ALJ/JMH/niz DRAFT Agenda ID # 5624
Quasi-Legislative
Decision DRAFT DECISION OF ALJ HALLIGAN (Mailed 4/25/2006)
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Order Instituting Investigation to Facilitate Proactive Development of Transmission Infrastructure to Access Renewable Energy Resources for California |
Investigation 05-09-005 (Filed September 8, 2005) |
OPINION ON PROCEDURES TO IMPLEMENT THE COST RECOVERY PROVISIONS OF PUBLIC UTILITIES CODE SECTION 399.25
TABLE OF CONTENTS
Title Page
OPINION ON PROCEDURES TO IMPLEMENT THE COST RECOVERY PROVISIONS OF PUBLIC UTILITIES CODE SECTION 399.25 11
IV. Implementation of Section 399.25 99
A. Revisions to D.03-07-033 1414
B. Eligibility for § 399.25 Cost Recovery 1818
C. Section 399.25 Cost Recovery Mechanism 2424
V. Comments on Draft Decision 3131
VI. Assignment of Proceeding 3131
Attachment A - List of Acronyms and Abbreviations
I. Summary1
In this order, we evaluate and adopt specific policies and procedures to implement the cost recovery provisions of Pub. Util. Code § 399.25. Section 399.252 was enacted on September 12, 2002, as part of Senate Bill (SB) 1078,3 and is intended to facilitate California's use of renewable energy resources. Section 399.25 directs the Commission to deem necessary those transmission facilities identified in certificate applications if the proposed facilities are necessary to facilitate achievement of the State's renewable power goals. Section 399.25 also provides a "backstop" cost mechanism allowing the utilities to recover through retail rates any costs of the above facilities that are not approved by the Federal Energy Regulatory Commission (FERC) for recovery through transmission rates. Today's order clarifies how we intend to implement § 399.25 to provide the utilities and renewable resource developers with the cost recovery assurance to facilitate meeting the Renewable Portfolio Standard (RPS) goals. This decision adopts principles for implementing the requirements of § 399.25 that are in the public interest, because they will assist in our effort to ensure that California has the necessary transmission infrastructure in place in order to meet the RPS goals. The adopted principles are summarized below.
· Today's decision reaffirms our finding in Decision (D.) 03-07-033 that the provisions of § 399.25 apply to transmission facilities that come before the Commission in the form of a Certificate of Public Convenience and Necessity (CPCN) or Permit to Construct (PTC) application and that are deemed necessary to facilitate meeting the Renewable Portfolio Standard (RPS) goals.
· We modify our prior finding in D.03-07-033 to reflect that the provisions of § 399.25 apply to both "network"4 transmission facilities and high-voltage, "generation-tie"5 (gen-tie) transmission facilities that are deemed necessary to facilitate the achievement of the RPS goals.
· Findings concerning network benefits pursuant to § 399.25(b)(1) are not a prerequisite to the provision of backstop cost recovery under § 399.25(b)(4). While § 399.25(b) requires the Commission to take "all feasible actions" to ensure that the costs of transmission projects that are necessary to facilitate achievement of RPS goals are fully reflected in rates, including, but not limited to, making findings, where supported by the evidentiary record, that the transmission facilities in question provide network benefits, we find that each of the obligations listed in the four subsections of § 399.25 (b) operate independently of one another, and none is a prerequisite to any other.
· Transmission projects that meet the following qualifying criterion should be considered eligible for § 399.25 cost recovery: (1) new high-voltage, bulk-transfer, transmission facilities, whether classified as network or gen-tie, that are designed to serve multiple RPS-eligible generators6 where it has been established that the amount of added transmission capacity will likely be utilized by RPS-eligible generation projects within a reasonable period of time, and (2) transmission upgrades that are required to connect RPS-eligible resources with approved RPS power purchase contracts.
Requests for § 399.25 cost recovery for upgrades that do not meet the above criterion will be considered on a case-by-case basis in the applicable certificate proceeding.
In adopting these principles, this decision modifies certain findings previously adopted in D.03-07-033 to reflect our further consideration and subsequent events.
1 Attachment 1 explains each acronym or other abbreviation that appears in this decision.
2 All statutory references are to the Public Utilities Code unless otherwise stated.
3 (Stats. 2002, Ch. 516), adding Article 16 (California Renewables Portfolio Standard Program) to the Cal. Pub. Util. Code § 399.11, et seq. (2004) (SB 1078).
4 "Network" facilities are defined in FERC Order 2003 as "additions, modifications, and upgrades to the Transmission Provider's Transmission System required at or beyond the point at which the Interconnection Customer interconnects to the Transmission Provider's Transmission System to accommodate the interconnection of the Large Generating Facility to the Transmission Provider's Transmission System."
5 According to Order No. 2003 generation-tie facilities "include all facilities and equipment between the Generating Facility and the Point of Interconnection, including any modification, additions or upgrades that are necessary to physically and electrically interconnect the Generating Facility to the Transmission Provider's Transmission System. Interconnection facilities are sole use facilities and shall not include Distribution Upgrades, Stand Alone Network Upgrades or Network Upgrades."
6 Section 399.12 (a) of Article 16 defines an "Eligible renewable energy resource" as a facility that meets the definition of "in-state" renewable electricity generation facility in Section 25741 of the Public Resources Code.
