ALJ/SRT/eap Mailed 3/16/2007
Decision 07-03-042 March 15, 2007
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Application of Pacific Gas and Electric Company for Approval of Power Purchase Agreements With Small Generating Facilities. (U 39 E) |
Application 06-10-003 (Filed October 3, 2006) |
OPINION GRANTING APPLICATION
I. Summary
Pacific Gas and Electric Company (PG&E) filed this application seeking approval of power purchase agreements (PPAs) for energy with three separate entities. The PPAs will give PG&E the right to obtain energy and capacity from two hydroelectric projects, a cogeneration project and one biogas facility.
Several intervenors raised generic issues related to biogas facilities that use energy generated from cow manure. Those issues are beyond the scope of this proceeding, but may be raised in the Commission's Renewable Portfolio Standard (RPS) proceeding, Rulemaking (R.) 06-05-027, as described below. That said, we are encouraged by PG&E's efforts to acquire the energy produced from the methane byproduct of dairy operations. We believe that, at least at the conceptual level, such contracts could provide a strong incentive to dairy and other livestock facilities to capture their methane emissions. This approach may offer several potential benefits to California and California ratepayers by aligning the profit motive of these operations with the environmental and energy goals of the state, including the Renewables Portfolio Standard, the Governor's Executive Order on biofuels and bioenergy (S-06-06) and the California Global Warming Solutions Act of 2006.
In addition, we require PG&E to work more closely with the Commission's Energy Division on future applications for RPS contracts. PG&E shall contact the Energy Division before filing any such application to ensure that it is 1) filing appropriate template information to enable the Commission to summarize contract terms in a standard way, 2) justifying contractual provisions adequately, and 3) using the Application or Advice Letter process appropriately.1
Further, it may make sense to develop a standard contract for RPS contracts of 1 megawatt (MW) or smaller. Parties to this proceeding may raise this issue - and propose standard contract terms - in the RPS proceeding identified above. However, this decision does not authorize use of the contracts in this proceeding as standard contracts. If PG&E wishes to use these contracts for small RPS purchases in the future, it shall have to justify such use in the RPS proceeding.
We grant PG&E's application on the ground that PG&E's entry into the PPAs is reasonable. We authorize PG&E to recover in rates the cost of payments made pursuant to the PPAs subject to continuing Commission oversight of contract administration.
1 In addition, PG&E should consult with the Energy Division as to the appropriateness of filing applications for approval of different types of PPAs (e.g., cogeneration and RPS) separately.
