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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

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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