VIII. Cost Allocation

D.06-07-029 directs utilities to make an election at the time they file an application for approval of PPAs as to whether they intend to use the decision's cost allocation mechanism. PG&E points out that D.06-07-029 issued after it filed this application, and proposes to make its cost allocation election for the PPAs soon after the Commission issues a final decision in the Long-Term Procurement Order Instituting Rulemaking (R.) 06-02-013 containing details of the energy auction mechanism, which is an element of the adopted cost allocation

methodology. We grant PG&E's unopposed request. PG&E may defer its election, subject to further Commission direction in the Long-Term Procurement

Order Instituting Rulemaking (R.) 06-02-013.¹⁹

In their comments on the proposed decision, AReM, CLECA and CMTA ask that the Commission specify that, when PG&E makes its election, it must elect the same cost allocation mechanism for all of the PPAs approved in this decision. This issue is beyond the scope of this proceeding. The parties may raise it for the Commission's consideration in R.06-02-013.

With respect to its utility-owned projects, PG&E requests that we adopt a non-bypassable charge for Humboldt and Colusa that corresponds to their commitments lives, or 30 years, whichever is less. PG&E has not justified its request, and we therefore deny it. D.06-07-029 provides that utility-owned new generation is subject to the 10-year non-bypassable charge established in D.04-12-048. Although D.04-12-048 adopts a 10-year recovery period for the non-bypassable charge, it notes that doing so "may still increase costs for captive ratepayers due to the need for the project developer to seek accelerated cost recovery for their investments rather than amortizing these assets over a longer time period." D.04-12-048 therefore allows utilities the opportunity to justify a longer cost recovery period, on a case-by-case basis in which "the Commission will examine the benefits to ratepayers as well as the current state of the customer base." (D.04-12-048, p. 55.) In support of its request, PG&E merely states that a longer cost recovery period will create a greater incentive for the development of long-term contracts to construct new generation facilities. This statement, along with the absence of any showing with respect to the current state of the customer base, does not provide justification for deviating from the adopted 10-year cost recovery period.

¹⁹ In its opening brief, PG&E states that it also requests that the Commission adopt a non-bypassable charge for the PPAs corresponding to their contract lives. As PG&E does not address the fact that this request deviates from D.06-07-029 (and its testimony), we assume that, with regard to the PPAs, this statement is an inadvertent error, and not an attempt to relitigate D.06-07-029.