Discussion
If SCE files its avoided cost posting in compliance with relevant Commission decisions on September 6, 2000, the Commission will be unable to decrease the avoided cost posting retroactively. As stated by the Commission in D.82-12-120, avoided cost "prices may be adjusted upward and applied retrospectively in the event the Commission later reaches a determination that the prices posted were too low. However, no downward adjustments will be made retrospectively to avoid pricing uncertainty for QFs." (10 CPUC 2d at 623, emphasis added.) Although other aspects of avoided cost pricing have changed, this prohibition against downward adjustments has been consistently enforced. Adopting of a provisional avoided cost posting as proposed by SCE in the emergency motion allows the Commission the ability to analyze and decide on the merits of modifying the Transition Formula already before it in the petition to modify D.96-12-028. Without adoption of a provisional posting, if the Commission were to conclude in a subsequent decision that the border prices were no longer valid or reliable, it would not be able to recover from qualifying facilities excess payments. However, if the Commission does adopt a provisional posting and later finds that the border prices remain valid and reliable, avoided cost payments can be adjusted upwards.
CCC/IEP argue in their preliminary comments that there is irreparable harm to both qualifying facilities and ratepayers if we adopt a provisional posting. CCC/IEP argue that qualifying facilities have entered into gas contracts based on the index prices and therefore, if they operate, will operate at a significant loss if we adopt a provision posting based on a lower price of gas. CCC/IEP also argue that decisions by qualifying facilities not to operate during this time period, because of pricing uncertainty, have the potential to cause significant ratepayer harm through increased electricity prices in the Power Exchange. CCC/IEP do not provide affidavits, contracts, or other documentation to support their contention that qualifying facilities will be forced to operate at a loss if a provisional posting is adopted. It is this assumption that drives the CCC/IEP contention that such generators will not operate if a provisional posting is adopted and their argument that there will be irreparable harm to ratepayers if a provisional posting is adopted.
Based on the pleadings before us, we cannot conclude that there is irreparable harm to raptepayers or market participants from adoption of a provisional posting. Adoption of a provisional posting best preserves the Commission's ability to conduct a thorough analysis of the issues and does not prejudge the merits of the pending petition to modify. Therefore, we will authorize SCE to use the August gas price indices from its August avoided cost posting in its September 2000 avoided cost posting, authorize SCE to use the lower of the August gas price indices and the then current indices for all future postings beginning with the October 2000 avoided cost posting, and authorize SCE to establish a tracking account to monitor avoided cost payments made pursuant to this order and those that would have been made if the motion had not been granted, so that appropriate payment adjustments can be made once the petition to modify review of the border indices is concluded.
We also will limit the time period during which the provisional posting will be in effect to six months. We note that, unless modified, the current transition formula remains in effect until the Commission determines that the Power Exchange (PX) is functioning properly. This question is an issue in Phase 2 of this proceeding and we cannot say when such a determination will occur. We also do not know when SCE's petition to modify D.96-12-028 will be decided. These uncertainties lead to the possibility that a provisional posting will remain in place for an extended period of time. Establishing a six-month end date for the provisional posting addresses some of the uncertainty associated with adoption of the provisional posting.
This emergency motion is granted to the extent set forth herein without prejudice, and serves only to preserve the rights of all parties while the Commission considers the merits of the petition to modify the avoided cost posting formula.
Comments on Draft Decision
Rule 77.7(f)(9) provides for reduction or waiver of the 30-day period for public review and comment when public necessity requires such reduction. We must balance whether the public necessity of adopting an order outweighs the public interest in having the full 30-day period for review and comment. We are convinced that the motion of SCE falls under Rule 77.7(f)(9), and for that reason, we established a shortened period for comments on the draft decision.
Comments were filed on ___ by ____.
Findings of Fact
1. Avoided cost postings are based on the Transition Formula adopted in D.96-12-028, which incorporates various border price indices.
2. If Topock indices are priced at $7.00/MMBtu, this represents an increase of $2.50/MMBtu over the posted August price.
3. The Commission is considering a pending petition to modify D.96-12-028.
4. The Assigned ALJ has ruled that the validity and reliability of border indices will be considered as part of the petition to modify.
1. D.82-12-120 prohibits retrospective downward adjustment of qualifying facility prices.
2. Adoption of a provisional posting best preserves the Commission's ability to conduct a thorough analysis of the issues and does not prejudge the merits of the pending petition to modify.
3. SCE should be required to establish a tracking account so that appropriate payment adjustments can be made once the petition to modify review of the border indices is concluded.
4. Pursuant to Rule 77.7(f)(9), the public review and comment period has been shortened.
5. This decision should be effective today to allow the avoided costs to be posted expeditiously.
Therefore, IT IS ORDERED that:
1. The Emergency Motion of Southern California Edison Company (SCE) is granted as set forth herein.
2. SCE is authorized to use the August gas price indices from its August avoided cost posting in its September 2000 avoided cost posting.
3. SCE is authorized to use the lower of the August gas price indices and the then current indices for all future postings beginning with the October 2000 avoided cost posting through the February 2001 avoided cost posting.
4. SCE shall establish a tracking account to monitor avoided cost payments made pursuant to this order and those that would have been made if the motion had not been granted, so that appropriate payment adjustments can be made once the petition to modify review of the border indices is concluded.
5. Within five days of the effective date of this decision SCE shall file and serve a compliance advice letter to establish a tracking account, consistent with this decision. The advice letter shall be effective on filing subject to Energy Division determining that it is in compliance with this Order.
6. This decision is an interim decision and does not prejudge the merits of the pending petition to modify.
This order is effective today.
Dated , at San Francisco, California.
