Common use of Consistency With Commission Guidelines for Bilateral Contracting Clause in Contracts

Consistency With Commission Guidelines for Bilateral Contracting. The Commission has developed guidelines for how the IOUs may enter into bilateral RPS contracts. In D.00-00-000, the Commission authorized entry into bilateral RPS contracts provided that such contracts did not require Public Goods Charge funds and were “prudent.”5 In D.00-00-000, the Commission again held that bilateral contracts were permissible provided that they were at least one month in duration, and also found that such contracts must be reasonable and submitted for Commission approval by advice letter.6 In addition, the Commission stated that bilateral contracts were not eligible for supplemental energy payments.7 Similarly, the Commission required that bilateral contracts be: (1) submitted for Commission approval; (2) longer than one month in duration; (3) do not receive above-market funds (“AMFs”); and (4) are deemed reasonable by the Commission.8 Finally, in D.00-00-000, the Commission determined that bilateral contracts should be reviewed using the same standards as contracts resulting from RPS solicitations.9 The Amended PPA satisfies the four requirements listed above and the requirements of D.00-00-000. The Original PPA was approved by the Commission in Resolution E-4340 on July 29, 2010, and the Amended PPA is being submitted for approval through this Advice Letter. The Amended PPA is not eligible for AMFs because it resulted from bilateral negotiations. The Amended PPA has a 25-year term, and is therefore longer than one month in duration. Finally, as PG&E explains in attached Confidential Appendix D, the terms and conditions in the Amended PPA do not materially change the economics of the Project for PG&E as compared to the Original PPA. In Resolution E- 4340, the Commission concluded that: “[t]he total all-in costs of the Rice Solar Energy, LLC power purchase agreement are reasonable based on their relation to bids received in response to Pacific Gas & Electric Company’s 2009 solicitation for renewable resources.”10 5 D.00-00-000 at pp. 57-58. 6 D.00-00-000 at p. 29. 7 Id. at p. 31. 8 Resolution E-4216 at p. 5. 9 D.00-00-000 at p. 29. 10 Resolution E-4340, Findings and Conclusions No.7.

Consistency With Commission Guidelines for Bilateral Contracting. The parties have an existing QF contract, and discussions pursuant to that QF contract led both parties to explore an alternative contract structure with different terms and conditions that would extend the relationship. The Commission has developed guidelines for how 4 Pub. Util. Code § 399.14(a)(3). 5 D.00-00-000 at 73. pursuant to which the IOUs utilities may enter into bilateral RPS contracts. In D.00-00-000, the Commission authorized entry into bilateral RPS contracts provided that such contracts did not require Public Goods Charge funds and were “prudent.”5 In ”6 Later, in D.00-00-000, the Commission again held that bilateral contracts were permissible provided that they were at least one month in duration, and also found that such contracts must be reasonable and submitted for Commission approval by advice letter.6 In additionletter.7 Also in that decision, the Commission stated that bilateral contracts were not eligible for supplemental energy payments.7 Similarly, the Commission required that bilateral contracts be:payments.8 (1) the contract is submitted for Commission approvalapproval by advice letter; (2) the contract is longer than one month in duration; (3) do the contract does not receive above-above market funds (“AMFs”); and (4) are the contract is deemed reasonable by the Commission.8 FinallyCommission.9 The Commission noted that it would be developing evaluation criteria for bilateral contracts, but that the above four requirements would apply in D.00-00-000, the Commission determined that bilateral contracts should be reviewed using the same standards as contracts resulting from RPS solicitations.9 interim.10 The Amended PPA Agreement satisfies the four requirements listed above and the requirements of D.00-00-000above. The Original PPA was approved by the Commission in Resolution E-4340 on July 29, 2010, and the Amended PPA Agreement is being submitted for approval through via this Advice Letter. The Amended PPA Letter and is not eligible for AMFs because it resulted from bilateral negotiations. The Amended Woodland PPA has is for a 25-year term, and is therefore term longer than one month in durationmonth. Finally, the PPA is reasonable, both with respect to price and other terms, as PG&E explains demonstrated in this Advice Letter and in the attached Confidential Appendix D, Appendices. The Commission should therefore approve the terms and conditions in the Amended PPA do not materially change the economics of the Project for PG&E as compared to the Original PPA. In Resolution E- 4340, the Commission concluded that: “[t]he total all-in costs of the Rice Solar Energy, LLC power purchase agreement are reasonable based on their relation to bids received in response to Pacific Gas & Electric Company’s 2009 solicitation for renewable resources.”10 5 D.00-00-000 at pp. 57-58. 6 D.00-00-000 at p. 29. 7 Id. at p. 31. 8 Resolution E-4216 at p. 5. 9 D.00-00-000 at p. 29. 10 Resolution E-4340, Findings and Conclusions No.7.

Consistency With Commission Guidelines for Bilateral Contracting. The PG&E and Xxxxxx negotiated the PPA on a bilateral basis. PG&E proceeded with bilateral negotiations for this project because it has a reasonable price, is an existing resource, and can provide for immediate deliveries of RPS-eligible energy. If PG&E had required the Seller to bid into its 2010 Solicitation, deliveries from the project would have been delayed substantially. To address the issue of bilateral contracting, the Commission has developed guidelines for how the IOUs pursuant to which utilities may enter into bilateral RPS contracts. In D.00-00-000, the Commission authorized entry into bilateral RPS contracts contracts, provided that such contracts did not require Public Goods Charge funds and were “prudent.”5 In ”3 Later, in 2 Pub. Util. Code § 399.14(a)(3). D.00-00-000, the Commission again held that bilateral contracts were permissible provided that they were at least one month in duration, and also found that such contracts must be reasonable and submitted for Commission approval by advice letter.6 In additionletter.4 Also in that decision, the Commission stated that bilateral contracts were not eligible for supplemental energy payments.7 Similarly, the Commission required that bilateral contracts be:payments.5 (1) the contract is submitted for Commission approvalapproval by advice letter; (2) the contract is longer than one month in duration; (3) do the contract does not receive above-market funds (“AMFs”); and (4) are the contract is deemed reasonable by the Commission.8 FinallyCommission.6 The Commission noted that it would be developing evaluation criteria for bilateral contracts, but that the above four requirements would apply in the interim.7 On June 19, 2009, the Commission issued D.00-00-000, the Commission determined 000 establishing price benchmarks and contract review processes for short-term and bilateral RPS contracts. D.00-00-000 provides that bilateral contracts should be reviewed using the same standards as contracts resulting from RPS solicitations.9 solicitations. The Amended PPA satisfies the four requirements listed above and the requirements of D.00D.09- 06-00-000050. The Original PPA was approved by the Commission in Resolution E-4340 on July 29, 2010, and the Amended PPA is being submitted for approval through via this Advice Letter. The Amended PPA Letter and is not eligible for AMFs because it resulted from bilateral negotiations. The Amended PPA has a 25-year term, and PPA’s term is therefore longer than one month in duration; it has a term of 20 years. Finally, the PPA is reasonable when considered against the pricing and other standards used for evaluating contracts resulting from PG&E’s 2009 RPS Solicitation, as PG&E explains in this Advice Letter and in the attached Confidential Appendix D, Appendices. The Commission should therefore approve the terms and conditions in the Amended PPA do not materially change the economics of the Project for PG&E as compared to the Original PPA. In Resolution E- 4340, the Commission concluded that: “[t]he total all-in costs of the Rice Solar Energy, LLC power purchase agreement are reasonable based on their relation to bids received in response to Pacific Gas & Electric Company’s 2009 solicitation for renewable resources.”10 5 4 D.00-00-000 at pp29. 57-585 Id. at 31. 6 D.00-00-000 at p. 29. 7 Id. at p. 31. 8 Resolution E-4216 at p. 5. 9 D.00-00-000 at p. 29. 10 Resolution E-4340, Findings and Conclusions No.7.

Consistency With Commission Guidelines for Bilateral Contracting. The PG&E and SPI negotiated the PSA on a bilateral basis in 2009 prior to the Commission has authorizing the solicitation of REC-only transactions in the annual RPS Solicitations. On October 29, 2009 PG&E filed A.00-00-000 seeking Commission approval of the PSA with SPI. In a Ruling, dated April 22, 2010, XXX Xxxxx ordered PG&E to seek approval of the contracts in A.00-00-000 using a Tier 3 advice letter process for RPS contracts and 3 Pub. Util. Code § 399.14(a)(3). present the information required by D.00-00-000 for advice letters seeking approval of contracts for procurement of unbundled RECs. On May 12, 2010, the Commission issued D.00-00-000 that stayed D.00-00-000. On January 14, 2011, the Commission issued D.00-00-000 that modified D.00-00-000 and lifted the stay of D.00-00-000 imposed by D.00-00-000. PG&E negotiated the amendments to the original agreement with SPI, resulting in the Amended and Restated PSA, in order to comply with additional Commission requirements in D.00-00-000 as amended by D.00-00-000. Rather than requesting that SPI bid the TRECs into PG&E’s 2011 RPS Solicitation, PG&E and SPI proceeded with bilateral negotiations because the transaction was offered at a competitive price and will provide deliveries of RPS-eligible TRECs during the 2010-2013 RPS flexible compliance period, which will help PG&E achieve its RPS goals.4 To address the issue of bilateral contracting, the Commission developed guidelines for how the IOUs pursuant to which utilities may enter into bilateral RPS contracts. In D.00-00-000, the Commission authorized entry into bilateral RPS contracts contracts, provided that such contracts did not require Public Goods Charge funds and were “prudent.”5 In Later, in D.00-00-000, the Commission again held that bilateral contracts were permissible provided that they were at least one month in duration, and also found that such contracts must be reasonable and submitted for Commission approval by advice letter.6 In additionAlso in that decision, the Commission stated that bilateral contracts were not eligible for supplemental energy payments.7 Similarly, the Commission required that bilateral contracts be: (1) submitted for Commission approval; (2) longer than one month in duration; (3) do not receive aboveBased on D.00-market funds (“AMFs”); 00-000 and (4) are deemed reasonable by the Commission.8 Finally, in D.00-00-000, the Commission determined that set forth the following four requirements for approval of bilateral contracts should be reviewed using in a Resolution approving a bilateral RPS contract executed by PG&E: (1) the same standards as contracts resulting from RPS solicitations.9 The Amended PPA satisfies the four requirements listed above and the requirements of D.00-00-000. The Original PPA was approved by the Commission in Resolution E-4340 on July 29, 2010, and the Amended PPA contract is being submitted for approval through this Advice Letter. The Amended PPA is not eligible for AMFs because it resulted from bilateral negotiations. The Amended PPA has a 25-year term, and is therefore longer than one month in duration. Finally, as PG&E explains in attached Confidential Appendix D, the terms and conditions in the Amended PPA do not materially change the economics of the Project for PG&E as compared to the Original PPA. In Resolution E- 4340, the Commission concluded that: “[t]he total all-in costs of the Rice Solar Energy, LLC power purchase agreement are reasonable based on their relation to bids received in response to Pacific Gas & Electric Company’s 2009 solicitation for renewable resources.”10 5 D.00-00-000 at pp. 57-58. 6 D.00-00-000 at p. 29. 7 Id. at p. 31. 8 Resolution E-4216 at p. 5. 9 D.00-00-000 at p. 29. 10 Resolution E-4340, Findings and Conclusions No.7.by advice letter;

Consistency With Commission Guidelines for Bilateral Contracting. PG&E negotiated the PPA on a bilateral basis because of the timing of negotiations. Bilateral negotiations started after the end of the 2009 RPS Solicitation in August 2009. By beginning negotiations rather than waiting until the following Solicitation, PG&E was able to secure a PPA for a highly viable project that provides for deliveries of RPS- eligible power by 2012. The Commission has developed guidelines for how the IOUs utilities may enter into bilateral RPS contracts. In D.00-00-000, the Commission authorized entry into bilateral RPS contracts provided that such contracts did not require Public Goods Charge funds and were “prudent.”5 In ”2 Later, in D.00-00-000, the Commission again held that bilateral contracts were permissible provided that they were at least one month in duration, and also found that such contracts must be reasonable and submitted for Commission approval by advice letter.6 In additionletter.3 Also in that decision, the Commission stated that bilateral contracts were not eligible for supplemental energy payments.7 Similarly, the Commission required that bilateral contracts be:payments.4 (1) the contract is submitted for Commission approvalapproval by advice letter; (2) the contract is longer than one month in duration; (3) do the contract does not receive above-market funds (“AMFsAMF”); and (4) are the contract is deemed reasonable by the Commission.8 FinallyCommission.5 The Commission noted that it would be developing evaluation criteria for bilateral contracts, but that the above four requirements would apply in the interim.6 On June 19, 2009, the Commission issued D.00-00-000, the Commission determined 000 establishing price benchmarks and contract review processes for short-term and bilateral RPS contracts. D.00-00-000 provides that bilateral contracts should be reviewed using the same standards as contracts resulting from RPS solicitations.9 The Amended PPA satisfies the four requirements listed above and the requirements of D.00-00-000. The Original PPA was approved by the Commission in Resolution E-4340 on July 29, 2010, and the Amended PPA is being submitted for approval through this Advice Letter. The Amended PPA is not eligible for AMFs because it resulted from bilateral negotiations. The Amended PPA has a 25-year term, and is therefore longer than one month in duration. Finally, as PG&E explains in attached Confidential Appendix D, the terms and conditions in the Amended PPA do not materially change the economics of the Project for PG&E as compared to the Original PPA. In Resolution E- 4340, the Commission concluded that: “[t]he total all-in costs of the Rice Solar Energy, LLC power purchase agreement are reasonable based on their relation to bids received in response to Pacific Gas & Electric Company’s 2009 solicitation for renewable resources.”10 5 solicitations.7 2 D.00-00-000 at pp. 57-58. 6 3 D.00-00-000 at p. 29. 7 4 Id. at p. 31. 8 5 Resolution E-4216 at p. 5. 9 D.00-00-000 at p. 29. 10 Resolution E-4340, Findings and Conclusions No.7.6 Id.