II. Procedural Background
PG&E filed this application on April 11, 2006, seeking an expedited order by November 2006 on the basis that delaying an order until after that time creates the risk that necessary resources will not be on line by the 2009 and 2010 summer peak periods. On May 17, 2006, protests were filed by the following parties:
· Coalinga Cogeneration Company, Salinas River Cogeneration Company and Sargent Canyon Cogeneration Company, filing jointly;
· Constellation Energy Commodities Group, Inc., Constellation Generation Group Inc. and Constellation Newenergy, Inc., filing jointly;
· Division of Ratepayer Advocates (DRA);
· Alliance for Retail Energy Markets (AReM), California Large Energy Consumers Association (CLECA), California Manufacturers & Technology Association (CMTA), Direct Access Customer Coalition, Energy Producers and Users Coalition, Energy Users Forum, Sempra Global and Silicon Valley Leadership Group, filing jointly;
· Western Power Trading Forum;
· Aglet Consumer Alliance (Aglet);
· The Utility Reform Network (TURN);
· California Municipal Utilities Association; and
· Merced Irrigation District and Modesto Irrigation District, filing jointly.
Many of the protests took issue with PG&E's apparent request, implied by the caption of the application and by PG&E's prayer for relief, that the Commission adopt a cost-allocation proposal that was then pending in the Long-Term Procurement Rulemaking (R.) 06-02-013. Specifically, PG&E and other parties jointly proposed, in R.06-02-013, that the Commission allocate the benefits and net costs of resource additions (including those that are the subject of this application) to all customers in PG&E's service territory, not just bundled customers. Some of the protests objected to PG&E's application as an improper attempt to relitigate the issue in this proceeding, while others protested the merits of the cost-allocation proposal. PG&E clarified, in its May 17, 2006, reply and at the May 25, 2006, prehearing (PHC) conference, that it did not intend for the Commission to determine the cost allocation issue in this proceeding.
Four additional parties entered appearances at the May 25, 2006, PHC: Southern California Edison Company (Edison), Calpine Corporation, Coalition of California Utility Employees (CUE) and California Unions for Reliable Energy (CURE), and California Department of Water Resources. (The California Independent System Operator appeared at the August 24, 2006, evidentiary hearing, at which time it requested and was also granted party status.)
The June 1, 2006, scoping memo and ruling of the assigned Commissioner adopted PG&E's, DRA's, TURN's and Aglet's jointly stipulated schedule of the proceeding, determined that the cost allocation issue is outside the scope of this proceeding, and identified the following issues for resolution:
· Should the Commission approve the PPAs, PSA and EPC contract resulting from PG&E's RFO?
· What ratemaking should apply to the costs of the contracts?
· Should the Commission grant a certificate of public necessity and convenience (CPCN) for the proposed Humboldt Bay Power Plant?
· Are the projects exempt from California Environmental Quality Act (CEQA) review by the Commission?
· Does PG&E have the authority to condition concluding the RFO on approval of the cost allocation proposal in R.06-02-013?
On July 20, 2006, the Commission issued D.06-07-029 adopting, with modification, the cost allocation proposal that had been pending in R.06-02-013. D.06-07-029 requires utilities to elect or waive the approved cost allocation mechanism at the time they file an application for approval of power purchase agreements. D.06-07-029 further provides that utility-owned new generation is not eligible for the new cost allocation methodology, but is subject to the 10-year non-bypassable charge established in D.04-12-048. In its prepared rebuttal testimony served on August 11, 2006, PG&E responded to D.06-07-029 by proposing to defer its election with respect to the power purchase agreements presented in this application, and to extend the non-bypassable charge applicable to the utility-owned projects to 30 years; no party opposed the testimony as beyond the scope of this proceeding.
Hearings were held on August 22-25 and 28, 2006. By consensus of the active parties, opening briefs were filed on September 22, 2006, and the proceeding was submitted upon the filing of reply briefs on September 29, 2006.2
The proposed decision of the Administrative Law Judge (ALJ) mailed on October 17, 2006. Comments on the proposed decision were filed on November 6, and reply comments were filed on November 13, 2006. The parties' comments identified a factual ambiguity in the record, namely, whether PG&E had included its proposed owner's contingency, which it sought to have included in the initial capital cost for the Humboldt and Colusa projects, was included in the
project bid prices submitted and analyzed in the solicitation and contract selection process. By ruling dated November 11, 2006, the ALJ set aside submission and reopened the evidentiary hearing to take evidence on this factual issue. The record was re-submitted at the conclusion of evidentiary hearing on November 21, 2006.
2 DRA's September 22, 2006, motion to file the proprietary version of its opening brief under seal, and Aglet's September 28, 2006, motion to file its reply brief under seal are granted.
