Background

QF energy under long-term contracts represents a significant component of energy provided by utilities to customers. The ability of QFs to provide this energy is critical to ensuring that there are sufficient resources available to meet customers electric demands this summer. In Decision (D.) 01-03-067, the Commission ordered utilities to resume payment for deliveries going forward. In D.01-06-015, the Commission found various non-standard contract amendments as reasonable, including a proposal for excess generation pricing.

The excess generation pricing provision provided a price higher than the Commission approved short-run energy price during certain summer hours in order to provide QFs with an incentive to produce as much electricity as possible during the critical summer months. Such incentive payments for excess generation were first approved by the Commission for the summer of 2000, and the Commission in D.01-06-015 again determined that such provisions were appropriate for 2001.