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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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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


Oakley contra costa power plant

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


Procedural background

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


    Procedural background1

    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


    Procedural background2

    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


    Updated application

    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


    Dra s protest

    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


    Follow up actions

    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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