COM/CXW/tcg **** Mailed 3/28/2001
Decision 01-03-067 March 27, 2001
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking into Implementation of Pub. Util. Code § 390. |
Rulemaking 99-11-022 (Filed November 18, 1999) |
DECISION MODIFYING DECISION 96-12-028
Payments to private producers of electricity who have the status of "qualifying facilities" (QFs) are governed by orders of this commission establishing standard rates for purchases that are just and reasonable to the electric consumers, consistent with regulations adopted by the Federal Energy Regulatory Commission (FERC). (18 CFR Part 292, subpart C, and California law.) This decision resolves the petition to modify an element of the formula for calculating QF energy payments adopted in Decision (D.) 96-12-028 filed by Southern California Edison Company (SCE). The Administrative Law Judge (ALJ) further expanded the scope of the proceeding to consider modifications to the natural gas price indices adopted in D.96-12-028.
This decision adopts a formula, to be updated periodically, to revise SCE's factor adopted in D.96-12-028 and establishes a procedure to replace the Topock index adopted in D.96-12-028. The formula presently applies to the energy payments for all QFs, including those who do not use natural gas a fuel. This decision does not change that practice. Through its investigative audits in the Rate Stabilization Proceedings, Application (A.) 00-11-038 et alia, the Commission is aware that utilities have not been paying QFs for deliveries for the past several months, while accumulating cash. Effective with the approval of this order, the
utilities are ordered to make payments to QFs for energy deliveries made on and after the effective date of this order, within 15 days after the end of the billing period. QFs may request a twice monthly billing period. The Commission proposes a significant penalty for failure to make payments going forward.
This decision establishes a Consumer Transition Price (CTP) as a reasonableness benchmark for payments to qualifying facilities of $ 79 per megawatt-hour (MWh). The CTP level is based on the reasonableness standard described by the Federal Energy Regulatory Commission in 93 FERC ¶ 61,294 and the average price of the portfolio of electricity supply developed by the California Department of Water Resources (CDWR) for the next five years. The CTP describes a general pricing goal for the average cost of QF production, including both energy and capacity payments specified in a contract between the purchasing utility and the QF. The CTP may be modified from time to time based on evolving conditions affecting electric energy prices and costs. It will not be employed as a cap or ceiling on payments.
Procedural Background
D.96-12-028 governs short-run avoided cost (SRAC) payments made by SCE, San Diego Gas & Electric Company (SDG&E), and Pacific Gas and Electric Company (PG&E) to qualifying facilities (QFs). The avoided cost posting is based on a Transition Formula adopted in D.96-12-028 that incorporates various border price indices for natural gas. Each Transition Formula contains a utility specific "factor" designed to relate SRAC prices to gas border prices for that utility. Although explicitly intended to be "transitional," i.e. short-lived, the formulas have been in place for over four years, during which time significant changes have occurred in both the gas and electric markets. It is time that they be revisited.
On July 28, 2000, SCE filed a petition to modify D.96-12-028 to revise its Transition Formula. On August 28, 2000, in comments on SCE's petition, the Office of Ratepayer Advocates (ORA) recommended that the Commission review the border gas indices used in SCE's Transition Formula on an emergency basis. In addition, ORA referenced a complaint filed by this Commission at FERC that seeks rescision of certain contracts that the Commission contends have permitted natural gas suppliers and their affiliates to increase prices through the withholding of capacity. On September 1, 2000, the Assigned ALJ issued a ruling adding the question of the reliability and validity of the border prices to the issues raised in SCE's petition to modify D.96-12-028. Comments and replies were filed on September 27, 2000 and October 30, 2000, respectively, on these issues. Comments on additional options for border prices were solicited by ruling on December 1, 2000. Comments and reply comments on these additional options were received on December 11 and 15, 2000, respectively.
On August 31, 2000, SCE filed an emergency motion seeking authorization for a provisional qualifying facility avoided cost posting for September 2000 and future months while the underlying petition was pending. That motion was denied in D.00-10-030. On November 28, 2000, SCE filed a second emergency motion, this time seeking an order modifying D.96-12-028 in several respects and requesting an expedited schedule for Commission action on the underlying petition to modify. The Commission has not addressed the November 28, 2000 emergency motion.
