BACKGROUND INFORMATI ON. SunPower Corporation is a vertically-integrated manufacturer and developer of solar photovoltaic modules and residential, commercial, and utility-scale installations. It sells solar PV systems to retail residential customers in Europe, Australia, and the U.S. In developing utility-scale solar PV projects, its 2011 annual report states that “plants and project development rights, initially owned by us, are sold to third parties”. SunPower is majority- owned by Total S.A., the French oil company. SunPower submitted for new solar PV projects to PG&E’s 2011 RPS RFO. The Xxxxxxxxx Solar PV xxxxxxx00, as it was then named, was the highest-valued based on PG&E’s LCBF valuation methodology, and the second-lowest priced12. PG&E selected the Xxxxxxxxx Xxxxx Offer for its short list. The parties negotiated terms for several 11 The Xxxxxxxxx Solar project is about 4 miles east of PG&E’s Xxxxxxxxx substation, and will interconnect to the grid on the Xxxxxxxxx-GWF 115-kV line. 12
BACKGROUND INFORMATI ON. The original Qualifying Facilities agreement between BFP and PG&E was executed in April 1985 and, as amended, still governs the facility’s sale of energy and capacity. It provides for capacity payments based on performance and, since the 11th contract year, for energy payments based on short-run avoided cost (SRAC). In recent years the SRAC calculation has led to energy payments sufficiently low that . Given that situation, the parties executed an amendment to the QF agreement in October 2011 that provided price relief, setting energy price to $75/MWh, subject to a cap on all-in payments of $100.43/MWh. The 2011 price amendment had a term of three years with two options for PG&E to extend the term at its sole discretion, by one year and then by an additional eleven months. In 2015, when PG&E agreed to exercise its option for the second extension of price relief into the October 2015 – August 2016 eleven-month period, the parties agreed to set for that period. Both energy price and all-in payment cap in this last eleven months first three years of the 2011 amendment. The facility was brought into commercial operation in 1989. Its annual production, based on public filings, averaged about 221 GWh/year over the 2011-2015 period for a capacity utilization of 81%, compared to contract quantity of 216 GWh/year specified in the 2011 amendment.4 In October 2015, the Governor issued an emergency proclamation on tree mortality associated with the ongoing drought in California. Among other things the proclamation ordered XxxXxxx and other agencies to identify high hazard zones for wildfire and falling trees, and ordered the CPUC to use its authority to extend contracts on existing bioenergy projects that receive feedstock from high hazard zones. BFP’s facility is one of the biomass- fueled generators that is closest to CalFire-designated HHZs; the boundary of the nearest HHZ is perhaps a mile from the project. The only closer biomass-fueled facilities are two that are actually sited within HHZs, one of which has ceased operation. EIF management approached PG&E in April 2016 with a concern about the impending expiration of the price amendment. The parties discussed various issues about the possibility of new contracting, including whether the use of mill waste from the adjacent Xxxxxx Xxxxx sawmill could count towards requirements for HHZ fuel content. No next steps regarding a specific proposal were forthcoming. Also in April 2016, PG&E was contacted by . PG&E commun...
