II. The Public Utility Regulatory Policies Act (PURPA) and Standard Offer Contracts
In 1978, in reaction to the nation's dependency on foreign supplies of oil and skyrocketing energy prices, Congress passed PURPA. (16 U.S.C. § 796 et seq.)2 One of PURPA's stated goals is to encourage the development of alternative and renewable generation of electricity in the United States. To serve this end, PURPA sets forth two major provisions. First, PURPA requires utilities to interconnect with and purchase power from QFs3 at prices up to a utility's avoided cost. Second, PURPA exempts QFs from standard utility cost-of-service regulation.
Following both the passage of PURPA and California statutes encouraging QF development, as well as on its own initiative, the Commission acted quickly to assure that California took immediate steps to develop QF power for anticipated future needs. Among other things, the Commission instituted a rulemaking, Order Instituting Rulemaking 2 (OIR 2), to establish standards governing the prices, terms, and conditions of utility power purchases from QFs. The Commission required the three principal California electric utilities, Edison, Pacific Gas and Electric Company (PG&E) and San Diego Gas & Electric Company (SDG&E), to develop and file a series of standardized power purchase contracts (standard offers or standard offer contracts) which were to be formulated upon Commission approved guidelines. (See generally D.82-01-103, 8 CPUC2d 20 (the Guidelines Decision).)
Edison seeks to modify D.82-12-120 and D.83-09-054,4 both issued in OIR 2.5 In D.82-12-120, among other things, the Commission approved the utilities' SO2 contracts for compliance with, the Guidelines Decision, subject to the utilities incorporating the principles and provisions reflected in the decision. (D.82-12-120, 10 CPUC 2d 553, 639.)
In D.83-09-054, 12 CPUC2d 604, the Commission approved Edison's (as well as PG&E and SDG&E's) ISO4 contract. This contract also includes the Operating Options.
2 California has had a longstanding demonstrated interest in promoting cogeneration and small power production. (See e.g., Pub. Util. Code §§ 2801-2824.) 3 QFs are cogenerators and small power producers who qualify for certain benefits under PURPA. 4 In its petition, Edison sometimes mistakenly cites one of the decisions it seeks to modify as D.83-09-053, instead of D.83-09-054. However, Edison correctly refers to D.83-09-054 in, among other places in the petition, its proposed findings of fact and conclusions of law in the event the Commission grants its petition. The pleadings indicate no party has been prejudiced by Edison's typographical error, and we construe Edison's references to D.83-09-053 as references to D.83-09-054. 5 We docket and review Edison's petition in Investigation (I.) 89-07-004 since this investigation is the most recent Biennial Resource Plan Update proceeding and is the successor proceeding to OIR 2.
