STATE OF CALIFORNIA ARNOLD SCHWARZENEGGER, Governor
PUBLIC UTILITIES COMMISSION
505 VAN NESS AVENUE
SAN FRANCISCO, CA 94102-3298
June 15, 2004
TO: ALL PARTIES OF RECORD IN RULEMAKING 01-10-024
Decision 04-06-011 is being mailed without the Dissents of Commissioners Lynch and Wood. The Dissents will be mailed separately.
Very truly yours,
/s/ ANGELA K. MINKIN
Angela K. Minkin, Chief
Administrative Law Judge
ANG:sid
Attachment
ALJ/CAB/sid Mailed 6/15/2004
Decision 04-06-011 June 9, 2004
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking to Establish Policies and Cost Recovery Mechanisms for Generation Procurement and Renewable Resource Development. |
Rulemaking 01-10-024 (Filed October 25, 2001) |
(See Appendix A for a list of appearances.)
OPINION APPROVING MOTION OF SAN DIEGO GAS & ELECTRIC
COMPANY (U 902 E) FOR APPROVAL TO ENTER INTO NEW
ELECTRIC RESOURCE CONTRACTS RESULTING FROM
SDG&E'S GRID RELIABILITY REQUEST FOR PROPOSAL
TABLE OF CONTENTS
Title Page
OPINION APPROVING MOTION OF SAN DIEGO GAS & ELECTRIC
COMPANY (U 902 E) FOR APPROVAL TO ENTER INTO NEW
ELECTRIC RESOURCE CONTRACTS RESULTING FROM
SDG&E'S GRID RELIABILITY REQUEST FOR PROPOSAL 2
I. Summary 2
II. Background 2
A. San Diego Gas & Electric Company 4
B. The Basis for SDG&E's RFP 7
C. Preparation and Circulation of the RFP 9
D. Bid Evaluation 11
E. Proposed Projects Resulting From the RFP Process 13
III. Summary of Parties' Positions 14
A. SDG&E 14
B. TURN/UCAN 14
C. ORA 16
D. PG&E 17
E. Coral Power 20
F. InterGen 21
G. Dynegy 23
H. Celerity 25
I. Nevada Hydro 27
J. SER 29
K. Calpine 29
IV. Discussion 30
A. Demand Response: Comverge 34
B. Demand Response: Celerity 38
C. Demand Response: Goals 40
D. Renewable: Envirepel 41
E. Ramco 43
F. Palomar 46
G. Otay Mesa 53
a) Reasons to Approve the PPA 59
b) Commission Involvement 60
c) There Was No Unfairness in the RFP Process 64
d) Consideration of Otay Mesa Should Not Be Deferred to the New LTRP Proceeding 67
e) SDG&E's Need for Otay Mesa Power 68
f) The Benefits of a 10-Year PPA 69
g) Transmission Upgrades 70
h) SDG&E's Conditions 71
H. The Value of This RFP Process 71
I. Procedural Issues 73
V. Comments on Proposed Decision 77
VI. Assignment of Proceeding 78
Findings of Fact 78
Conclusions of Law 84
ORDER 86
Appendix A - List of Appearances
OPINION APPROVING MOTION OF SAN DIEGO GAS & ELECTRIC
COMPANY (U 902 E) FOR APPROVAL TO ENTER INTO NEW
ELECTRIC RESOURCE CONTRACTS RESULTING FROM
SDG&E'S GRID RELIABILITY REQUEST FOR PROPOSAL
I. Summary
In this decision, we approve the five proposals that SDG&E presented to meet its short-term and long-term grid reliability needs. These proposals were the result of an open and competitive Request for Proposal (RFP) process that solicited bids from all qualified resources, including turn-key natural gas-fired generating units, power purchase agreements (PPA), demand response programs, and renewable resources. Out of 22 bids received, these five proposals were identified as conforming to the RFP specifications and were found to be the least cost/best fit choices for meeting the utility's need to have a diversified portfolio of resources to meet its customers grid reliability needs, are consistent with SDG&E's long-term resource plan (LTRP), benefit consumers, and are in the public interest. The proposals include a demand response program from Comverge, a renewable resource contract with Envirepel, and contracts for three gas-fired facilities, Ramco, Palomar, and Otay Mesa. Ramco is a turn-key combustion turbine intermediate unit, Palomar is a turn-key 500/555 MW combined-cycle power plant, and Otay Mesa is a 10-year PPA for a 485/573 MW combined cycle facility.
In addition, we authorize SDG&E to continue negotiations with Celerity on a demand response contract.
