ALJ/BWM/tcg Mailed 10/23/2006
Decision 06-10-050 October 19, 2006
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 06-05-027 (Filed May 25, 2006) |
OPINION ON REPORTING AND COMPLIANCE METHODOLOGY
FOR RENEWABLES PORTFOLIO STANDARD PROGRAM
Title Page
OPINION ON REPORTING AND COMPLIANCE METHODOLOGY
FOR RENEWABLES PORTFOLIO STANDARD PROGRAM 1
1. Summary 2
2. Procedural Background 4
3. Revised Methodology 6
3.1. Guiding Principles 6
3.1.1. GP 2: Adhere to Prior Decisions 7
3.1.2. GP 4: Equal Application of All LSEs 7
3.1.3. GP 5: Simpler is Better 8
3.1.4. GP 7: Energy Counted Only Once 8
3.1.5. GP 8: Resource Neutrality 8
3.2. Methodology Based on Reporting 9
4. APT-Based Methodology 10
4.1. Simpler 11
4.2. Easier to Understand and Administer 13
4.3. Incorporates Incentives 14
4.4. Consistent with Law 16
4.5. Test of Proposals 18
5. Adopted Comments and Clarifications Regarding Initial Proposal 19
5.1. Three Years to Make Up Deficit 19
5.2. Carry Forward in Relation to IPT 20
5.3. 2003 Initial Baseline Procurement Amount 23
5.4. Banking of Surpluses 24
5.5. Other 24
6. Rejected Comments and Other Clarifications 24
6.1. Reject 100% Earmarking 25
6.2. Flexible Compliance in 2010 and Thereafter 25
TABLE OF CONTENTS
(Cont'd)
Title Page
6.3. Flexible Compliance Prior to 2010 30
6.4. Procurement Deficit Must Continue to be Reported 35
6.5. APT and IPT Based on Retail Sales 35
6.6. Estimation of Penalties 36
6.7. Ongoing Penalties 38
6.8. Alternative Approach 42
7. Timing of Reports and Reporting Format 44
7.1. Timing of Reports 44
7.2. Reporting Format 46
7.3. Updated Compliance Reports and Possible Enforcement 50
7.4. Ongoing Reporting 51
7.5. Updated Reporting Spreadsheet and Format 51
7.6. Requests for Confidential Treatment 52
8. Additional Resources 52
9. Categorization and Need for Hearing 54
10. Assignment of Proceeding 54
11. Comments on Proposed Decision 55
Findings of Fact 56
Conclusions of Law 59
ORDER 63
Attachment A - Renewables Portfolio Standard (RPS) Rules for Reporting
and Determining Compliance with RPS Procurement Targets
Attachment B - Tentative Schedule for Determining RPS Compliance
1. Summary
Senate Bill (SB) 1078, effective January 1, 2003, established the California Renewables Portfolio Standard (RPS) Program.1 The Program's objective is to increase the amount of California's electricity generated from renewable resources to meet several identified purposes.2
To achieve these purposes, each California load serving entity (LSE) is required each year to procure a minimum quantity of electricity from eligible renewable energy resources.3 The quantity is a specific percentage of total annual retail energy sales. The quantity must increase annually by at least 1% of retail sales compared to the procurement in the prior year, reaching 20% by 2010.
The legislation directs the Commission and the CEC to implement and administer the RPS Program. Commission implementation includes setting procurement targets and adopting rules for flexible compliance. The rules for flexible compliance must permit an LSE to apply excess procurement to subsequent years, or makeup inadequate procurement in one year within no more than the following three years. LSEs are permitted reasonable flexibility in complying with program requirements, but are subject to penalties for failure to comply. LSEs must periodically report targets and results.
The concepts and terms used for reporting electricity generated from RPS-eligible resources are stated in the legislation, Commission decisions, and CEC documents. We here adopt a revised paper (see Attachment A) prepared by Energy Division (ED) staff as the primary guide for reporting RPS Program targets and results. It consolidates, defines and clarifies the sometimes complex concepts and terms used for reporting and compliance. The adopted methodology applies equally to all LSEs. Unique aspects of the rules, if any, as they apply to ESPs, CCAs, and small and multi-jurisdictional investor owned utilities (IOUs) will be determined in Rulemaking (R.) 06-02-012.
Key elements of the adopted methodology and decisions made herein are:
· The adopted methodology requires reporting and assessment of actual annual procurement (AP) and the annual procurement target (APT); it does not require separate reporting and assessment of baseline procurement (BP) against a baseline procurement target (BPT), nor incremental procurement (IP) against the incremental procurement target (IPT).
· Each large IOU has a baseline procurement amount, but no procurement target, for 2003; the first year it has an APT is 2004; its 2003 initial baseline procurement amount is developed from 2001 RPS-eligible procurement.
· Each subsequent procurement target is calculated based on the prior year's target, not the prior year's actual procurement.
· Any RPS-eligible procurement may be used to satisfy any portion of the APT, including the IPT.
· An LSE is out of compliance with RPS targets in any year in which its actual AP is less than its APT; flexible compliance rules provide the opportunity for an LSE to defer enforcement while the LSE seeks to achieve compliance.
· Flexible compliance rules are clarified to be in relationship to the IPT, not APT.
· Existing flexible compliance applies to procurement through 2009 (allowing an excused 2009 deficit to be fulfilled by the end of 2012).
· The 20% target must be met in 2010 and beyond with actual deliveries, and more than 20% in 2010 and after may be required to fulfill prior deficits that have been deferred.
· Flexible compliance in 2010 and beyond is the subject of further comment, and will be addressed in a future decision.
Two compliance reports are due each year. A reporting format is adopted, and may be further modified, as provided herein. The three largest IOUs shall pay costs for contractors to be hired and managed by the Commission. This proceeding remains open.
1 Added by Stats. 2002, Ch. 516, Sec. 3, codified in Pub. Util. Code Article 16, §§ 399.11, et seq. All subsequent code section references are to the Public Utilities Code unless noted otherwise.
2 These purposes include increasing generation resource diversity, enhancing electric reliability, protecting and improving public health, improving environmental quality and benefits, promoting stable electricity prices, stimulating economic development, creating new employment opportunities, and reducing reliance on foreign fuels. (§ 399.11.)
3 LSEs are electrical corporations, electric service providers (ESPs), or community choice aggregators (CCAs). (§ 380(j).) LSEs, including ESPs and CCAs, are subject to the same basic RPS Program requirements as applicable to electrical corporations, even if the manner of their participation may vary. (§§ 380(e) and 399.11 et seq.; also see Decision (D.) 05-11-025, Finding of Fact 4, Conclusion of Law 2.) Eligible renewable resources are determined by the California Energy Commission (CEC) and may include (but are not limited to) wind, geothermal, bioenergy, small hydro, solar thermal, and photovoltaic. We note that the Order Instituting Rulemaking erroneously named Central California Power as a respondent in this proceeding. Central California Power has been a participant, and will remain on the service list as a party, but should be removed from the category of respondent. We took this same action recently in D.06-10-019.
