ALJ/AES/sid Date of Issuance 6/19/2009
Decision 09-06-050 June 18, 2009
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Rulemaking to Continue Implementation and Administration of California Renewables Portfolio Standard Program. |
Rulemaking 08-08-009 (Filed August 21, 2008) |
DECISION ESTABLISHING PRICE BENCHMARKS AND CONTRACT
REVIEW PROCESSES FOR SHORT-TERM AND BILATERAL
PROCUREMENT CONTRACTS FOR COMPLIANCE WITH THE
CALIFORNIA RENEWABLES PORTFOLIO STANDARD
TABLE OF CONTENTS
Title Page
DECISION ESTABLISHING PRICE BENCHMARKS AND CONTRACT
REVIEW PROCESSES FOR SHORT-TERM AND BILATERAL
PROCUREMENT CONTRACTS FOR COMPLIANCE WITH THE
CALIFORNIA RENEWABLES PORTFOLIO STANDARD 2
1. Summary 2
2. Procedural Background 4
3. Discussion 7
3.1. General Considerations for Short-Term Contracts 7
3.2. Fast-track Treatment 8
3.3. Eligible Facilities 11
3.4. Price Reasonableness Benchmark 13
3.5. Confidentiality of Prices 20
3.6. Contract Terms and Conditions 21
3.7. Least-Cost Best-Fit 23
3.8. Review by Procurement Review Group and
Independent Evaluator 23
3.9. Application to Small Utilities 25
3.10. Application to Multi-Jurisdictional Utilities 25
3.11. PG&E and SCE Proposals 26
3.12. Bilateral Contracts 28
3.13. Implementation 30
4. Comments on Proposed Decision 30
5. Assignment of Proceeding 32
Findings of Fact 32
Conclusions of Law 34
ORDER.. 37
DECISION ESTABLISHING PRICE BENCHMARKS AND CONTRACT
REVIEW PROCESSES FOR SHORT-TERM AND BILATERAL
PROCUREMENT CONTRACTS FOR COMPLIANCE WITH THE
CALIFORNIA RENEWABLES PORTFOLIO STANDARD
1. Summary
This decision announces simplified and standardized procedures for Commission review of certain procurement contracts of investor-owned utilities under the renewables portfolio standard (RPS). The decision provides criteria for a fast-track review of RPS contracts that are less than 10 years in duration if the contracts meet specified criteria. The price will be considered per se reasonable and recoverable in rates if it satisfies the price benchmark requirements. The contract may be submitted for Commission approval using a Tier 2 advice letter if the contract is made with a generation facility that is in commercial operation or will commence commercial operation not later than six months from the date the contract is signed, contract price meets the price benchmark, the contract meets the requirements for contract terms and conditions, and the contract is otherwise consistent with all other applicable RPS program requirements.
Contracts of less than 10 years that do not meet the criteria for fast-track treatment may continue to be submitted for review and approval using the regular RPS Tier 3 advice letter process.
The specific requirements for contracts one month to four years in duration to receive fast-track review are:
● The contract is made with a generation facility that is in commercial operation or will commence commercial operation not later than six months from the date the contract is signed;
● The levelized price, including firming and shaping costs, over the life of the contract does not exceed a price benchmark calculated as 150% of the forward price for a contract of the same duration for non-renewable energy and that price does not exceed 90% of the market price referent for a contract of 10 years duration;
● The terms and conditions in the contract are the same (with allowance for minor modifications) as those provided in a pro forma contract submitted with the utility's RPS procurement plan and approved for use by the Commission;
● The contract is reviewed by the utility's Procurement Review Group and Independent Evaluator;
● The contract is consistent with the utility's least-cost best-fit criteria for RPS procurement; and
● The contract otherwise is consistent with the utility's approved RPS procurement plan.
For RPS contracts of four to 10 years in duration, the decision authorizes Energy Division staff to develop a price benchmark derived from the market price referent. It also authorizes the use of a Tier 2 advice letter if:
● The contract is made with a generation facility that is in commercial operation or will commence commercial operation not later than six months from the date the contract is signed;
● The levelized price, including firming and shaping costs, over the life of the contract is less than or equal to the price benchmark for a contract of that length;
● The terms and conditions in the contract are the same (with allowance for minor modifications) as those provided in a pro forma contract submitted with the utility's RPS procurement plan and allowed to be used by the Commission;
● The contract is consistent with the utility's least-cost best-fit criteria for RPS procurement;
● The contract is reviewed by the utility's Independent Evaluator and its Procurement Review Group; and
● The contract otherwise is consistent with the utility's approved RPS procurement plan.
Finally, the decision clarifies that the review by utilities and by Energy Division of contracts negotiated outside the context of an annual RPS solicitation (bilateral contracts) should apply the same standards as are applied to the review of contracts that are the result of a solicitation.
