPANY'S APPLICATION TO ACQUIRE MOUNTAINVIEW POWER COMPANY, LLC (MVL) EITHER AS A WHOLLY OWNED SUBSIDIARY AND TO ENTER INTO A POWER PURCHASE AGREEMENT WITH MVL FOR ELECTRICITY FROM THE MOUNTAINVIEW POWER PROJECT,
OR AS A UTILITY-OWNED GENERATION FACILITY
TABLE OF CONTENTS
Title Page
OPINION GRANTING SOUTHERN CALIFORNIA EDISON COMPANY'S APPLICATION TO ACQUIRE MOUNTAINVIEW POWER COMPANY, LLC (MVL) EITHER AS A WHOLLY OWNED SUBSIDIARY AND TO ENTER INTO A POWER PURCHASE AGREEMENT WITH MVL FOR ELECTRICITY FROM THE MOUNTAINVIEW POWER PROJECT,
OR AS A UTILITY-OWNED GENERATION FACILITY 2
I. Summary 2
II. Proposed Decision/Alternate Proposed Decision 3
III. Background 4
IV. Motions 8
A. IEP's Motion for Un-redacted Copy of Application 8
B. Motion of The Utility Reform Network for Acceptance of Late-filed Notice of Intent to Claim Compensation 10
C. Motion of the Nevada Hydro Company, Inc. and the Elsinor Valley Municipal Water District to Intervene as a Party
and Submit Comments 10
V. Summary of Parties' Positions 11
VI. FERC Jurisdictional PPA 16
VII. Affiliate Issues 25
VIII. Cost Effectiveness and Need 31
IX. Cost Effectiveness 36
X. PUHCA Section 32(k) Findings 40
XI. CPUC Regulatory Authority 43
XII. The PPA Does Not Violate Any State Law 44
XIII. The PPA Does Not Confer Any Unfair Competitive Advantage 45
XIV. Public Interest and Benefit to Consumers 46
XV. Cost Recovery 47
XVI. Recovery of Initial Capital Outlay 48
XVII. Recovery of Operating Costs 50
XVIII. Incentives 50
XIX. Capital Additions and Betterments 51
XX. Ratemaking Issues 52
XXI. Decommissioning Costs 55
XXII. Expedited Advice Letter Process 56
XXIII. Financing 57
XXIV. CPCN and CEQA Issues 58
XXV. Comments on Proposed Decision 61
XXVI. Assignment of Proceeding 61
Findings of Fact 61
Conclusions of Law 65
ORDER 67
APPENDIX A - List of Appearances
APPENDIX B - Mountainview Cost Categories and Forecasted Costs
OPINION GRANTING SOUTHERN CALIFORNIA EDISON COMPANY'S APPLICATION TO ACQUIRE MOUNTAINVIEW POWER COMPANY, LLC (MVL) EITHER AS A WHOLLY OWNED SUBSIDIARY AND TO ENTER INTO A POWER PURCHASE AGREEMENT WITH MVL FOR ELECTRICITY FROM THE MOUNTAINVIEW POWER PROJECT,
OR AS A UTILITY-OWNED GENERATION FACILITY
I. Summary
This opinion authorizes Southern California Edison Company (Edison) to acquire Mountainview Power Company, LLC (MVL) as a wholly-owned subsidiary of Edison and to enter into a power purchase agreement (PPA) with MVL for the purchase of electricity from Mountainview Power Project (Mountainview), subject to the conditions and modifications set forth herein, or as a utility-owned generation facility. Although the Commission approves Edison's application for a Federal Energy Regulatory Commission (FERC) jurisdictional Power Purchase Agreement (PPA), with modifications, that avenue requires that Edison seek FERC approval for the project before it can go forward. The option agreement Edison has to acquire Mountainview expires February 29, 2004, and there is a risk that Edison cannot obtain the necessary FERC approval in time to exercise the option, putting the opportunity in peril. If Edison chooses to proceed with the project as a utility-owned facility, this opinion issues Edison a certificate of public convenience and necessity (CPCN) now, allowing Edison to immediately exercise the option agreement obviating any risk that FERC approval will not be forthcoming within the option time.
While we authorize Edison to proceed with the proposed FERC jurisdictional PPA, we are desirous of having Mountainview owned and operated as a utility-owned project some time in the future. If legislation is enacted that secures cost recovery of a utility generation investment over the life of the asset, Edison is directed to file an application, within 60 days of the effective date of the legislation, to terminate the PPA and put Mountainview in rate base. Then all costs for Mountainview will be recovered through Commission-jurisdictional rates. Edison will then have MVL agree to terminate the PPA, subject to FERC approval.
