Conclusion
We again authorize SDG&E to enter into a ten-year PPA with OMEC for the output from the Otay Mesa generating plant. While we have previously issued this authorization to SDG&E, once in D.04-06-011, and again on rehearing in D.06-02-031, what is before us now is a Revised PPA─an agreement that brings all of the benefits we previously found for the ratepayers of SDG&E, but with enhancements that obviate the concerns the other stakeholders, in particular DRA, TURN, and UCAN, have with the original ten-year PPA.
In D.06-02-031, we approved the Otay Mesa PPA based on our findings that the ten-year agreement would provide the following benefits:
a. Provide substantial benefits both to the customers of SDG&E and to the state as a whole.
b. Allow [SDG&E] to reduce RMR costs.
c. Provide state-of-the-art, low heat-rate, economical, clean power to SDG&E's service territory.
d. Increase overall efficiency and reliability in SDG&E's service territory.
e. Provide a cost effective "insurance policy" in the event of another energy crisis.
f. Allow older units in SDG&E[`s] service territory to eventually be retired [resulting] in electric generation within SDG&E's service territory [being] much cleaner and more efficient.6
All of these finding are still relevant to the Revised PPA, and in fact, as already discussed, with the revisions, the plant brings even more potential benefits to SDG&E's ratepayers. In particular, the plant represents new generation─something the Commission is very concerned with having for the state as a whole. In D.06-07-029, we found that there was "a need for the state to invest in new generation in both northern and southern California in order to assure continued reliable service at a reasonable cost."7 The Revised Otay Mesa PPA presents SDG&E, and the state, with an opportunity for a 573 MW new natural gas-fired combined cycle power plant in SDG&E's service territory that will serve both local area reliability needs for the utility, as well as benefit the electric system as a whole.
With the enhancements that make the PPA acceptable to DRA, TURN, and UCAN, we find it reasonable to approve the Revised PPA. Although we approved the original ten-year PPA in D.04-06-011, when we granted rehearing on the PPA in D.05-06-062, we considered the Otay Mesa PPA de novo. When we issued the decision on rehearing, D.06-02-031, we made findings of fact, conclusions of law, and issued ordering paragraphs based on the record on rehearing. We did not rely on the previous record, nor did we incorporate it by reference into D.06-02-031. Therefore, we only modify our decision on rehearing, D.06-02-031 and the changes are contained in this decision.
6 D.06-02-031, mimeo., p. 17, citing D.04-06-011.
7 Finding of Fact 3, D.06-07-029.
