XVII. Assignment of Proceeding
Michael R. Peevey is the Assigned Commissioner and Bruce DeBerry is the assigned Administrative Law Judge in this proceeding.
1. D.96-12-028 adopted a transition formula for each utility which determines SRAC energy prices based on gas border indices for PG&E (Malin-Topock, 50/50), Edison (Topock), and SDG&E (Topock).
2. Beginning in May 2000 gas spot prices at the California border began to increase significantly above gas prices in the producing basins.
3. The increased gas border indices resulted in significant SRAC prices during the Remand Period.
4. SRAC energy prices are based on monthly forecasts of avoided energy costs.
5. Recent information indicates that gas prices at Malin were also manipulated during the Remand period.
6. The Court ordered the Commission to determine if SRAC prices during the Remand Period were correct, and complied with PURPA, or if the Transition Formula should be applied retroactively to the Remand Period.
7. Avoided fuel costs are not a term defined in PURPA.
8. Avoided costs as defined by PURPA are incremental energy or capacity, or both which but for the purchase from QFs the utility would either generate itself or purchase from another source.
9. PURPA does not provide an alternate definition of avoided costs when the fuel component of energy costs is manipulated or otherwise incorrect.
10. PURPA requires that rates for purchases be just and reasonable to the electric consumer, and in the public interest, but that these requirements are satisfied if the rate equals the avoided costs determined under various factors.
11. A review of the avoided cost factors in 18 C.F.R. § 292.304(b) and (e) shows that these do not impact changes in the determination of avoided costs in this instance.
12. If QF energy was not available, or if QFs did not provide energy, utilities would be forced to pay those energy costs that existed at the time to replace QF energy.
13. Given that the utilities fully dispatched their own resources, subject to operating constraints, a reasonable estimate of utility avoided energy cost during the Remand Period is an electric price calculated using bidweek border gas at MMCP heat rates, which conservatively reflect the market for available power purchases.
14. Market spot energy prices exceed SRAC prices by approximately $60 to $105/MWh in the Remand Period, and by $19, $31, and $63/MWh for the prior 12, 24, and 36 months at PX and Border MMCPs. Market prices exceed SRAC prices by $4, $7, and $15 over these same extended periods at mitigated PX and Basin-Forward prices. See Tables D and E shown above.
15. PURPA provides that where rates for QF purchases are based on estimates of avoided costs over the specific term of the contract or other legally enforceable obligation, the rates for such purchases do not violate PURPA if the rates for such purchases differ from avoided costs at the time of delivery.
16. The transition formulas adopted in D.96-12-028 were not modified until the adoption of D.01-03-067 on March 27, 2001.
17. The transition formulas determining SRAC prices were consistently applied prior to and during the Remand Period.
18. Avoided costs are incremental energy or capacity, or both, which but for the purchase from QFs the utility would either generate itself or purchase from another source.
1. SRAC prices derived from consistent application of a formula complies with the FERC regulations implementing PURPA.
2. The Court ordered the Commission to determine if SRAC prices comply with PURPA.
3. The Court's remanded order to the Commission did not direct the Commission to determine new SRAC pricing methods.
4. We have implemented Pub. Util. Code § 390 in a manner that complies with PURPA.
This order is effective today.
Dated _____________________, at San Francisco, California.
