5. Discussion
In D.06-07-029, which established the CAM, the Commission specifically excluded UOG from the CAM cost sharing mechanism. However, the August 15, 2006 ACR directed SCE to develop utility-owned generation so that the new resources could be on line by summer 2007. The ACR also discussed the collateral grid reliability benefits that the new peakers would bring. And finally, the ACR invited SCE to seek different rate treatment for the peaker costs.
As a part of the ACR the assigned Commissioner noted and relied in part on representations by the CAISO14 that the peakers were needed:
I urge the CPUC to direct ... [the IOUs] ... to solicit a combination of quick-start generation and demand response opportunities ... to increase available supply and enhance grid reliability. (Emphasis added.)
SCE followed the Commission's direction, built the peakers on an expedited schedule, and is now seeking "different" rate treatment for the peakers so its bundled ratepayers do not have to bear the full cost. As SCE argues in its brief, it did not build these peakers for its bundled customers; these peakers were in addition to its existing power procurement requirements for its bundled customers. TURN also argues that the system needed the peakers, regardless of which loads were growing and therefore all load is equally responsible for the marginal costs of new capacity, in proportion to their contribution to peak load.
When the ACR is read in concert with the arguments presented by SCE and TURN, a strong case can be made that it would be equitable to have the costs of the peakers shared by all benefiting customers. It is therefore appropriate to consider adopting an exception to the UOG CAM in this instance. We note that the application was served on all parties to R.05-12-013, A.05-06-006, and R.06-02-013: the CAM was adopted by D.06-07-029 in this last docket, R.06-02-0013, and thus the parties to R.06-02-013 have had notice that the Commission was considering in this proceeding a different allocation method than that set forth in D.06-07-029.
We therefore find it reasonable to adopt SCE's proposed method of allocation which is consistent with the Joint Parties' proposal described in D.06-07-029 and excludes an auction at this time.15 This allocation authority expires in 10 years from the date of the commercial operation for each unit, consistent with D.07-06-022, D.06-07-029, and D.08-09-012. We find that the ACR was issued with a concern for the entire grid, with the support of the CAISO, and with a view to providing enhanced grid reliability. Allocating the cost to all benefiting customers is a matter of equity and fairness; it would be unreasonable to arbitrarily limit the allocation according to D.06-07-029 when addressing a situation not contemplated when we adopted the general allocation policy.
14 Letter dated August 9, 2006 from Yakout Mansour, President and Chief Executive Officer of the CAISO. This letter was attached to the ACR.
15 D.06-07-029, pp. 14-18.
