4. SDG&E's Need for the El Dorado Plant or Similar Resource

The need for the El Dorado plant is driven by the future energy and resource adequacy needs identified by SDG&E in its LTPP for its bundled customers. The LTPP was filed in R.06-02-013 on December 11, 2006 and is currently under review by the Commission.

In the LTPP, SDG&E showed bundled customer needs for three different scenarios, Low, Base and High, mainly driven by different load growth scenarios. These scenarios also show the potential impact on resource needs in the San Diego service area with and without the Sunrise Powerlink, which is also currently under Commission review in a separate proceeding.⁵ SDG&E has not identified any transmission constraints related to deliverability of power from El Dorado to SDG&E. The three Low, Base and High scenarios that support SDG&E's request in this application as well as the LTPP were developed as follows:

Base Need Scenario: The base need scenario is derived using a modified California Energy Commission (CEC) load forecast and the Commission-adopted goals for energy efficiency and demand response. SDG&E assumes Direct Access (DA) load will remain at historical levels.

High Need Scenario: The high need scenario is derived using a combination of assumptions that could lead to a higher resource requirement for SDG&E's bundled customers. SDG&E's high case assumes 1% to 2% additional load growth in the first three years of the forecast horizon, followed by a 0.25% to 0.50% growth adder thereafter. The high case also assumes a return of some DA load to bundled load. It also assumes that the Otay Mesa power plant's on-line date is delayed one year to 2010.

Low Need Scenario: The low need scenario is derived using a combination of assumptions that could lead to a lower resource requirement for SDG&E's bundled customers. SDG&E's low case assumes more moderate reductions to overall load in the forecast horizon and uses rates that are half of the high case. Over a five-year period, the low case also assumes large customers are allowed to return to DA over a five-year period. It also models potential load loss if DA is re-opened to customers with load greater than or equal to 500 kilovolts and these customers leave over a five-year period. In addition, a load loss is phased in over a three-year period to account for the possibility of CCA occurring over the 2008 - 2010 timeframe.

For each of the three scenarios, SDG&E determined resource needs to meet the requirements for its bundled customer load. SDG&E's bundled customer peak need in each of the scenarios from 2010 to 2016 is shown in Table 1 below. Need was determined by subtracting all energy efficiency and demand response programs, both committed and uncommitted, and existing and planned supply resources from the forecasted load plus a 15% reserve margin. SDG&E notes that since the Commission-approved reserve margin is actually a range of 15-17%, the values in this table could be increased by about 80 MW and still be within the Commission-approved range.

Table 1

Bundled Customer Need (in MWs)

SDG&E's testimony makes the following points:

Of the total bundled need identified in SDG&E's LTPP filing, SDG&E has filed for Commission approval (Application (A.) 07-05-023) of two contracts to add 130 MW of new peaking capacity to be built in SDG&E's service area by 2008. A portion of this need, estimated to be about 100-350 MW over the 2010 to 2016 period will also be met with new renewable resources.

The large increase in need between 2011 and 2012 is mainly driven by the end of the California Department of Water Resources contract with the Sunrise Power Plant (Sunrise CDWR contract). Under that contract, SDG&E has full rights to all the capacity, energy and ancillary services from a combined cycle plant of approximately 545 MW. In the LTPP, SDG&E showed a generic combined cycle plant being added in 2012 to replace the capacity and energy that SDG&E's customers had from the Sunrise CDWR contract. The Sunrise Power Plant is located in Kern County, California, and its power is scheduled through the ISO and delivered at ZP-26. Thus, the addition of the El Dorado plant represents a replacement of a similar off-system resource that SDG&E has used to meet its bundled customers' needs since SDG&E was allocated, for the purposes of operational administration, the Sunrise CDWR contract in 2003.

SDG&E also identified in the LTPP that a portion of need could come from off-system resources, and SDG&E would still be able to meet its local resource adequacy requirements. In 2012, if the Sunrise Powerlink is added, then 540 MW of this total need must be on system in the base case. If the Sunrise Powerlink is delayed until after 2012, then about 1,400 MW of the need has to be on system, still leaving room for off system resources.

Additionally, since the LTPP was filed, the staff of the CEC has issued a draft revised demand forecast for 2008, which is 50 MW higher than the LTPP forecast on both the expected (50/50 forecast) load and on an adverse peak basis (90/10 forecast). By 2012, the CEC forecast is 100 MW higher, and it is over 200 MW higher by 2018.

4.1. Discussion

SDG&E's proposal to procure approximately 500 MW of power for 2012 from a fully dispatchable, baseload facility is consistent with its LTPP that is currently being evaluated by the Commission in R.06-02-013. Although SDG&E's 2006 LTPP has not yet been approved, the amount of power at issue is well within SDG&E's identified bundled customers' needs for that timeframe. For the purposes of this application, we find that SDG&E has adequately demonstrated a need for the El Dorado plant or similar resource. However, we do not prejudge here any need determinations we may make in the LTPP proceeding R.06-02-013 or the Sunrise Powerlink proceeding A.06-08-010.

The procurement authority SDG&E requests in its 2006 LTPP should be reduced by the 480 MW of generation it is procuring by exercising the El Dorado Option.

⁵ A.06-08-010.