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Order Instituting Rulemaking to Continue

Implementation and Administration of

California Renewables Portfolio Standard


Rulemaking 06-05-027

(Filed May 25, 2006)

Non-Modifiable: Each contract used for RPS compliance by an investor-owned utility (IOU), including a small or multi-jurisdictional utility (SMJU), must contain the 4 non-modifiable STCs. (See Decision (D.) 04-06-014, Appendix A, D.07-02-011; D.07-05-057; D.07-11-025, Attachment A.) Each contract used for RPS compliance by a load-serving entity (LSE) other than an IOU must also contain the non-modifiable STCs, with the exception of STC 1 (CPUC Approval.) (See D.06-10-019.)

Modifiable: The model contract initially used by each buyer3 in soliciting bids from project developers/sellers for purposes of RPS compliance must include the Commission's most recently adopted language for the 9 modifiable STCs. Model contracts of electrical corporations may, in the alternative, employ language subsequently accepted by the Commission as part of the periodic review and acceptance, rejection or modification of an electrical corporation's procurement plan. Such language, however, must continue to apply the principles behind each modifiable STC, and remain consistent with all applicable laws and regulations. Electrical corporations must use reasonable efforts to propose uniform and consistent language in their model contracts over time and among electrical corporations. For the final contract, seller and buyer (inclusive of all LSEs under the RPS program) may negotiate different language for each modifiable STC (or agree to delete the term if it is not applicable), as long as the result remains consistent with all applicable laws and regulations. (See D.04-06-014, Appendix A; D.07-11-025, in particular pp. 22-23, 26 and Ordering Paragraph 1.)

"Each of the ten remaining terms [the modifiable STCs] is important, and each contract should contain something on each item, to the extent applicable. Each contract, for example, should address important matters such as contract duration (STC 5: Contract Term), certain expectations (STC 7: Performance Standards), applicable definitions (STC 8: Product Definitions), and consequences of failure (STC 9: Non-Performance or Termination Penalties and Default Provisions). The desire for flexibility does not outweigh the state's interest in each contract containing something on a minimum number of important terms. In fact, STCs must include `performance requirements for renewable generators.' (§ 399.14(a)(2)(D).) Even if we desired to grant this part of petitioners' request, we could not do so." (D.07-11-025, p. 20.)

"Second, we do not eliminate but keep the five remaining terms as modifiable. These are: STC 7 (Performance Standards), STC 8 (Product Definitions), STC 9 (Non-Performance Penalties), STC 12 (Credit Terms), and STC 18 (Prevailing Wages). We do this, as stated above, because we believe every contract should contain something on each of these minimal but important items, and in the case of performance requirements, the contract must contain this term." (Id., pp. 21-22.)

"We point out regarding parties' modifications to any of the ten modifiable STC that such modifications, if any, must continue to be consistent with law and government regulation. For example, parties may modify the STC regarding confidentiality, but the modified term must still comply with all applicable laws regarding confidentiality, including all Commission orders (e.g., D.06-06-066)." (Id., p. 22.)

1 See, for example, the "Comments of San Diego Gas & Electric Company to the Proposed Decision Conditionally Accepting Procurement Plans for 2008 RPS," January 31, 2008, page 7.

2 SB 1036 (Stats. 2007, Ch. 685) removed SEP funding of the above market costs incurred by certain projects.

3 This includes all LSEs under the RPS Program, such as IOUs (including SMJUs), electric service providers (ESPs) and community choice aggregators (CCAs).

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