2. Procedural Background
Consideration of the issues addressed in this decision began in Rulemaking (R.) 06-02-012. The Amended Scoping Memo and Ruling of Assigned Commissioner (December 29, 2006) in R.06-02-012 identified certain topics as necessary follow-up to the Commission's authorization of the use of short-term contracts1 for RPS procurement in Decision (D.) 06-10-019.2
An Administrative Law Judge's (ALJ) Ruling Providing Opportunity for Comments and Reply Comments (May 10, 2007), asked parties for comments and reply comments on, inter alia, proposals by Energy Division staff on:
a. A methodology for a short-term contract price reasonableness benchmark;
b. Reasonableness criteria for assessing bilateral contracts entered into by investor-owned utilities.3
Comments were received June 14, 2007 from Aglet Consumer Alliance, Alliance for Retail Energy Markets (AReM), Division of Ratepayer Advocates (DRA), Green Power Institute (GPI), PacifiCorp, Pacific Gas and Electric Company (PG&E), Powerex, Southern California Edison Company (SCE), San Diego Gas & Electric Company (SDG&E), The Utility Reform Network (TURN), and the Center for Energy Efficiency and Renewable Technologies (CEERT). Reply comments were filed on June 25, 2007 by Aglet, CEERT, GPI, PG&E, SCE, SDG&E, and TURN.
An ALJ's Ruling Requesting Further Comment on Short-term Pricing Benchmark Proposals (September 4, 2007) sought additional comment from parties, to clarify proposals from earlier comments, and provide any additional information useful for developing a short-term pricing benchmark. Comments were received on September 24, 2007 from AReM, DRA and Aglet (jointly), GPI, PG&E, Powerex, SCE, and SDG&E. Reply comments were filed on October 1, 2007 by CEERT, DRA/Aglet, and PG&E.
In their 2009 RPS procurement plans, filed in September 2008, both SCE and PG&E made separate proposals for streamlined Commission approval of certain kinds of RPS contracts for each of these two utilities. Comments or reply comments on these proposals were filed by DRA, L. Jan Reid (Reid), PG&E, SCE, SDG&E, and TURN.
An Assigned Commissioner's Ruling (ACR) Transferring Consideration of Certain Issues from Rulemaking 06-02-012 to Rulemaking 08-08-009 (April 3, 2009) transferred three issues pending in R.06-02-012 to this proceeding for consideration and disposition. Two of them are the previously identified issues related to price reasonableness benchmarks and contract approval processes; the third is not related to this decision. These two relevant issues are:
1. The development of price benchmarks for evaluating the reasonableness of utilities' short-term bundled contracts (whether bilateral or the result of solicitations) and long-term bilateral bundled contracts.
2. The process for approval of utilities' short-term bundled contracts (whether bilateral or the result of solicitations) and long-term bilateral bundled contracts.
SCE and PG&E made proposals in their 2009 procurement plans that are related to the issues transferred by the ACR. SCE proposes that all its RPS procurement contracts having a term of less than five years be preapproved and then reported in the utility's quarterly procurement advice letter filing, up to a cumulative limit of 10,000 gigawatt-hours (GWh) of RPS procurement over five years. PG&E proposes a pilot program in which it submits Tier 1 advice letters4 for RPS contracts of any length that conform to Commission-approved terms and are priced at or below the market price referent (MPR). The program would be limited to a total of 800 GWh.
1 RPS contracts with a duration of less than 10 years are considered short-term contracts.
2 In response to direction in Senate Bill (SB) 107, in D.07-05-028 the Commission established, for a limited period of time, minimum quantities of RPS-eligible energy to be procured through contracts with new facilities or long-term contracts with existing facilities necessary in order for load-serving entities to count deliveries from short-term RPS-eligible contracts with existing facilities for RPS compliance. See Pub. Util. Code § 399.14(b).
Unless otherwise indicated, all subsequent citations to sections refer to the Public Utilities Code and citations to rules refer to the Rules of Practice and Procedure, which are codified at Chapter 1, Division 1 of Title 20 of the California Code of Regulations.
3 Additional topics for comment set out in the ruling are not relevant to this decision.
4 Advice letters are governed by General Order 96-B. Advice letter "tiers" are set forth in Industry Rule 5 and are explained in D.07-01-024. A Tier 1 advice letter is effective upon filing, though staff retains the right to suspend the advice letter, and other parties have the right to protest the advice letter.
