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PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA AGENDA ID 15607

ENERGY DIVISION RESOLUTION E-4834 April 6,

2017

R E D A C T E DR E S O L U T I O N

Resolution E-4834. This Resolution approves Pacific Gas and Electric Company’s (PG&E) requests of a power purchase agreement and a price extension amendment with Wheelabrator Shasta Energy Company Inc. (Wheelabrator Shasta).

PROPOSED OUTCOME:• Approve cost recovery for the power purchase

agreement and the price extension amendment between PG&E and Wheelabrator Shasta. The power purchase agreement and Amendment are approved without modification.

SAFETY CONSIDERATIONS:• This Resolution implements biomass provisions of

Senate Bill 859 and the Governor’s Emergency Proclamation to address public safety and property from falling trees and wildfire.

• Renewable Auction Mechanism standard contracts contain Commission approved safety provisions. There are not expected incremental safety implications associated with approval of this Resolution.

ESTIMATED COST: • Actual costs of the power purchase agreement and the

price extension amendment are confidential at this time.

By Advice Letter 4984-E, filed on December 20, 2016. __________________________________________________________

181670023 1

Resolution E-4834 DRAFT April 6, 2017PG&E AL 4984-E/CXC

SUMMARY

Pacific Gas and Electric Company’s (PG&E) Proposed PPA and Price Extension Amendment (Amendment) with Wheelabrator Shasta are Approved without Modification.

PG&E filed Advice Letter 4984-E (Wheelabrator) on December 20, 2016, requesting California Public Utilities Commission (Commission or CPUC) review and approval of a PPA and price extension amendment (Amendment) with Wheelabrator Shasta. The proposed PPA was executed in response to Commission Resolution E-4805, which implemented Senate Bill (SB) 859. The Amendment was executed in order to provide a bridge across winter months for facility operation from December 1, 2016 to May 31, 2017, prior to energy delivery under the new PPA approved in this Resolution. Energy delivery associated with this PPA is estimated to commence by December 1, 2017. If the Amendment terminates prior to approval of the new PPA, the PPA will revert to its original price terms in the underlying qualifying facility (QF) PPA.

This Resolution approves both the proposed Wheelabrator PPA and the Amendment. PG&E’s execution of the PPA and Amendment are fair and reasonable. Payments made by PG&E pursuant to the PPA and the Amendment are fully recoverable in rates over the life of the PPA and Amendment, subject to Commission review of PG&E’s administration of the contracts.

BACKGROUND

Overview of Commission Resolution E-4805 and Senate Bill (SB) 859Resolution E-4805, implementing SB 859 (2016), ordered Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E) (collectively, the large investor-owned utilities or IOUs) to each purchase a share of 125 megawatts (MW) of capacity from facilities that use biofuel that is a byproduct of sustainable forestry management. This includes dead and dying trees from high hazard zones (HHZs), as further defined in SB

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859.1 The relevant portions of SB 859, Section 14 (Public Utilities Code Section 399.20.3) provide the following guidance:

Sub-division (b): Requires electrical corporations to collectively procure by December 1, 2016 their proportionate share of 125 MW from existing, qualifying biomass facilities through five year contracts. Requires 80% of fuel stock to be a product of sustainable forest management, and 60% to be from HHZs specifically.

Sub-division (c)(1): Requires that the Commission allocate each electrical corporation’s proportionate share of the 125 MWs based on the ratio of its peak demand to the total statewide peak demand.

Sub-division (c)(2): States that procurement pursuant to Commission Resolution E-4770 that is in excess of the procurement requirement in Resolution E-4770 shall count towards meeting the utility’s share allocated under 399.20.3(c)(1).

Sub-division (d): States that the Commission may direct the development of contract terms and conditions, or may require the use of the process under Resolution E-4770, to meet the requirements of subdivision (c). Requires that procurement occur on an expedited basis.

Sub-division (f): Requires that costs of procurement to satisfy the requirements of Section 399.20.3 are recoverable from all customers on a nonbypassable basis.

Resolution E-4805 specified procurement options that the IOUs may use to procure their share of this capacity: the Renewable Auction Mechanism (RAM) directed in Commission Resolution E-4770, a second biomass RAM authorized by Resolution E-4805, or bilateral contracting also authorized by Resolution E-4805. E-4805 also provides for the cost recovery and cost allocation of procurement by directing the IOUs to create memorandum accounts and to submit Applications to create a new Tree Mortality Nonbypassable Charge.2

1 The full text of SB 859 can be found at: ht t p:/ / l e g i n fo.le g i s la t u r e.ca.g o v / fa c es/b i l l Na v Cl i ent. x html ? b i ll_ i d = 201520160 S B859 2 Resolution E-4805 at p. 18 (Ordering Paragraph 4).

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Overview of the Emergency ProclamationSevere drought conditions and an epidemic infestation of bark beetles have caused tree mortality in several regions of California. On October 30, 2015, Governor Brown issued an Emergency Proclamation (Proclamation)3 to protect public safety and property from falling dead trees and wildfire. Ordering Paragraph 1 of the Proclamation tasked the Department of Forestry and Fire Protection, the California Natural Resources Agency, Caltrans, and the California Energy Commission to immediately identify “high hazard zones for wildfire and falling trees.” Other ordering paragraphs directed the Commission to take various measures to expedite contracts that can be executed for bioenergy facilities that receive feedstock from high hazard zones.

The Proclamation’s orders are intended to address certain safety and wildfire risks. This Resolution is consistent with the Proclamation’s orders that direct the Commission to:

Use its authority to extend contracts for existing forest bioenergy facilities receiving feedstock from high hazard zones. (Ordering Paragraph 8 of Proclamation)

Take expedited action to ensure that contracts for new forest bioenergy facilities receiving feedstock from high hazard zones can be executed in an expedited manner, including initiation of a targeted RAM and consideration of adjustments to the Bioenergy Market Adjusting Tariff (BioMAT). (Ordering Paragraph 9 of Proclamation)

3 Full Proclamation can be found at: https://www.gov.ca.gov/docs/10.30.15_Tree_Mortality_State_of_Emergency.pdf

4

https://www.gov.ca.gov/docs/10.30.15_Tree_Mortality_State_of_Emergency.pdf


Overview of the Renewables Portfolio Standard (RPS) ProgramThe California RPS program was established by Senate Bill (SB) 1078, and has been subsequently modified by SB 107, SB 1036, SB 2 (1X), and SB 350.4 The RPS program is codified in Public Utilities Code Sections 399.11-399.32.5 The RPS program requires each retail seller to procure eligible renewable energy resources so that the amount of electricity generated from eligible renewable resources is an amount that equals an average of 20 percent of the total electricity sold to retail customers in California for compliance period 2011-2013; 25 percent of retail sales by December 31, 2016; 33 percent of retail sales by December 31, 2020; 40 percent of retail sales by December 31, 2024; 45 percent of retail sales by December 31, 2027; and finally 50 percent of retail sales by December 31, 2030.

Additional background information about the Commission’s RPS Program, including links to relevant laws and Commission decisions, is available at: http://www.cpuc.ca.gov/PUC/energy/Renewables/overview.htm and http://www.cpuc.ca.gov/PUC/energy/Renewables/decisions.htm.

PG&E Requests Approval of Its New Wheelabrator PPA In response to Resolution E-4805, PG&E requests approval of its Advice Letter (AL) 4984-E regarding its PPA with Wheelabrator Shasta, which will provide 34 MW of biomass capacity for biofuel from high hazard zones (HHZs).

In its March 18, 2016 Resolution E-4770, the Commission directed PG&E to conduct a Bioenergy Procurement Renewable Auction Mechanism (BioRAM 1) solicitation6 for facilities that utilize biofuel from HHZs, pursuant to the Governor’s Tree Mortality Emergency Proclamation. Resolution E-4770 allocated to PG&E a procurement requirement of at least 20 MW.7 4 SB 1078 (Sher, Chapter 516, Statutes of 2002); SB 107 (Simitian, Chapter 464, Statutes of 2006); SB 1036 (Perata, Chapter 685, Statutes of 2007); SB 2 (1X) (Simitian, Chapter 1, Statutes of 2011, First Extraordinary Session); and SB 350 (De Leoñ, Chapter 547, Statutes of 2015).5 All further statutory references are to the Public Utilities Code unless otherwise specified.6 Resolution E-4770 at p. 18 (Ordering Paragraph 1).7 Id.

5

http://www.cpuc.ca.gov/PUC/energy/Renewables/decisions.htm

http://www.cpuc.ca.gov/PUC/energy/Renewables/overview.htm


Subsequently, in its October 21, 2016 Resolution E-4805, the Commission directed PG&E to procure an additional 43 MW of capacity from facilities that utilize biofuel from HHZs by December 1, 2016. Resolution E-4805 authorized the IOUs to procure this capacity using any combination of three options: 1) BioRAM 1 directed in Resolution E-4770; 2) a second BioRAM; or 3) a bilateral contracting process. E-4805 also indicated that any excess procurement from E-4770 will count toward E-4805 assigned procurement targets.8 As a result of Commission assigned targets in Resolutions E-4770 and E-4805, PG&E is responsible for procuring a total of 63 MW of capacity from facilities that utilize biofuel from HHZs.

The Commission approved PG&E’s Advice Letter 4958-E, which requested to enter into a PPA with Burney Forest Products for 29 MW of capacity, resulting from PG&E’s BioRAM 1. Accordingly, this Resolution approves the remaining 34 MW of capacity that PG&E requires to meet its total 63 MW assigned procurement target.

Table 1: Summary of PG&E Compliance

CPUC Order

CPUC-required PG&E MW

PortionPG&E

Procured MW

E-4770 20 29

E-4805 43 34

TOTAL 63 63

PG&E Requests Approval of an Amendment to its Renewable Power Purchase Agreement with Wheelabrator ShastaTo ensure that Wheelabrator Shasta would be able to operate through the winter months prior to the new Wheelabrator PPA commencing delivery approximately December 1, 2017, PG&E negotiated with Wheelabrator Shasta a price extension amendment (Amendment). This new Amendment will be in effect from December 1, 2016 – May 31, 2017.

The Wheelabrator Shasta facility is a 54.9 MW nameplate capacity biomass generation facility located in Anderson, California. PG&E currently has an existing 30-year, 49.9 MW PPA with Wheelabrator 8 Resolution E-4805 at p. 17 (Finding 5).

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Shasta as part its QF program, which expires on April 30, 2018. In August 2011, PG&E and Wheelabrator executed a price amendment (Original Amendment) which was approved by Commission Resolution E-4455 on March 8, 2012. The Original Amendment expired on July 31, 2016 and price and terms reverted to the underlying Interim Standard Offer No. 4 PPA.9

Following the expiration of the Original Amendment, the Wheelabrator Shasta plant continued to operate. However, during negotiations for the new PPA, Wheelabrator Shasta indicated that it will cease operations without a new price extension amendment that will allow it to continually operate through the winter months.

PG&E Requests Specific Findings for Commission ApprovalPG&E requests that the Commission issue a resolution that contains the findings necessary for “CPUC Approval” as defined in Appendix A of D.04-06-014. In addition, PG&E requests that the Commission issue a resolution that finds the following:10

1. The Wheelabrator PPA and Price Extension should be approved in their entirety, including payments to be made by PG&E pursuant to the PPA and Price Extension, subject to the Commission’s review of PG&E’s administration of the PPA and Price Extension;

2. A finding that any procurement pursuant to the Wheelabrator PPA and Price Extension constitutes procurement from an eligible renewable energy resource for purposes of determining PG&E’s compliance with any obligation or target that it may have to procure eligible renewable energy resources pursuant to the California RPS (Public Utilities Code Section 399.11 et seq.), D.03-06-071, D.06-10-050, D.10-12-048, D.11-12-020, D.11-12-052, Resolution E-4414, or other applicable law;

3. A finding that, subject to after-the-fact verification that all applicable criteria have been met, the Energy Division accepts PG&E’s upfront showing that deliveries from the Wheelabrator PPA should be categorized as procurement under the portfolio content category specified in Public Utilities Code Section 399.16 (b)(1)(A);

9 PG&E AL 4984-E, p. 2.10 PG&E AL 4984-E, pp. 7-8.

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4. Adopts the following findings with respect to resource compliance with the EPS adopted in R.06-04-009:

a. The Wheelabrator PPA is pre-approved as meeting the EPS because it is an existing biomass facility covered by Conclusion of Law 35(d) of D.07-01-039;

5. A finding that all procurement and administrative costs associated with the Wheelabrator PPA and Price Extension are fully recoverable in rates and/or applicable nonbypassable charges over the term of the PPA and Price Extension, subject to reasonableness review of PG&E’s administration of the PPA and Price Extension.

NOTICE

Notice of the Wheelabrator advice letter was made by publication in the Commission’s Daily Calendar. PG&E states that a copy of the Wheelabrator advice letter was mailed and distributed to the R.15-02-020 service list and GO 96-B service lists in accordance with Section 4 of General Order 96-B.

PROTEST

Advice Letter 4984-E was not protested.

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DISCUSSION

The Commission examined the PPA and Amendment on multiple grounds:

Consistency with D.06-12-009 and D.07-09-040 (Modification of QF Contract Extensions)

Consistency with D.10-12-035 (QF/CHP Program Settlement) Consistency with PG&E’s 2015 RPS Procurement Plan and

Commission Resolutions E-4770 and E-4805 Consistency with Portfolio Content Category Requirements Consistency with Long-term Contracting Requirements Procurement Review Group Requirements Independent Evaluator Review Cost Reasonableness of the PPA and Amendment Compliance with Bilateral Contract Rules Compliance with Interim Greenhouse Gas Emissions Performance

Standard (EPS) PPA and Amendment Viability Public Safety Disadvantaged Communities

Consistency with D.06-12-009 and D.07-09-040 Allowing Modifications and Amendments for QF Contract Extensions of Less than Five Years DurationThe filing of AL 4984-E is consistent with Commission procedures for the extension of QF contracts. D.04-12-048 concludes that “contracts with duration five years or longer [shall] be submitted with an application to the Commission for preapproval.”11 D.06-12-009 clarifies that based on D.04-12-048, QF contract extensions for less than five years should be authorized through the advice letter process.

11 D.04-12.048 at p. 108.

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Further, D.07-09-040 states that “in recognition of the often lengthy process involved in negotiating contract terms… the QF may extend the non-price terms and conditions of the expiring contract and continue service with the price set forth in this Decision until the final [QF Standard Offer] contract is available.”12

The Wheelabrator Amendment is consistent with D.06-12-009 and D.07-09-040 because the Amendment term is at most 6 months, and when it expires the terms will revert to its original price terms in the underlying qualifying facility (QF) PPA.

Consistency with D.10-12-035 and D.15-06-028 (QF/CHP Program Settlement)On December 16, 2010, the Commission adopted the QF/Combined Heat and Power (CHP) settlement (Settlement) with the issuance of D.10-12-035. The Settlement became effective as of November 23, 2011. The Settlement resolves a number of longstanding issues regarding the contractual obligations and procurement options for facilities operating under legacy and new QF contracts.

Among other things, the Settlement allows for bilaterally negotiated contracts with QFs to determine alternative energy and capacity payments mutually agreeable by relevant parties and subject to CPUC approval. Finally, it establishes specific CHP procurement targets and greenhouse gas (GHG) reduction targets for each named utility.

In D.15-06-028, the Commission decided that PG&E already met their Settlement megawatt and GHG reduction targets and, consequently, that PG&E should not be a participant in the Settlement’s Second Program Period for CHP Solicitations. The Second Program Period for CHP solicitations began on November 24, 2015.

The PPA and Amendment are consistent with D.10-12-035 and D.15-06-028 because they allow for bilaterally negotiated contracts, and upon expiration of the price amendment, the energy price paid to the QF will revert to short-run avoided cost variable (SRACVAR) price for any remaining term of the contract.

12 D.07-09-040 at p. 126.

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Consistency with PG&E’s 2015 Renewable Portfolio Standard (RPS) Procurement Plan (Plan) and Commission Resolutions E-4770 and E-4805California’s RPS statute requires the Commission to direct each utility to prepare an annual RPS Plan and then review and accept, modify, or reject the Plan prior to the commencement of a utility's annual RPS solicitation. The Commission must then accept or reject proposed PPAs based on their consistency with the utility’s approved Plan.

The Wheelabrator PPA and Amendment were executed on November 17, 2016. At the time the extension was executed, the most recent Commission-approved Plan was PG&E’s 2015 Plan, which was approved in D.15-12-025. Pursuant to statute, PG&E’s Plan includes an assessment of supply and demand to determine the optimal mix of renewable generation resources, and consideration of flexible compliance mechanisms established by the Commission.

In PG&E’s 2015 RPS Plan, PG&E stated that it did not intend to procure any additional RPS eligible resources. However, Resolutions E-4770 and E-4805 authorized PG&E to enter into power purchase agreements with existing forest bioenergy facilities that require fuel from high hazard zones in order to meet PG&E’s total assigned incremental bioenergy target of 63 MW.

The Wheelabrator PPA and Amendment are consistent with PG&E’s 2015 RPS Procurement Plan and Commission Resolutions E-4770 and E-4805 because the Wheelabrator PPA and Amendment comply with the requirements to procure RPS eligible energy from a bioenergy facility that uses forest fuel supplied from wildfire high hazard zones.

The Wheelabrator PPA and Amendment are consistent with PG&E’s 2015 renewable portfolio standard Procurement Plan, as approved by D. 15- 12-025, and Commission Resolutions E-4770 and E-4805.

Consistency with Portfolio Content Category RequirementsIn D.11-12-052, the Commission defined and implemented Portfolio Content Category (PCC) classifications for the RPS program and authorized the Commission’s Director of Energy Division to require the IOUs to provide information regarding the proposed contract’s PCC classification in each advice letter seeking Commission approval of an

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RPS contract. The purpose of the information is to allow the Commission to evaluate the claimed PCC of the proposed RPS PPA as well as the risks and value to ratepayers if the proposed PPA ultimately results in renewable energy credits in another PCC.

In AL 4984-E, PG&E states that the product procured pursuant to the PPA will be classified as PCC One. PG&E asserts in its advice letter that the Wheelabrator PPA satisfies the upfront showing required by D.11-12-05213 for PCC One because the PPA has or is expected to have its first point of interconnection within the metered boundaries of an IOU transmission or distribution system, within a California balancing authority (“CBA”) area.14

Consistent with D.11-12-052, PG&E provided information in AL 4984-E regarding the expected portfolio content category classification of the renewable energy credits to be procured pursuant to the Wheelabrator PPA.

Long-Term Contracting RequirementIn D.12-06-038, the Commission established a long-term contracting requirement that must be met in order for retail sellers to count RPS procurement from contracts less than 10 years duration for compliance with the RPS program.15 In order for the procurement from any short-term contract signed after June 1, 2010 to count for RPS compliance, the retail seller must execute long-term contracts in the compliance period in which the short-term contracts are signed representing 0.25% of retail sales of the previous compliance period. 16

13 Public Utilities Code Section 399.16 (b)(1)(A) (“Portfolio Content Category One”) – to meet this requirement an IOU may show that the RPS-eligible generator has its first point of interconnection with the Western Electricity Coordinating Council (“WECC”) transmission system within the boundaries of a California balancing authority area (“CBA”), in PG&E’s case, the California Independent System Operator (CAISO).14 AL 4984-E, p. 7. 15 For the purpose of the long-term contracting requirement, contracts of less than 10 years duration are considered “short-term” contracts. (D.12-06-038)16 Pursuant to D.12-06-038, the methodology setting the long-term contracting requirement is: 0.25% of Total Retail Sales in 2010 for the first compliance period; 0.25% of Total Retail Sales in 2011-2013 for the second compliance period; and 0.25% of Total Retail Sales in 2014-2016 for the third compliance

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The Wheelabrator PPA triggers the minimum quantity condition because the contract term is less than 10 years and was signed after June 1, 2010. PG&E’s retail sales for 2011 - 2013 were 226,774 GWh, and 0.25 percent of its 2010 retail sales are 567 GWh. PG&E has executed a number of contracts in Compliance Period 2014 - 2016 that are longer than 10 years in contract term length (Table 2). In total, the listed contracts represent 2,287 GWh. Thus, PG&E has satisfied the minimum quantity condition because the contracts PG&E executed in Compliance Period 2014 - 2016 exceed the minimum quantity threshold.

Table 2: PG&E Long-Term Contracts for Compliance Period 2014 - 2016

Year Executed

Location GWh/Year Expected

2014 Nipton, San Bernardino 2952014 Nipton, San Bernardino 3262015 Tehachapi 3632015 Tehachapi 2372015 Santa Margarita, SLO 1,066

TOTAL 2,287

Independent Evaluator Review PG&E retained Arroyo Seco Consulting (Arroyo) as the independent evaluator (IE) to oversee its 2015 RPS contracting activities. Arroyo also oversaw the negotiations and evaluated the overall merits of the Wheelabrator PPA and Amendment. The Wheelabrator advice letter includes public and confidential versions of the IE’s report. As part of its role, Arroyo evaluated the fairness of the bilateral contracting process. Based on its analysis, the IE concluded that both the Wheelabrator PPA and price extension Amendment merit approval.

Arroyo found that while the price of the Wheelabrator PPA is high compared with competing alternatives for renewable energy that the price is moderate when compared to proposals for delivering energy from high hazard zones (HHZs). The IE determined that the Wheelabrator Shasta offer was “the highest-valued alternative available to PG&E to meet its compliance obligation set by the CPUC’s Resolution E-4805.”17

period.17 Report of the Independent Evaluator on Wheelabrator Shasta PPA and Amendment, Executive Summary, p. 4.

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For the Wheelabrator price extension Amendment, Arroyo found that while the price was moderate or high compared with competing alternatives for renewable energy that it ranked low or moderate against alternatives for short-term procurement of energy delivered from HHZs.

The IE’s assessment found that PG&E’s negotiations with Wheelabrator Shasta were conducted in a fair manner and consistent with the urgency of the state’s safety objectives. Arroyo concluded that both the PPA and the Amendment rank high based on PG&E’s quantitative criteria of Least-Cost / Best-Fit criteria and its qualitative criteria of facility proximity to HHZs. In addition, Arroyo found that the Wheelabrator PPA ranks high for viability.18

Consistent with D.06-05-039, an independent evaluator oversaw PG&E’s 2015 RPS contracting activities and the negotiations on the Wheelabrator PPA .

Procurement Review Group (PRG) Participation RequirementThe PRG was initially established in D.02-08-071 to review and assess the details of the IOU’s overall procurement strategy, solicitations, specific proposed procurement contracts, and other procurement processes prior to submitting filings to the Commission as a mechanism for procurement review by non-market participants.

Participants in PG&E’s PRG include representatives from the Office of Ratepayer Advocates, California Department of Water Resources, The Utility Reform Network, the California Utility Employees, Union of Concerned Scientists, and Jan Reid. In the Wheelabrator advice letter, PG&E asserts that it notified its PRG on November 10, 2016 of its intension to execute the Wheelabrator PPA and price extension Amendment.

Consistent with D.02-08-071, PG&E’s Procurement Review Group participated in the review of the Wheelabrator PPA and Amendment.

18 Id.

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Cost ReasonablenessThe Commission compared the price of the Wheelabrator PPA with competing offers that PG&E received as part of its bilateral contracting process. We found it was most fair to assess PPA value by comparing similar offers that deliver energy from high hazard zones. In addition, the Commission performed an analysis across executed contracts from BioRAM 1 and BioRAM 2 and found that the price of the Wheelabrator PPA is reasonable.

The Commission also reviewed the reasonableness of the cost of the Wheelabrator price extension Amendment. We compared the proposed Amendment with both Wheelabrator Shasta’s original price extension as well as similar PG&E price extension amendments with other facilities. Based on this analysis, the Commission found that the cost of the Wheelabrator Amendment is reasonable.

Payments made by PG&E under the Wheelabrator PPA and Amendment are fully recoverable in rates over the life of the PPA, subject to Commission review of PG&E’s administration of the PPA and any other conditions contained herein or required by law.

Consistency with Bilateral Contracting RulesPG&E and Wheelabrator Shasta negotiated the Wheelabrator PPA and Amendment on a bilateral basis, in place of an RPS solicitation. PG&E entered into bilateral negotiations as authorized by Resolution E-4805, consistent with the urgency of SB 859 and the Governor’s Emergency Proclamation on Tree Mortality.

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The Commission has developed guidelines by which the IOUs may enter into bilateral RPS contracts. In D.03-06-071, the Commission authorized entry into bilateral RPS contracts provided that such contracts did not require Public Goods Charge funds and that they were “prudent.” In D.06-10-019, the Commission established rules by which the IOUs could enter into bilateral RPS contracts. PG&E adhered to these bilateral contracting rules because the Wheelabrator PPA is longer than one month in duration, the amendment was filed by advice letter, and the contracts are reasonably priced, as discussed in more detail above.

In D.09-06-050, the Commission also determined that bilateral agreements should be reviewed according to the same processes and standards as projects that come through a solicitation. Accordingly, as described above, the Wheelabrator PPA was compared to other offers received in PG&E’s bilateral contracting process; the PPA and amendment were reviewed by PG&E’s Procurement Review Group; and an Independent Evaluator oversaw the project evaluation and PPA / Amendment negotiation.

The Wheelabrator PPA and Amendment are consistent with the bilateral contracting guidelines established in D.06-10-019 and D.09-06-050.

Compliance with Interim Greenhouse Gas Emissions Performance Standard (EPS)Public Utility Code Sections 8340 and 8341 require that the Commission consider emissions costs associated with new long-term (five years or greater) baseload power contracts procured on behalf of California ratepayers.19 D.07-01-039 adopted an interim EPS that establishes an emission rate for obligated facilities at levels no greater than the greenhouse gas emissions of a combined-cycle gas turbine power plant. Generating facilities using certain renewable resources are deemed compliant with EPS.20

The W hee l abr a tor PPA complies with the EPS because it is an exempt facili t y established b y D.07-01-039.

19 “Baseload generation” is electricity generation at a power plant “designed and intended to provide electricity at an annualized plant capacity factor of at least 60%.” Pub. Util. Code Section 8340 (a).20 D.07-01-039, Attachment 7, p. 4.

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PPA and Amendment ViabilityThe generation to be delivered pursuant to the Wheelabrator PPA is from an online and operating facility that has been certified by the California Energy Commission (CEC) as RPS-eligible and is managed by an experienced generator (Wheelabrator Shasta).

The Independent Evaluator gave the Wheelabrator PPA a viability score of 100 using the Commission’s viability calculator, noting that Wheelabrator Shasta is an existing generation facility that has on average operated reliably above annual contact quantity.21 The IE finds that both PG&E and Wheelabrator Shasta have a strong incentive to meet minimum requirements and avoid default, which would trigger a price reduction.22

I t is reasonable to expect that the Wheelabrator Shasta facility will meet the terms and conditions of its PPA.

Safety ConsiderationsSection 451 requires that every public utility maintain adequate, efficient, just, and reasonable service, instrumentalities, equipment, and facilities to ensure the safety, health, and comfort of the public.

PG&E’s Wheelabrator PPA, which is based on the RAM PPA includes safety provisions that require the seller to operate the generating facility in accordance with the Prudent Electrical Practices as defined in the PPA. Further, these provisions specifically require that all sellers take a list of reasonable steps to ensure that the generation facility is operated, maintained, and decommissioned in a safe manner. A search of the U.S. Department of Labor’s Occupational Safety and Health Administration (OSHA) database did not result in any reported safety violations over the past five years.

In addition, this Resolution implements provisions of Senate Bill 859 and the Governor’s Emergency Proclamation to address public safety related to falling trees and wildfire.

Disadvantaged Community Considerations

21 AL 4984-E, Appendix D, Independent Evaluator Report, p. 26. 22 Id., p. 18.

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Senate Bill 350 (de León, Chapter 547, Stats. 2015) contains disadvantaged community goals that are cross-cutting and therefore will be integrated into all policy areas. Thus, in evaluating the Wheelabrator PPA, the Commission will analyze its impact on communities.

The Commission’s Energy Division staff notes that the Wheelabrator biomass facility, located in Shasta County, is not physically located in a CalEnviroScreen Version 3.0 designated Disadvantaged Community.

CalEnviroScreen23 indicates the surrounding Census Tract, 6089012000, is in the 8th percentile for pollution statewide. It is in the 18th percentile for diesel pollution and the 8th percentile for toxic releases. However, it ranks higher in other areas such as the 54th percentile for groundwater threats, the 70th percentile for asthma, and the 80th percentile for unemployment.The Wheelabrator PPA will contribute to PG&E’s RPS goals to achieve the state’s mandate to reduce GHG emissions, as well as address California’s Tree Mortality issue to mitigate the threat of wildfires.

The Wheelabrator biomass facility is not located in a CalEnviroScreen designated Disadvantaged Community.

23 https://oehha.ca.gov/calenviroscreen/report/calenviroscreen-30

18

https://oehha.ca.gov/calenviroscreen/report/calenviroscreen-30


Confidential Information The Commission, in implementing Section 454.5(g), has determined in D.06-06-066, as modified by D.07-05-032, that certain material submitted to the Commission as confidential should be kept confidential to ensure that market sensitive data does not influence the behavior of bidders in future RPS solicitations. D.06-06-066 adopted a time limit on the confidentiality of specific terms in RPS contracts. Such information, including price, is confidential for three years from the date the contract states that energy deliveries begin, or until one year following contract expiration, except contracts between IOUs and their affiliates, which are public.The confidential appendices, marked “[REDACTED]” in the public copy of this resolution, as well as the confidential portions of the Wheelabrator advice letter, remain confidential at this time.

COMMENTS

This is an uncontested matter in which the resolution grants the relief requested. Accordingly, pursuant to PU Code 311(g)(2), the otherwise applicable 30-day period for public review and comment is being waived.

FINDINGS

1. The price extension amendment between Pacific Gas and Electric Company and Wheelabrator Shasta Energy Company Inc. is consistent with Commission Decision 06-12-009 and Decision 07-09-040 allowing modifications and amendments for qualified facility contract extensions.

2. The renewable power purchase agreement and price extension amendment between Pacific Gas and Electric Company and Wheelabrator Shasta Energy Company Inc. are consistent with Commission Decision 10-12-035 allowing bilaterally negotiated contracts for qualified facility contracts.

3. Consistent with Decision 11-12-052, Pacific Gas and Electric Company provided information in Advice Letter 4984-E regarding the expected portfolio content category classification of the renewable energy credits to be procured pursuant to the Wheelabrator Shasta Energy Company Inc. power purchase agreement.

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4. Consistent with Decision 12-06-038, Pacific Gas and Electric Company meets its long-term contracting requirement in order to count renewable portfolio standard procurement from contracts of less than 10 years duration.

5. Consistent with Decision 02-08-071, Pacific Gas and Electric Company’s Procurement Review Group participated in the review of the proposed power purchase agreement and the price extension amendment to Pacific Gas and Electric Company’s renewable power purchase agreement with Wheelabrator Shasta Energy Company Inc.

6. Wheelabrator power purchase agreement and price extension amendment are consistent with Pacific Gas and Electric Company’s renewable portfolio standard procurement plan, as approved by Decision 15-12-025, and Commission Resolutions E-4805 and E-4770.

7. The Wheelabrator power purchase agreement and price extension amendment are consistent with the bilateral contracting guidelines established in Decision 06-10-019 and Decision 09-06-050.

8. The payment amounts pursuant to the power purchase agreement and price extension amendment between Pacific Gas and Electric Company and Wheelabrator Shasta Energy Company Inc. are reasonable.

9. Payments made by Pacific Gas and Electric Company under the power purchase agreement and price extension amendment between Pacific Gas and Electric Company and Wheelabrator Shasta Energy Company Inc. shall be recoverable in rates over the life of the power purchase agreement and price extension amendment, subject to Commission review of Pacific Gas and Electric Company’s administration of the power purchase agreement and amended power purchase agreement and any other applicable Commission review.

10.The confidential appendices, marked "[REDACTED]" in the public copy of this resolution, as well as the confidential portions of Advice Letter 4984-E, remain confidential at this time.

11.Advice Letter 4984-E should be approved and effective today.

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THEREFORE IT IS ORDERED THAT:

1. The request of the Pacific Gas and Electric Company for review and approval of the renewable power purchase agreement and price extension amendment between Pacific Gas and Electric Company and Wheelabrator Shasta Energy Company Inc., as requested in Advice Letter 4984-E, is approved without modification.

This Resolution is effective today.

I certify that the foregoing resolution was duly introduced, passed, and adopted at a conference of the Public Utilities Commission of the State of California held on April 6, 2017; the following Commissioners voting favorably thereon:

_____________________ TIMOTHY J. SULLIVANExecutive Director

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Confidential Appendix A

[REDACTED]

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Confidential Appendix B

[REDACTED]

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Date post:	24-Feb-2021
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