II. Background
In D.99-11-022, the Commission allowed QFs to switch to PX zonal day-ahead market clearing price in lieu of Commission-determined short-run avoided cost (SRAC) energy pricing, subject to the potential for a later true-up by the Commission. The PX terminated operations in January 2001 and the "QF switchers" were required to return to the SRAC pricing in effect at that time. The true-up issue for the QF switchers remains a matter to be settled in R.99-11-022. A briefing schedule has been established for the determination of this dispute.
There is also a remand order of the California Court of Appeal in Southern California Edison v. Public Utilities Commission, 101 Cal.App.4th 982 (2002) regarding SRAC pricing between December 2000 and March 2001. The remand issue is still pending in R.99-11-022.
In addition, there is a Petition to Modify D.01-02-072 filed by Rio Bravo in this proceeding, R.99-11-022, related to the calculation of QF payments.
R.04-04-003 is the Rulemaking the Commission initiated "To Promote Policy and Program Coordination and Integration in Electric Utility Resource Planning," and as part of that proceeding, the Commission is reviewing the long-term policy for new and existing QFs. R.04-04-025 was initiated "To Promote Consistency in Methodology and Input Assumptions in Commission Applications of Short-run and Long-run Avoided Costs, Including Pricing for Qualifying Facilities." This proceeding is designated for addressing SRAC pricing issues for QFs including: (1) whether or not the Commission's current SRAC energy pricing formula, including existing time-of-delivery and line loss factors, should be altered, and if so, what changes should be made; and (2) updating current as-delivered capacity prices.
R.04-04-003 and R.04-04-025 were consolidated for evidentiary hearings on policy and pricing related to QF contracts.
Before evidentiary hearings began on the policy and pricing QF issues, the Commission encouraged all the parties to the QF proceedings to explore settlement possibilities. During December 2005, all of the parties interested in the QF issues from R.04-04-003 and R.04-04-025 met for a 10-day period with two mediators from the Commission's Administrative Law Judge (ALJ) Division to negotiate the issues and pursue possible settlement of some, or all, of the outstanding issues. No settlements were reached at that time and the evidentiary hearings went forward January 18 through February 2, 2006.
PG&E and IEP continued their negotiations, reached a settlement and noticed a settlement conference, pursuant to Rule 51.1(b),3 for April 7, 2006. Following that meeting, the settlement was finalized and on April 18, 2006, PG&E and IEP filed and served a Joint Motion for approval of the Settlement Agreement and Associated Amendments.
3 All references to Rules are to the Commission's Rules of Practice and Procedure and references to Codes are to the California Public Utilities Code.
