5. Administration of QF Contracts in the Restructured Market

QFs receive payments from utilities for both energy and capacity. Currently the utilities schedule QF power through the PX as a must-take resource and receive payment for that power based on the PX price. The utilities then pay the QFs for their energy deliveries based on the administratively determined SRAC formula in Section 390(b). Section 390(b) established an interim methodology using a historical benchmark indexed for changes in gas prices. The difference between SRAC payments to QFs (including payments for capacity) and PX revenues associated with QF power is either a transition cost or benefit. The evidence shows that during the period November 1998-December 1999, the Section 390(b) price consistently exceeded the PX market clearing price and resulted in additional transition costs to be recovered.

Section 390(c) allows qualifying facilities to exercise a one-time option to elect to receive energy payments based on the PX market-clearing price upon appropriate notice to the utilities. The statute does not define the market-clearing price. In Decision (D.) 99-11-025, we established procedures to allow for the one-time switch.