3. Recovery of Peaker Costs
On December 31, 2007, SCE filed this application seeking allocation of the resource adequacy capacity and the costs of the energy from the peaker units to all benefitting customers, and not just to its bundled customers, although the peakers are owned by SCE. SCE requested the CAM treatment because it contends that it developed the peaker units to provide capacity and grid-reliability benefits to all electricity customers on its distribution system and therefore it is appropriate that all benefitting customers, not just its bundled service customers, pay the costs. SCE proposes that in lieu of the time, effort and cost of an energy auction that the energy value of the peakers be allocated pursuant to a formula set forth in the "Joint Proposal" that is summarized at D.06-07-029, pp. 14-18. SCE also supports its request for the CAM cost allocation because the utility was authorized in the ACR to seek different rate treatment for the peakers.
SCE's application states that the total acquisition and installation cost for the four peakers through November 2007 is $238 million and that the operation and maintenance costs from August 2007 through November 2007 is $1.279 million. SCE's testimony states that all of these costs are reasonable and justified and should be recoverable. We will address the reasonableness of these costs in phase 2.
Alliance for Retail Energy Markets (AReM) filed a protest to the application, the Division of Ratepayer Advocates (DRA)4 filed a response and the California Cogeneration Council and California Wind Energy Association (CCC/CWEA) filed comments. The Utility Reform Network (TURN) filed a Motion of Consolidation of Capital Recovery Issues and Deferral of those Issues to Phase 2.
A Prehearing Conference (PHC) was held on April 8, 2008. At the PHC, SCE was directed to supplement its application and a schedule was established for parties to brief the cost allocation issue. Briefs were received from TURN, Western Power Trading Forum (WPTF), AReM, and Energy Producers and Users Coalition (EPUC). Reply briefs were received from WPTF/AReM, TURN and SCE.
4 DRA's response did not focus specifically on SCE's application, but more on whether the use of an ACR, that is issued by just one Commissioner and not the full Commission, is the appropriate vehicle to direct a utility to undertake the type of investment that SCE undertook pursuant to the August 15, 2006 ACR.
