X. Assignment of Proceeding
Michael R. Peevey is the Assigned Commissioner and Carol Brown is the assigned Administrative Law Judge in this proceeding.
1. Mountainview presents Edison with the opportunity to acquire a new, state-of-the-art combined cycle gas turbine generating station with an expected net electrical output of 1,054 MW with a low target heat rate of 7,100 Btu/kWh.
2. Edison has entered into an option agreement with MVL, Mountainview's current owner, for the right to acquire MVL in its entirety, as a wholly-owned subsidiary of Edison.
3. MVL has already received a license for the project from CEC, and the environmental review done by CEC as the lead agency for the license exempts this Commission from conducting further environmental review under CEQA.
4. When acquired by Edison, MVL will complete construction of the facility pursuant to construction contracts already in place and turn the facility over to Edison, to be operated by Edison as a utility-owned generating asset.
5. The output of Mountainview will be dedicated to Edison customers at cost-based rates.
6. Edison proposed entering into a PPA with MVL that would give Edison the responsibility for gas procurement, hedging, and plant dispatch.
7. The PPA would be subject to exclusive FERC jurisdiction.
8. The PPA is not in the public interest from a ratepayer perspective.
9. By denying the PPA, and authorizing Edison to move forward with the project as a utility-owned generation facility, vexing questions raised by the parties relating both to FERC jurisdiction and to the applicability of the Commission's affiliate rules will no longer be before the Commission.
10. By authorizing Edison to go forward with the project as a direct utility-owned project under the historic, rate-based approach will maximize the advantages of the project to customers and ratepayers.
11. The record developed in this proceeding provides a substantial evidentiary basis for the issuance of a CPCN for Mountainview.
12. No further finding of need, or further environmental review under CEQA is required for the Commission to grant a CPCN for Mountainview.
13. The CEC's environmental analysis fully satisfies the environmental assessment requirement that must be met in order for this Commission to issue a CPCN for the Mountainview project.
14. Edison has established a need for Mountainview to meet its immediate need for dispatchable peaking and intermediate capacity and its long-term need for baseload resources.
15. Edison has established that Mountainview is a cost-effective resource to meet its short-term and long-term resource needs because of its attractive purchase price, state-of the-art low heat rate of 7,100 Btu/kWh, environmental benefits, and location in its load center.
16. Acquisition of Mountainview is consistent with the Energy Action Plan drafted by the CPUC, CEC, and CPA.
17. Although Edison established a need for Mountainview, in order to not over-burden ratepayers in the early years of the contract, we adopt TURN's proposal that all customers currently ineligible for direct access be obligated to pay for stranded costs for the first 10 years of Mountainview's life.
18. The Mountainview project is in the public interest.
19. The issuance of a CPCN for Mountainview will benefit consumers.
20. The total projected costs for Mountainview should be capped at the total project costs estimates presented by Edison, plus a contingency equal to either 5% of the total project cost estimates presented by Edison, or 50% of the costs projected to be subject to uncertainty, whichever is higher.
21. If there are cost overruns that exceed either contingency allowance, Edison may pass the additional costs on to shareholders, or come to the Commission, on an expedited schedule, and request and justify a higher contingency allowance adjustment.
22. Once it is built and operational, Mountainview should be included in Edison's rate-base.
23. By granting Edison a CPCN to acquire, develop, construct, own, and operate Mountainview as a utility-owned project, all cost recovery and rate-related aspects of Edison's activities associated with Mountainview will follow traditional utility ratemaking.
24. By granting Edison a CPCN to acquire, develop, construct, own, and operate Mountainview as a utility-owned project, it will not be necessary for Edison to recover all costs of operating Mountainview, which it would pay pursuant to the FERC-jurisdictional PPA, through the ERRA, or for the Commission to rule on various other Edison proposals for the review of various Mountainview costs in other Commission proceedings.
25. By granting Edison a CPCN to acquire, develop, construct, own, and operate Mountainview as a utility-owned project, it is not necessary at this time for the Commission to address decommissioning costs for Mountainview or to adopt an expedited Advice Letter process whereby the Commission can pre-approve capital addition/betterment projects and certain reclassification of charges.
26. Edison should be allowed to recover AFUDC recorded during the remainder of project planning and construction.
27. It is reasonable to have Mountainview financed at the utility level, with Edison using existing debt financing and equity, and there is no anticipated cost-savings if financing was done at the project-level.
28. Edison has another application, A.02-05-046, pending before this Commission concerning the future disposition of the Mohave Generation Plant in Laughlin, Nevada.
29. Edison's recovery mechanism for O&M costs is reasonable and should be adopted.
30. Edison's incentive program for plant operation is reasonable and should be adopted.
1. The FERC-jurisdictional PPA financing mechanism proposed by Edison will not benefit customers and is not in the public interest.
2. A certificate of public convenience and necessity is required for the Mountainview project.
3. A CEQA review by this Commission is not required in order for the Commission to issue a CPCN for the Mountainview project.
4. There is a need for the power from the Mountainview project.
5. The Mountainview project is cost-effective.
6. The total project costs for the Mountainview project are capped.
7. The issuance of a CPCN for the Mountainview project will benefit customers.
8. The issuance of a CPCN for the Mountainview project does not violate any state laws.
9. The issuance of a CPCN for the Mountainview project is in the public interest.
10. Financing for the acquisition of MVL and the funding of construction and operation of Mountainview at the utility level using existing debt financing is consistent with D.98-02-104 and D.00-10-063 and more advantageous than having the financing done at the project level.
11. Nothing done by the adoption of this decision concerning the acquisition of Mountainview prejudges the Commission's determination of the future of the Mohave Generating Plant in A.02-05-046.
IT IS ORDERED that:
1. The Southern California Edison Company's (Edison) application for approval of a Power Purchase Agreement (PPA) with Mountainview Power Company, LLC, to be filed with Federal Energy Regulatory Commission (FERC), is disapproved.
2. Edison is hereby granted a Certificate of Public Convenience and Necessity, authorizing it to acquire, develop, construct, own, and operate the power generation project currently owned by Mountainview Power Company, LLC.
3. All cost recovery and rate-related aspects of Edison's activities associated with the Mountainview project will follow traditional utility ratemaking.
4. The total projected costs for the Mountainview project is capped at the total project costs estimates presented by Edison, plus a contingency equal to either 5% of the total project cost estimates presented by Edison, or 50% of the costs projected to be subject to uncertainty, whichever is higher.
5. If there are cost overruns that exceed either contingency allowance, Edison may pass the additional costs on to shareholders, or come to the Commission, on an expedited schedule, and request, if justified, a higher contingency allowance adjustment.
6. Once it is built and operational, the Mountainview project shall be included in Edison's rate-base.
7. Edison is authorized to recover AFUDC recorded during the remainder of project planning and construction for the Mountainview project.
8. Edison is authorized to collect operation and maintenance fees and incentive payments for plant performance, as described herein.
9. The motions of IEP, TURN and TNHC are disposed of as discussed herein.
10. This proceeding is closed.
This order is effective today.
Dated , at San Francisco, California.
