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PG&E’s Oakley Application (A.12-03-026)

PG&E’s Oakley Application (A.12-03-026). Yuliya Shmidt, lead Selena Huang, analyst Candace Morey, attorney May 23, 2012. Image of proposed Oakley plant from California Energy Commission: www.energy.ca.gov/2011publications/CEC-800-2011-002/CEC-800-2011-002-CMF.pdf.

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PG&E’s Oakley Application (A.12-03-026)

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  1. PG&E’s Oakley Application(A.12-03-026) Yuliya Shmidt, lead Selena Huang, analyst Candace Morey, attorney May 23, 2012 Image of proposed Oakley plant from California Energy Commission: www.energy.ca.gov/2011publications/CEC-800-2011-002/CEC-800-2011-002-CMF.pdf

  2. Oakley (Contra Costa) Power Plant • New combined cycle natural gas-fired facility in Contra Costa County • 584 megawatts (MW) • Heat rate of 6,752 British Thermal Units per kilowatt-hour (BTU/kWh) • Total cost of approximately $1.15 billion • Alleged to be efficient (low fuel consumption and GHG emissions) and fast-ramping • Bid into PG&E’s 2008 Long-Term Request for Offers (LTRFO) • Was shortlisted • PG&E executed a power and sale agreement (PSA) for the facility in 2009 • Fully permitted (although CEC permit is being challenged in the courts) and began construction in June 2011 2

  3. Procedural Background • In 2007, the Long-Term Procurement Plan proceeding found a need of 800-1,200 MW of new generation for PG&E (D.07-12-052) • PG&E filled that need in 2008 and 2009 with two projects which have been approved (Mariposa and Mirant Marsh Landing) • To fill the last of its need, PG&E proposed three facilities simultaneously in 2009: • Oakley Plant (utility-owned generation, A.09-09-021): 584 MW • GWF Tracy (PPA, A.09-10-022): 145 MW • Calpine Los Esteros (PPA, A.09-10-034):109 MW • DRA recommended that the Commission approve either Oakley or GWF Tracy and Calpine Los Esteros 3

  4. Procedural Background Continued… • The Commission conditionally approved the GWF Tracy and Calpine Los Esteros plants if Oakley were denied (D.10-07-042) • The Commission then rejected Oakley citing a lack of need for the plant but allowing it to be resubmitted if one of three events occurred (D.10-07-045): • a project fails creating an open need • PG&E is able to retire a Once Through Cooling plant ahead of schedule • The CAISO Renewable Integration Study demonstrates that there are reliability risks from integrating the 33% RPS • Since Oakley was denied, GWF Tracy and Calpine Los Esteros were approved 4

  5. Procedural Background Continued… • PG&E immediately filed a Petition for Modification (PFM) of the Oakley decision • Changed the online date from 2014 to 2016 to better fit with PG&E’s need • All other aspects of the Application remained the same • Procedurally, the CPUC could not approve the facility as a PFM • The Commission, sua sponte, converted the PFM to an Application • The Application for PG&E to purchase and operate the Oakley facility with a 2016 online date was approved in 2010 (D.10-12-050) • TURN challenged D.10-12-050 in the California Court of Appeal • In March 2012, the Court annulled the Decision because did not follow “proper procedures” (TURN v. California Public Utilities Commission, Case No. A132439) 5

  6. Updated Application • PG&E immediately filed a new Application to purchase and operate the Oakley plant with the 2016 online date (A.12-03-026) • Proposal is identical to previous Application • Leaves open the possibility that the plant comes online in 2014 and operates as a merchant until purchase date of 2016 • PG&E claims this is unlikely • PG&E did not filed Testimony with its Application but alleged that its Testimony will be filed on May 16 • Eight parties, including DRA, filed protests • Two parties – CARE and Independent Energy Producers – filed Motions to Dismiss • Administrative Law Judge Rulings set a Prehearing Conference for May 22, directed parties to immediately begin discovery, and shortened PG&E’s time to reply to protests 6

  7. DRA’s Protest • PG&E has no authority nor outstanding need to procure this plant • PG&E has not met any of the three requirements for resubmitting Oakley • Need for new generation being determined in the LTPP (R.12-03-014) • That proceeding is ongoing with a Decision expected by the end of 2012 • It is the appropriate venue for a need determination • Application does not comply with requirements for filing a UOG proposal, new rules require a Certificate of Public Convenience and Necessity (D.12-04-046) • The previous proceeding’s partial settlement on cost recovery – to which DRA is a signatory – is no longer in effect • The plant may no longer be competitive and its value, as a potentially-used plant, is not the same as a brand-new facility 7

  8. Follow-up Actions • At Pre-Hearing Conference on May 22 emphasized that: • PG&E does not have authority for this plant • PG&E has not satisfied the requirements for submitting this Application • Challenge PG&E’s extremely aggressive proposed schedule • Request more time for discovery and intervenor testimony • Reserve right to hearings • Supported Independent Energy Producer’s Motion to Dismiss 8

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