Conclusions of Law

1. The Commission should not hold LSEs accountable for changes in a resource's QC that may be identified by the CAISO after the list is established on or about July 1 of each year; thus, for the applicable RAR compliance year, LSEs should not be subject to any Commission-imposed penalty or Commission-imposed replacement procurement obligation as the result of a forced outage of a unit that was on the CAISO's QC list and used by the LSE in fulfillment of its RAR procurement obligation.

2. Because the reserve margin adopted in D.04-01-050 encompasses forced outages, LSEs should not be required to engage in replacement procurement following a forced outage.

3. The consensus QC counting protocol for scheduled outages that is set forth in the foregoing discussion should be adopted.

4. For purposes of the RAR program, unit derates during an RAR compliance year should be reflected in the next year's QC list.

5. The Commission should not decide or impose any specific credit requirements for a standard capacity product, as those requirements will be determined by the individual companies based upon internal risk controls.

6. The Commission intends to continue to pursue any additions and refinements to the RAR program through an open, participatory process, with due consideration of the need for reasonable program stability and certainty.

7. To reduce contracting risk and encourage development of RAR capacity products and their use by LSEs in satisfying their procurement obligations, the required elements of a standard RA capacity contract set forth in the foregoing discussion should be approved in place of the contract elements approved in D.05-10-042. Capacity products that conform to these elements will be accepted for purposes of Year-Ahead and Month-Ahead compliance filings by LSEs for both System and Local RAR.

8. The RAR filing guides and templates and instructions developed by the Energy Division should be approved, and the Energy Division should be authorized to modify those templates and instructions and promulgate additional filing procedures and instructions as necessary for the orderly implementation of the adopted RAR program and the changing needs of the program.

9. Failure of an LSE to submit a compliance filing in accordance with the filing instructions and reporting templates promulgated by the Energy Division may be deemed a violation of a Commission order.

ORDER

IT IS ORDERED that:

1. The Commission's Resource Adequacy Requirements program is modified and clarified as set forth in the foregoing discussion, findings of fact, and conclusions of law.

2. The Executive Director shall ensure that Commission staff undertakes the activities identified for staff in the foregoing discussion, findings, and conclusions.

3. Pacific Gas and Electric Company, San Diego Gas & Electric Company, and Southern California Edison Company (the IOUs) are authorized to use resource adequacy (RA) capacity products that meet the terms of this decision for 2007 procurement. The IOUs shall, on or before September 1, 2006, amend their Long Term Procurement Plans to provide details of how they will use RA products in 2007.

4. Phase 1 of this proceeding is concluded; the proceeding remains open for consideration of issues listed in the Scoping Memo that are not resolved by Decision 06-06-064 or by today's order.

This order is effective today.

Dated July 20, 2006, at San Francisco, California.

Previous PageTop Of PageGo To First Page