Settlement Agreement Frequently Asked Questions
GENERAL QUESTIONS
CONTRACTING OPTIONS
- Q3. What Settlement Contracts am I eligible for?
- Q4. What options are available to renewable QF generators under the Settlement Agreement?
- Q5. How does the Assembly Bill 1613 (AB 1613) CHP Program fit in with the terms of the Settlement Agreement?
- Q6. What if my contract is not expiring any time soon? Does the Settlement Agreement require me to take any action?
- Q7. What does “Utility Prescheduled Facility” mean?
- Q8. The Settlement Agreement does not provide a pro forma contract for a Utility Prescheduled Facility (UPF). Will SCE develop and publish such a pro forma contract?
CONTRACT PRICING
- Q9. Does the QF fixed price agreement from SCE’s recent RFO conflict with the Settlement Agreement?
- Q10. How will the new SRAC methodology affect payments that I receive under my existing contract?
- Q11. What are the capacity payments under the Settlement Agreement?
INTERCONNECTION
- Q12. Do some current QF contracts have the Power Purchase and Interconnection Agreements together?
- Q13. Does my interconnection agreement expire if my legacy QF contract expires?
- Q14. If I want to sell my generating output to an entity other than SCE, may I apply for a Rule 21 Interconnection Agreement?
- Q15. What happens to the interconnection agreement for a project that repowers?
- Q16. Will SCE need to perform a re-study of a QF prior to execution of a new interconnection agreement?
- Q17. What do I do if I have questions about my interconnection with SCE?
Q1. When is the Settlement Effective Date?
A. Specific date is unknown at this time. The Settlement Agreement does not become effective until (i) there is a final and non-appealable FERC approval of an application by the California Investor Owned Utilities (lOUs) to terminate their obligation pursuant to the PURPA to purchase from QFs greater than 20 MW, and (ii) the Settlement Agreement becomes final and non-appealable at the CPUC, without revisions unacceptable to any Party. The first condition was met on June 16, 2011 when FERC approving the IOUs 210(m) application. The second condition has not yet been met; the Parties to the Settlement Agreement are waiting on a CPUC ruling, anticipated for the fourth quarter of 2011, on a petition for modification of D.11-07-010 related to cost allocation terms.
Q2. When will the CHP RFO launch?
A. The Settlement Agreement requires the launch of the CHP RFO within 90 days after the Settlement Effective Date.
Q3. What Settlement Contracts am I eligible for?
| Current Project Contracting Status | Project Size | ||
|---|---|---|---|
| ≤ 5 MW | > 5 MW, ≤ 20 MW | > 20 MW | |
| No contract; New Project | PURPA | PURPA CHP PPA*+ |
Optional As-Available CHP PPA*+ |
| Contract expired/expiring before Settlement Effective Date on Extension | PURPA Transition |
PURPA Transition CHP PPA*+ |
Optional As-Available+ Transition CHP PPA*+ |
| Contract expiring after Settlement Effective Date and before July 1, 2015 | Legacy Amendment Transition PURPA Legacy → PURPA Transition → PURPA |
Legacy Amendment Transition PURPA Legacy → PURPA Transition → PURPA Legacy → CHP PPA*+ Transition → CHP PPA*+ CHP PPA*+ |
Legacy Amendment Transition Optional As-Available+ Legacy → CHP PPA*+ Legacy → Optional As-Available+ Transition → CHP PPA*+ CHP PPA*+ |
| Contract expiring after July 1, 2015 | Legacy Amendment PURPA Legacy → PURPA |
Legacy Amendment PURPA Legacy → PURPA Legacy → CHP PPA*+ CHP PPA*+ |
Legacy Amendment Optional As-Available+ Legacy → CHP PPA*+ Legacy → Optional As-Available+ CHP PPA*+ |
* Awarded through CHP RFO solicitation (CHP PPA includes a Utility Prescheduled Facility PPA currently under development).
+ Contracts Eligible for CHP facilities only
To view the specific contracts, visit the CHP website.
Q4. What options are available to renewable QF generators under the Settlement Agreement?
A. Upon the Settlement Effective Date, a “20 MW PURPA PPA” will be available for small power production facility QFs that are 20 MW or less. Generators that qualify as “eligible renewable resources” under California Public Utilities Code Section 399.12 may participate in SCE’s Renewable Portfolio Standard programs or can pursue other market opportunities.
Q5. How does the Assembly Bill 1613 (AB 1613) CHP Program fit in with the terms of the Settlement Agreement?
A. AB 1613 is a CHP program adopted by California that is still in development. The AB 1613 program is proposed to provide standard PPAs for efficient CHP projects up to and including 20 MW. Additional program requirements will apply.
Q6. What if my contract is not expiring any time soon? Does the Settlement Agreement require me to take any action?
A. No, the Settlement Agreement does not require you to take any action. However, the Settlement Agreement provides choices (a Legacy Amendment with different energy pricing options and new PPAs after expiration of the current contract). Please note, Legacy amendments are only available within 180 days of the Settlement Effective Date and Transition contracts will terminate no later than July 1, 2015. Be sure to plan in advance for transition to a new PPA to avoid any issues and take into account the fact that your existing interconnection agreement may be linked with your existing legacy QF PPA; you should investigate what steps you will need to take to transition to a new interconnection agreement upon termination of your legacy QF PPA.
Q7. What does “Utility Prescheduled Facility” mean?
A. Per the Settlement Agreement, a Utility Prescheduled Facility is an Existing CHP Facility that has changed operations to convert to a utility controlled scheduled dispatchable generation facility, including but not limited to an Exempt Wholesale Generator (defined in the Settlement Agreement).
Q8. The Settlement Agreement does not provide a pro forma contract for a Utility Prescheduled Facility (UPF). Will SCE develop and publish such a pro forma contract?
A. SCE may develop a pro forma UPF contract based on existing SCE pro formas from other SCE solicitations. If and when a pro forma is developed and complete, SCE will post the UPF pro forma on its CHP website.
Q9. Does the QF fixed price agreement from SCE’s recent RFO conflict with the Settlement Agreement?
A. No. The terms of the fixed price agreement addresses how that agreement interacts with the Settlement Agreement. QFs on the fixed price agreement are not prevented from signing Legacy Amendments but pricing under the Legacy Amendments will not be effective until the termination of the fixed price agreement. QFs with further questions on this subject should contact their SCE QF contract manager.
Q10. How will the new SRAC methodology affect payments that I receive under my existing contract?
A. The new SRAC methodology has three main differences: (1) the Location Adjustment replaces the Distribution Loss Factors, (2) it reflects GHG compliance costs and charges, and (3) it will use negotiated administrative heat rates for 2011-2014 and a Market Heat Rate for 2015 and beyond. Due to the comprehensiveness of the SRAC methodology, we encourage you to review Section 10 of the Settlement Agreement for the SRAC formula and additional details regarding its implementation.
Q11. What are the capacity payments under the Settlement Agreement?
A. Capacity payments for existing contracts are not modified under the Settlement Agreement. The capacity payments for new PPAs will be calculated as outlined in CPUC Decision 07-09-040; i.e., Firm Capacity at $91.97/kW-yr, As-Available currently at $41.22/kW-yr and adjusted on an annual basis. However, capacity payments for CHP RFO PPAs will be paid as bid if selected in the competitive process.
Q12. Do some current QF contracts have the Power Purchase and Interconnection Agreements together?
A. It depends on the individual project agreement. Going forward, new agreements will be split into two individual parts: (1) a PPA (through SCE’s Renewable and Alternative Power department), and (2) an Interconnection Agreement (through SCE’s Grid Interconnection department, CAISO, or other interconnection provider).
Q13. Does my interconnection agreement expire if my legacy QF contract expires?
A. It depends on your specific contract, but generally speaking under the legacy QF contracts, the interconnection agreement will terminate upon expiration of the QF power purchase agreement. To maintain your interconnection status, you will be required to sign a new interconnection agreement.
Q14. If I want to sell my generating output to an entity other than SCE, may I apply for a Rule 21 Interconnection Agreement?
A. No. A QF that wants to sell to other entities or is unsure who they will sell to, must choose an interconnection agreement subject to SCE's Wholesale Distribution Access Tariff (WDAT). Only QFs < 20 MW, interconnected at the distribution level, and who sell all their net output to SCE, may choose the Rule 21 Agreement.
Q15. What happens to the interconnection agreement for a project that repowers?
A. A QF that repowers will require a Material Modification Evaluation by SCE Engineering. If there has been a Material Modification to the facility (e.g., an increase in capacity) then a re-study of the QF will be required before a new interconnection agreement can be executed with SCE. The QF will need to sign a study agreement and provide a deposit. In addition, SCE Engineering may require safety- and reliability-related upgrades to a QF to bring the facility up to current SCE standards. If such upgrades are required, the QF is responsible for paying for the upgrades and providing the necessary deposit at the time a new Interconnection Agreement is executed.
Q16. Will SCE need to perform a re-study of a QF prior to execution of a new interconnection agreement?
A. If a QF has made no changes in equipment or capacity since its existing Interconnection Facilities Agreement (which is an attachment to the PPA) was executed, the QF must submit a letter to SCE affirming this information. (A notarized Affidavit is not required.) A QF that submits such a letter cannot be re-studied, provided SCE Engineering verifies the information in the letter. However, SCE Engineering may require safety- and reliability-related upgrades to a QF to bring the facility up to current SCE standards. If such upgrades are required, the QF is responsible for paying for the upgrades and providing the necessary deposit. These additional facilities would be included in an Attachment to the new Interconnection Agreement.
If there is an equipment change, but no change in capacity, the project likely will not have to be restudied. Seller, however, is required to submit an affidavit stating that there is no change to the project capacity. SCE engineers will then visit the site to confirm that there is no change to the project capacity, and also inspect the site to assure that the project satisfies the telemetry requirements. A repowered facility that results in expanded capacity can trigger a material modification evaluation, the result of which may require a restudy.
Q17. What do I do if I have questions about my interconnection with SCE?
A. For questions regarding the interconnection of your generating facility, please send your questions in an email with the word "Question" typed into the subject line to InterconnectionQA@sce.com.
Disclaimer: The information on this page relating to the CHP Settlement (including any presentations prepared by SCE and any imbedded links) is provided by SCE as a convenience to the public. This information may not completely or accurately describe or link to all relevant provisions of the CHP Settlement, and expressly does not constitute legal advice to or for any party. A party should consult with appropriate experts to determine the effect of the CHP Settlement on any specific transaction, agreement, relationship, or circumstance. The publication of the information on this page does not constitute an offer to buy or sell electricity. Every CHP purchase agreement between SCE and any party is subject to SCE management approval and the prior execution of definitive documents by both parties.
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