II. The Contracts

The contracts at issue are as follows:

1. Two PPAs with Tunnel Hill Hydro, LLC (Tunnel Hill) for hydroelectric facilities with nameplate ratings of 400 Kilowatts (kW) and 600 kW, respectively, located in El Dorado County and scheduled to become operational in 2007.

Generating Facility	Type	Term	kW	Online	Location
Tunnel Hill Hydroelectric Project	Hydroelectric	10 years	600	6/07	5605 Volcanoville Road, El Dorado County, CA
Buckeye Hydroelectric Project	Hydroelectric	10 years	400	6/07	2900 Fox Run Road, El Dorado County, CA

2. One PPA negotiated with J.R. Simplot (Simplot) to purchase power from a 4,000 kW, currently operational, cogeneration facility located in San Joaquin County. The facility's primary fuel is waste heat from sulfuric acid manufacturing.

Generating Facility	Type	Term	kW	Online	Location
Cogeneration-Simplot-waste heat from sulfuric acid manufacturing		10 years	4,000	1/07	16777 Howland Road, Lathrop, San Joaquin County, CA

3. One PPA negotiated with Jacob De Raadt, doing business as Eden Vale Dairy (Eden Vale²), an operational biogas facility with a nameplate rating of 150 kW, located in Kings County.

Generating Facility	Type	Term	kW	Online	Location
Eden Vale Dairy	Biogas	10 years	150	Already operational	6944-21-1/2 Avenue, Lemoore, Kings County, CA

On January 31, 2007, the ALJ sent a data request to PG&E seeking additional information about each contract. For the 3 contracts covered by the RPS program (the Eden Vale Dairy, Tunnel Hill Hydro and Buckeye Hydro project), the Administrative Law Judge (ALJ) asked for standard information the Energy Division seeks for all RPS projects. This information fits a standard template the Commission's RPS team has developed so that all RPS projects are reported in standard fashion. Such standard reporting allows the Commission to compile data on the overall RPS program, and certain aspects of it, in standard form.

PG&E responded to the data request on February 8, 2007. In most aspects, its responses are adequate, but a few lack detail. For example, the pricing for each RPS contract (all but the Simplot contract) is 90% of the Market Price Referent (MPR) in effect on the date of contract execution. The January 31, 2007 ruling asked why the price was the same for each provider despite the difference in the means of generation. PG&E's response was simply that "[t]he MPR percentage (i.e. the discount from the MPR) was a result of negotiations conducted between PG&E and the counterparties."³ The MPR is one benchmark to be used in determining the reasonableness of these contracts. Given the small size of the contracts at issue, we find the pricing term in the contracts to be reasonable. However, PG&E shall be prepared to justify its pricing in greater detail in all future applications. For example, PG&E should demonstrate the contracting party's creditworthiness and experience with similar contracts; the contract's viability; what other similar providers are paid; and the considerations PG&E used to settle on a particular price. Nor shall the 90%-of-MPR pricing we approve here serve as precedent for any future RPS contract, without such justification.

It may well be that standard contracts for RPS facilities of 1 MW or smaller are desirable. Nothing in this decision shall be interpreted as allowing the terms PG&E submitted here (other than the 4 standard RPS terms discussed in the section entitled "Required Contract Terms," below) to be part of such a standard contract without further justification.

² PG&E's initial application misidentified the dairy as "Eden Valley," but corrected this error in a December 15, 2006 supplement to its application.

³ Response of [PG&E] to Second Ruling Requesting Additional Information Regarding Application, dated Feb. 8, 2007, Answer 3(a).