1. Quantification of GHG Benefits And Net Present Value

The Decision states that a GHG adder would increase the net present value of the SGRP by between $307.9 million and $257.1 million. (Decision, at p. 67.) The Application asserts: "These numbers are not substantiated, are not consistent with the values contained in the record, and do not appear to take into account the Commission's finding that SONGS will continue to operate past 2009 even if the SGRP does not occur." (Application, at p. 4.) By way of contrast, the Application notes that Edison calculated the GHG adder to be $160 million if SONGS shut down in 2009, based on an $8/ton adder. TURN/CEC assert that the $8/ton adder is required by Consistency in Assumptions (2004) __ Cal. P.U.C. 2d __, Cal.P.U.C. Dec. No. (D.) 05-04-024, 2005 Cal. PUC LEXIS 244 (D.05-04-024).

The Application is incorrect to claim that an $8/ton adder is required in this proceeding. TURN/CEC misread both the Decision and D.05-04-024. The Decision, at page 37, makes clear that prior decisions on GHG adders are not binding in this case because those decisions addressed different issues. Analysis of D.05-04-024 confirms this. That decision states that there is a range of values for GHG adders, from $5 to $69 a ton. The $8/ton adder adopted in that decision is "levelised" so it can be used to make decisions that will have effects over the period of time from now to 20 years from now. This $8/ton adder captures, for this purpose, "a trend of $5 per ton in the near term, $12.50 per ton by 2008, and higher values thereafter." (Consistency in Assumptions, supra, [D.05-04-024], at p. 28 (slip. op.), 2005 Cal. PUC LEXIS 244, at p. *12.) It would not make sense to require the use of this "levelized" number for the SGRP because avoided emissions will not begin until 2012. (Decision, at pp. 30, 66.) In this respect, the Application should be denied.

Currently, however, the Decision does not explain how the GHG adder was calculated. Our intent was to calculate the GHG adder on the assumption that units 2 and 3 would shut down in 2012 without the SGRP, using accurate information. Edison introduced calculations into the record based on an $8/ton adder and a $25/ton adder. (Exhibit SCE-15R2.) While helpful in establishing a range, these numbers are not precise. Having considered this issue in light of the rehearing request, we believe the most accurate values are contained in the report, which underlies D.05-04-024: "Methodology and Forecast of Long Term Avoided Costs for The Evaluation of California Energy Efficiency Programs," prepared by the "E3" consulting group on October 25, 2004 ("E3 Report"). Those values start at $11.82/ton in 2012 and rise to $21.067/ton in 2024. If we are to use those numbers, parties should be given an opportunity to comment. Thus limited rehearing is granted to determine the GHG adder based on the discussion in this order.

Our consideration of this question also reveals that the cost-effectiveness table in the Decision does not reflect the Decision's findings. (See, Decision at pp. 64-65.) The numbers in Decision's "Table of Results" were calculated assuming that units 2 and 3 would shut down in 2009-2010 without the SGRP. The Decision adopts a shutdown date of 2012 for use in the cost-effectiveness model. (Decision, at p. 30 (Unit 2 shut down in 2012), 66 (Units 2 and 3 to be shut down together).) As a result, limited rehearing should be granted to calculate the net present values for the SGRP based on a shutdown date of 2012, and to consider the determination to approve the project in light of those values.

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