PacifiCorp 2007 Integrated Resource Plan (May 30, 2007)

PacifiCorp – 2007 IRPChapter 3 – The Planning Environmentto an approved procurement plan and the Public Utilities Commission is required to ensuretimely cost recovery of those costs. Long-term financial commitments entered into through acontract approved by the Public Utilities Commission for electricity generated by a zero- or lowcarbongenerating resource 10 that is contracted for on behalf of consumers in California on acost-of-service basis is recoverable in rates, and the Public Utilities Commission may, after hearing,approve an increase from one-half to one percent in the return on investment by the thirdparty entering into the contract with an electrical corporation relating to its investment in zero- orlow-carbon generation resources.On January 25, 2007, the California Public Utilities Commission approved the decision of PresidentPeevey and Administrative Law Judge Gottstein in Rulemaking 06-06-009 11 , “Order InstitutingRulemaking to Implement the Commission’s Procurement Incentive Framework and toexamine the Integration of Greenhouse Gas Emissions Standards into Procurement Policies”.The decision adopts an emissions performance standard of 1,100 pounds per megawatt-hour fornew long-term base load (60%) financial commitments. The term “long-term financial commitments”,will also include new financial investments by utilities in their own existing base loadgeneration that extends the life of a plant by five years or more.The Commission also adopted an interpretation of §§ 8341(d)(2) and (5) and clarified that it willdetermine compliance with the standard based on the reasonably projected net emissions over thelife of a facility, but in calculating the net emissions rate, the Commission will not count carbondioxide that is sequestered through injection in geological formations. This allows for a sequestrationproject to become operational after the power plant comes on line or the load serving entityenters into the contract. PacifiCorp had argued for such an interpretation as a means of allowingadvanced coal projects to demonstrate compliance with the greenhouse gas emissionsperformance standard even though their carbon sequestering equipment may not be operationalduring the first few years of a project.Regarding § 8341(d)(9)’s multi-jurisdictional utility qualification requirements for alternativecompliance, the Commission adopted the tests proposed by PacifiCorp. In fact, the Commissionwent further and concluded that the information provided by PacifiCorp during the rulemakingprocess and the Oregon Public Utilities Commission’s January 8, 2007 Order #07-002 12 , whichestablishes a proceeding to examine carbon dioxide risk associated with resource decisions, weresufficient for the Commission to conclude that PacifiCorp meets the alternative compliance requirements.As a result, PacifiCorp is not obligated to submit an alternative compliance applicationand is only required to file an annual attestation advice letter affirming that it still satisfiesthe alternative compliance requirements by February 1 of each year, beginning in 2008.The California Energy Commission must adopt regulations for municipal utilities consistent withthe Public Utilities Commission rules by June 30, 2007. 13 Enforcement of the emission perform-10 Zero- or low-carbon generating resource is defined as an electrical generating resource that will generate electricitywhile producing emissions of greenhouse gases at a rate substantially below the greenhouse gas emission performancestandards, as determined by the PUC.11 See, http://www.cpuc.ca.gov/PUBLISHED/AGENDA_DECISION/63931.htm12 See, http://apps.puc.state.or.us/edockets/orders.asp?ordernumber=07-00213 SB1368, supra note 42.36