Section 2821.5 Of Article 3. Rights, Obligations, And Charges From California Public Utilities Code >> Division 1. >> Part 2. >> Chapter 7. >> Article 3.
2821.5
. The Legislature finds and declares all of the following:
(a) Small power producers provide important alternative sources of
electrical energy.
(b) The commission is required to approve and establish equitable
charges to be paid by electrical corporations which purchase
electricity or electrical generating capacity, or both, from
qualifying small power producers.
(c) The commission recognized the importance of developing
standard offer contracts based on long-run avoided costs in order to
encourage the development of qualifying small power producers. On
September 7, 1983, in Decision 83-09-054, the commission approved
interim standard offer No. 4, which established a long-term power
purchase contract.
(d) Many pioneer small power producers operating prior to
September 7, 1983, did so under power purchase contracts based on
short-term energy prices and long-term capacity prices. When interim
standard offer No. 4 was approved, the commission allowed its
provisions to be offered to qualified facility projects which had not
yet obtained construction financing or otherwise entered a contract
and started construction. Pioneer small power producers with existing
contracts were not allowed to switch to the new interim standard
offer No. 4 until their existing contracts were no longer in effect.
(e) On April 17, 1985, pursuant to Decision 85-04-075, the
commission suspended all payment options offered under interim
standard offer No. 4 due to the contrasting of excessive energy
capacity, and the conclusion that prices were too high.
(f) Many qualifying small power producers who were operating under
contracts made prior to September 7, 1983, were thus precluded by
the commission from adopting interim standard offer No. 4, and may be
required to accept new prices and terms which provide less
compensation than the suspended interim standard offer No. 4.
(g) These financially stressed qualifying small power producers
assert they were unfairly denied the opportunity to adopt interim
standard offer No. 4 by the commission. They also assert that much of
the capacity contracted for under the suspended interim standard
offer No. 4 will never be constructed. They further allege that they
are being forced to close small powerplants which are currently in
operation while producers with interim standard offer No. 4 contracts
are constructing new plants.