9. Assignment of Proceeding

Michael R. Peevey is the assigned Commissioner. On February 26, 2009, Douglas M. Long replaced Carol A. Brown as the assigned Administrative Law Judge in this proceeding.

Findings of Fact

1. On July 20, 2006, the Commission issued D.06-07-029 establishing a CAM to support the IOUs investment in long-term PPA for new generation from IPPs.

2. Pursuant to the CAM, all benefitting customers in an IOU's service territory would share in the capacity benefits from the PPA and, the IOU would auction the energy from the PPA, and benefitting customers would pay the net cost of the PPAs minus revenues from the energy auction.

3. D.06-07-029 specifically excluded UOG from the CAM because UOG is essentially dedicated to bundled service customers.

4. D.06-07-029 has not previously been modified or amended to remove the exclusion of UOG from eligibility for the CAM; but parties to that proceeding were given notice and an opportunity to be heard on the question in this proceeding.

5. The CAISO informed the assigned Commissioner that quick-start generation and demand response would increase available supply and enhance grid reliability.

6. On August 15, 2006, due to the heat storm and power-demand conditions experienced during July-August 2006, an ACR issued ordering SCE to build up to 250 MW of black-start, dispatchable peaking units (up to five units) in its service territory that could be on-line by August 2007, to provide capacity and grid reliability benefits to all of SCE's distribution system.

7. The ACR authorized SCE to seek different ratemaking treatment for the costs of the peakers than would otherwise be applicable to UOG projects.

8. SCE undertook the development of the five peaker units and by summer 2007 four peaker units were on-line and fully operational. The fifth unit is still in the permit and development stage and is not addressed in the application or this decision.

9. Allocation of the resource adequacy capacity and the net costs of the capacity of the four peaker units to all benefitting customers is consistent with the CAM established in D.06-07-029.

10. The peakers provide capacity and grid reliability benefits to all electricity customers on its distribution system and all benefitting customers should pay for the costs.

Conclusions of Law

1. D.06-07-029 established a CAM for the allocation of the benefits and costs of resources that the IOUs procure for their respective systems, but UOG resources were explicitly excluded from this CAM treatment.

2. Modification of the CAM's limitation to non-UOG resources is properly noticed and before the Commission in this proceeding with respect to the four peakers SCE developed pursuant to the August 15, 2006 ACR.

3. The four SCE peakers were developed for the benefit of all SCE customers, and therefore all of the peakers' costs and resource adequacy benefits should be allocated to all benefiting customers, not just SCE's bundled service customers.

ORDER

1. The net capacity costs and resource adequacy benefits of the four peaker units developed, owned and operated by Southern California Edison Company (SCE) are to be allocated to all benefiting customers as a one-time exception to Decision (D.) 06-07-029, and excludes an auction. The allocation authority expires in 10 years from the date of commercial operation for each unit, consistent with D.07-06-022, D.06-07-029, and D.08-09-012.

2. The Utility Reform Network's March 21, 2008 Motion for Consideration of Capital Recovery Issues is denied without prejudice.

3. Application 07-12-029 remains open.

This order is effective today.

Dated March 26, 2009, at San Francisco, California.

Commissioners

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