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ALJ/MSW/sid Mailed 12/20/2005


Order Instituting Rulemaking to Consider Refinements to and Further Development of the Commission's Resource Adequacy Requirements Program.



DECEMBER 15, 2005


RULEMAKING 05-12-013


1. Summary

We open this rulemaking to continue our efforts to ensure reliable and cost-effective electricity supply in California through refinement and augmentation of our adopted program of resource adequacy requirements (RAR). Under this program, established pursuant to Decision (D.) 04-01-050, D.04-10-035, and D.05-10-042, investor-owned utilities (IOUs) as well as the electric service providers (ESPs) and community choice aggregators (CCAs) operating within the IOUs' service territories (collectively, load serving entities or LSEs) are required to demonstrate that they have acquired the resources needed to meet their forecasted retail customer load plus a reserve margin.

The Commission has determined that certain RAR program elements that were proposed in earlier proceedings offer the prospect of more effective achievement of RAR goals but require further consideration before they can be adopted. This is the successor to the RAR portion of Rulemaking (R.) 04-04-003,1 and it will be the forum in which we consider such program elements. In particular, it will be the forum for consideration of local RAR. In addition, this rulemaking will be the primary forum in which the Commission reviews the requirements of Assembly Bill (AB) 380 (Stats. 2005, Chapter 367) and takes the steps necessary to ensure full implementation of this legislation. Finally, this is the forum for consideration of previously identified "second generation" RAR topics that include multi-year RAR, capacity tagging, and capacity markets.

The predecessor RAR proceeding (R.04-04-003) initially named the three large California IOUs as respondents. D.05-03-013 (as modified by D.05-03-035 and D.05-08-029) modified the April 1, 2004 order that instituted that rulemaking by naming registered ESPs and CCAs as respondents. Because this proceeding is the forum for implementing AB 380, which requires that RAR be established for all LSEs, we will adopt a more expansive approach and name as respondents all LSEs as defined in Pub. Util. Code § 380(j). We invite the participation of all parties who are interested in these efforts, including those who have actively participated in R.04-04-003 as well as municipal utilities, which may have an interest in how local area requirements are established for LSEs subject to our jurisdiction.

In D.05-10-042, we noted that the California Independent System Operator (CAISO) and the California Energy Commission (CEC) will each play an important role in the implementation and ongoing operation of the RAR program. We invite the CEC to join us in this proceeding by continuing the collaborative approach that both agencies pursued in the development of RAR in R.04-04-003. We also invite and welcome the active participation of the CAISO in this rulemaking, as careful coordination of the activities of the CAISO and those of this Commission is indispensable to the success of the RAR program.2

1 Order Instituting Rulemaking to Promote Policy and Program Coordination and Integration in Electric Utility Resource Planning, dated April 1, 2004.

2 We note that AB 380 provides that "[t]he commission, in consultation with the Independent System Operator, shall establish resource adequacy requirements for all load serving entities." (Pub. Util. Code § 380(a).) We expect that such consultation will include, but not be limited to, the CAISO's timely participation as a party to this proceeding.

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