Background
Edison filed two versions of its Application for approval of a non-standard power purchase agreement between Edison and KRCC1, a public version and a confidential version filed under seal.2 Information that Edison considers confidential has been redacted in the public version. Redacted information includes specific terms of the KRCC Contract, and associated negotiation strategy and economic analysis.3 Edison contends that the power purchase agreement will benefit customers and is not harmful to non-affiliated QFs, and that although the negotiations were with an Edison affiliate, the negotiations were at "arms-length". Edison explains that during the negotiations Edison rejected certain KRCC price offers and that Edison is prepared to offer comparable terms to other similarly situated non-affiliated QFs. Edison requests that this application be approved no later than April 30, 2006, in order that ratepayers may immediately benefit from the terms of the KRCC Agreement.
Edison's Motion requests an order protecting: 1) portions of the filed testimony in support of the Application including economic analyses and negotiation strategy, and 2) the KRCC Contract (Confidential Information). Edison contends the Confidential Information includes "market sensitive information" that if revealed would place Edison at an unfair business advantage, and furthermore would harm ratepayers. Edison argues that release of the terms and conditions of the KRCC Contract is likely to place Edison at a disadvantage when negotiating a future contract and provide a counterparty leverage in negotiations. Edison explains that the information related to the negotiation of, and the economic analysis of, the KRCC Contract includes the tools Edison employs in evaluation of offers it receives. Edison also notes that QF contracts are an issue in the avoided cost Rulemaking (R.) 04-04-025, and that a determination regarding treatment of confidential and market sensitive information is an issue in R.05-06-040.4 Edison offers to make any necessary changes to its redacted materials in accordance with any decision emanating from R.05-06-040.
On January 9, 2006, The Utility Reform Network (TURN) and the California Cogeneration Council (CCC) filed responses in opposition to Edison's Motion. TURN, noting that it generally favors confidential treatment of market sensitive information, argues that in this case the terms of the KRCC contract should be public as the QF is an Edison affiliate, and the contract may reflect favoritism. TURN also contends that Edison's willingness to offer similar contract terms to other QFs similarly situated removes the benefit of affording the contract confidential treatment as the terms will be known to other QFs. TURN supports Edison's request to maintain the confidentiality of the strategy and economic analyses used in the negotiations with KRCC.
CCC also argues that the KRCC Contract should be public. CCC explains that disclosure of the KRCC Contract to non-affiliated QFs is one means of ensuring that non-affiliated QFs receive equal treatment. Furthermore, CCC questions the meaning of Edison's term "similarly situated", and whether the application of this term might preclude non-affiliated QFs from receiving similar contract terms. As the R.04-04-003 proceedings may be impacted by the outcome of this application, CCC contends QF parties should have the ability to review the KRCC Contract terms and not be denied disclosure as this might impact arguments in the R.04-04-003 proceeding. Similar to TURN's position, CCC supports Edison's request to maintain the confidentiality of the strategy and economic analyses used in the KRCC negotiations.
On January 19, 2006, Edison replied to the TURN and CCC oppositions to Edison's Motion (Edison Reply). Edison's Reply, quoting Code Section 454.5(g), argues that the KRCC Contract should remain confidential regardless of whether the contract is between Edison and an affiliate. Edison contends public knowledge of the contract will create a "floor" for future non-affiliated contract negotiations. Edison further contends the purpose of the Commission review of KRCC Contract terms is not to offer similar terms to non-affiliated QFs, but to determine whether the contract is fair to non-affiliated QFs. As an alternative, Edison proposes that if the KRCC Contract is publicly produced, it should be subject to limitations including prohibitions against reviewing parties participating in non-affiliated QF negotiations.
1 Edison states that KRCC is a qualifying facility (QF) 50% owned by an Edison affiliate.
2 Edison filed the confidential version under Public Utilities Code Sections 454.5(g) and 583, and Commission General Order 66-C.
3 All of the redacted information is included in Edison's prepared testimony and is intended to demonstrate that the KRCC Contract is the result of arms-length negotiations, compares favorably to standard offer contracts, is in the customers' interest, and will not harm non-affiliated QFs.
4 The Commission is reviewing confidentiality in R.05-06-040, a rulemaking to implement Senate Bill 1488 (2004 Cal. Stats., Ch. 690).
