3. Procedural Background
The history of the consideration of the use of TRECs in the RPS program was presented in detail in Decision (D.) 08-08-028 and will not be repeated here. This section addresses the procedural steps in this proceeding.
Rulemaking (R.) 06-02-012, the Order Instituting Rulemaking (OIR) for this proceeding, was issued in the framework of the original RPS legislation, Senate Bill (SB) 1078 (Sher), Stats. 2002, ch. 516. In the OIR, the Commission identified TRECs as an important component of the proceeding. The Scoping Memo and Ruling of Assigned Commissioner (April 28, 2006) set out a number of issues related to TRECs, and assigned them to the second portion of this proceeding.
A staff white paper, "Renewable Energy Certificates and the California Renewables Portfolio Standard Program" (REC white paper), was published April 20, 2006.4 Comments on the REC white paper were filed in late May 2006; reply comments were filed on June 14, 2006.5
Among other things, the REC white paper set out definitions of terms that have been used throughout the subsequent consideration of the use of RECs for RPS compliance. The Commission adopted the white paper's definitions of "unbundled" RECs and "tradable" RECs in D.06-10-019:
Under an unbundled REC regime, claim over the renewable attributes of energy produced by eligible renewable technologies can be transferred from the renewable generator to one LSE while the energy is delivered to another. However, once this transfer occurs, claim over the attributes cannot be resold. In contrast, under a tradable REC regime, although the concept of selling the energy and claim over the attributes to different parties remains intact, RECs may be transferred from the renewable generator to any third party, not just obligated LSEs. In addition, these attributes can be resold subsequent to the initial sale.6
In D.06-10-019, the Commission decided not to authorize the use of unbundled RECs for RPS compliance at that time. We stated that we would consider the use of unbundled and/or tradable RECs later in this proceeding.7
The Amended Scoping Memo and Ruling of Assigned Commissioner (December 29, 2006) (Amended Scoping Memo) revised the tasks for this proceeding, in light of prior work and the enactment of SB 107, effective January 1, 2007. The Amended Scoping Memo identified three areas related to TRECs:
● Exploring the use of tradable RECs for RPS compliance by all RPS-obligated LSEs, including determining what attributes should be included in a REC;
● Determining the appropriate treatment of RECs associated with energy generated by renewable customer-side distributed generation, after examination of two important issues-measurement of renewable output from customer-side distributed generation, and analysis of the impact of ratepayer subsidies of renewable distributed generation-in R.06-03-004; and
● Determining the status of RECs associated with renewable energy generated by qualifying facilities (QFs) under contract with California utilities.
The Second Amended Scoping Memo and Ruling of Assigned Commissioner (February 25, 2008) noted several developments related to the use of TRECs for RPS compliance since the issuance of the Amended Scoping Memo. These changes resolved some of the previously identified issues, added new tasks, and moved other issues forward.
In D.07-01-018, issued in R.06-03-004, the Commission determined that RECs associated with customer-side renewable distributed generation (DG) belong to the DG system owner, irrespective of participation in net energy metering, the California Solar Initiative, or the Self-Generation Incentive Program (SGIP).
SB 107 resolved the status of RECs for renewable energy generated by QFs by prohibiting the creation of RECs associated with energy generated by QFs under contracts pursuant to the Public Utility Regulatory Policies Act of 1978 (Public Law 95-617) (PURPA) executed after January 1, 2005. It also allowed the creation of RECs associated with energy generated under any contract with a California RPS-obligated LSE or publicly owned utility (POU) prior to January 1, 2005 only if the contract explicitly addressed the ownership of RECs.8
SB 107 also added the requirement that, in order for us to authorize the use of TRECs for RPS compliance, this Commission and the California Energy Commission (CEC) must each make a determination that the CEC's RPS tracking system (including WREGIS) is ready to support the use of tradable RECs for RPS compliance.9 Staff of the two agencies jointly produced a report. The joint staff report was adopted by this Commission in Resolution (Res.) E-4178 (November 21, 2008).10 It was adopted by the CEC at its business meeting on December 3, 2008.11
Energy Division staff held a comprehensive workshop on TRECs and RPS compliance on September 5-7, 2007 (TRECs workshop).12 Parties filed and served pre-workshop comments on August 17, 2007.13 After the workshop, staff prepared a revised straw proposal (Straw Proposal) covering a number of TREC market and compliance issues. The Straw Proposal was circulated to parties with the Administrative Law Judge's (ALJ) Ruling Requesting Post-Workshop Comments on Tradable Renewable Energy Credits (October 16, 2007)
(post-workshop ruling). Post-workshop comments were filed on November 13, 2007.14 Post-workshop reply comments were filed on December 5, 2007.15
At the prehearing conference held December 10, 2007, some parties suggested that parties interested in the subject might try to develop a consensus recommendation on the definition and attributes of a TREC. Informal discussions among the parties were publicized to the service lists in this proceeding, R.06-05-027, R.06-03-004, and R.06-04-009. The discussions did not result in the filing of any recommendations on this topic. On May 9, 2008, the Center for Resource Solutions (CRS) filed a Motion for Leave to File Additional Comments related to REC definition and attributes. This motion was granted by an ALJ's ruling on June 6, 2008.16 The ruling allowed reply comments to be filed not later than June 11, 2008.17 Following this round of comments, the Commission issued D.08-08-028, on the definition and attributes of a REC.18
Several significant developments have occurred since the TRECs workshop, including issuance of D.08-08-028; ongoing implementation of the California Global Warming Solutions Act of 2006; Assembly Bill (AB) 32 (Núñez/Pavley), Stats. 2006, ch. 488; and the CEC's revisions to its criteria for delivery of RPS-eligible generation in its Renewables Portfolio Standard Eligibility Guidebook (RPS Eligibility Guidebook) at 23-26 (3d ed. December 19, 2007).19 In order to allow parties an opportunity to update their positions on TRECs, the ALJ issued a Ruling Requesting Supplemental Comments on the Use of Tradable Renewable Energy Credits for the Renewables Portfolio Standard Program (supplemental comment ruling) on September 4, 2008. Comments were filed on September 12, 200820 and reply comments were filed on September 18, 2008.21
A proposed decision (PD) on the use of TRECs was issued for comment on October 29, 2008. That PD was withdrawn March 26, 2009 and a new PD was issued the same day. Comments on the PD issued March 26, 2009 (March PD) were filed on April 15, 2009.22 Reply comments were filed on April 20, 2009.23
The March PD has been revised in light of comments and subsequent Commission decisions. In view of the passage of time since March 2009, this revised proposed decision was circulated for a full period of comments and reply comments.
Finally, the Assigned Commissioner's Ruling Transferring Consideration of Certain Issues from R.06-02-012 to R.08-08-009 (April 3, 2009) transferred all issues remaining in this proceeding other than those addressed in this decision to R.08-08-009.24
4 The REC white paper may be found at http://www.cpuc.ca.gov/word_pdf/REPORT/55606.doc.
5 Comments were filed by Central California Power; Sustainable Conservation; Powerex Corp. (Powerex); California Solar Energy Industries Association (CalSEIA), Clean Power Markets, Inc., PV NOW, Vote Solar Initiative (jointly); Pacific Gas and Electric Company (PG&E); Mountain Utilities (MU); Division of Ratepayer Advocates (DRA); Southern California Edison Company (SCE); San Diego Gas & Electric Company (SDG&E), Pilot Power Group, Inc. (Pilot Power); Alliance for Retail Energy Markets (AReM), Western Power Trading Forum (WPTF) (jointly); Aglet Consumer Alliance (Aglet); Green Power Institute (GPI); Center for Energy Efficiency and Renewable Technologies (CEERT); Independent Energy Producers Association (IEP); Union of Concerned Scientists (UCS); The Utility Reform Network (TURN); and California Large Energy Consumers Association and California Manufacturers and Technology Association (jointly).
Reply comments were filed by Central California Power, CEERT, GPI, Aglet, Pilot Power, AReM, SDG&E, SCE, MU, UCS, TURN, PG&E, Powerex, and IEP.
6 REC white paper at 1, n. 1; D.06-10-019 at 33.
7 In view of our decision to authorize the use of tradable RECs, we will not use the category of "unbundled REC" in this decision. We will refer to transactions in which only TRECs (not energy) are bought or sold as "TREC transactions" or "REC-only transactions." If the context requires a reference to "RECs" because, for example, the RECs were procured through a bundled contract, the RECs so referenced should be presumed to be tradable (unless they are RECs governed by §§ 399.16(a)(5) or (6), as explained in § 4.8, below).
8 Pub. Util. Code §§ 399.16(a)(6), (5).
9 Section 399.16(a)(1).
10 The resolution and attached final report are available at http://docs.cpuc.ca.gov/WORD_PDF/FINAL_RESOLUTION/94349.PDF.
11 See http://energy.ca.gov/2008publications/CEC-300-2008-001/CEC-300-2008-001-CMF.PDF.
12 The workshop notice and the assigned Administrative Law Judge's rulings seeking pre-workshop and post-workshop comments were circulated to the service lists in this proceeding, R.06-05-027 (RPS administration), R.06-03-004 (distributed generation and California Solar Initiative), and R.06-04-009 (greenhouse gas policy). The workshop presentations are available at http://www.cpuc.ca.gov/PUC/energy/electric/RenewableEnergy/misc/recpresentations.htm.
13 Pre-workshop comments in response to the ALJ's Ruling Requesting Pre-Workshop Comments on Tradable Renewable Energy Credits (July 19, 2007) were filed by Central California Power; Powerex, Solar Alliance; PacifiCorp; CEERT; Sustainable Conservation; AReM and WPTF (jointly); CalpinePowerAmerica-CA, LLC (Calpine); Coral Power, LLC; SDG&E; Aglet; IEP; PG&E; UCS; SCE; GPI; PPM Energy, Inc.; CPV Renewable Energy Company, LLC; and Sempra Energy Solutions.
14 Post-workshop comments were filed by PG&E; GPI; Powerex; SDG&E; Golden State Water Company; IEP; Pilot Power; Central California Power; EcoSecurities; DRA; CEERT; Calpine Corporation and Calpine (jointly); AReM and WPTF (jointly); MU; SCE; TURN; PacifiCorp; California Farm Bureau Federation and Sustainable Conservation (jointly); Solar Alliance and CalSEIA (jointly).
15 Post-workshop reply comments were filed by Central California Power; PacifiCorp; Aglet; UCS; California Farm Bureau Federation, Inland Empire Utilities Agency, Sustainable Conservation (jointly); Recurrent Energy, Inc., Solar Alliance, CalSEIA (jointly); Calpine Corporation and Calpine (jointly); TURN; IEP; AReM; SCE; MU; CEERT; SDG&E; DRA; GPI; and PG&E.
16 Parties were notified informally by e-mail on May 28, 2008.
17 Reply comments were filed on June 11, 2008 by AReM and WPTF (jointly; collectively, AReM); DRA; GPI; IEP; SCE, PG&E, PacifiCorp, Sierra Pacific, and SDG&E (jointly; collectively, IOUs); Solar Alliance and CalSEIA; TURN; and UCS.
18 Although the definition of a REC is central to the tradability of a REC, the details of D.08-08-028 are largely not relevant to this decision. One convention that should be kept in mind throughout the discussion, however, is that one REC represents the environmental and renewable attributes associated with one megawatt-hour (MWh) of RPS-eligible generation. See WREGIS Operating Rules, section 2, which may be found at http://www.wregis.org/content/blogcategory/26/47/.
19 The RPS Eligibility Guidebook is available at http://www.energy.ca.gov/2007publications/CEC-300-2007-006/CEC-300-2007-006-ED3-CMF.PDF.
20 Comments were filed by Aglet, AReM, Bear Valley Electric Service (BVES), Calpine, CEERT, DRA, GPI, Horizon Wind Energy and Iberdrola Renewables (jointly; collectively, Horizon), IEP, MU, PG&E, PacifiCorp, Powerex, SDG&E, Sacramento Municipal Utility District (SMUD), SCE, UCS, and Wal-Mart.
21 Reply comments were filed by Aglet, AReM, IEP, Large-scale Solar Association, PG&E, SCE, SDG&E, TURN, and UCS.
22 Comments were filed by Aglet, BVES, SCE, PacifiCorp, Solar Alliance, NaturEner USA LLC, CEERT, SDG&E, Evolution Markets, Inc., AReM and WPTF (jointly; collectively, AReM), UCS, SMUD, IEP, Horizon, PG&E, DRA, TURN, GPI, and Large Scale Solar Association (LSA).
23 Reply comments were filed by Aglet, Iberdrola, PacifiCorp, PG&E, AReM, MU, BVES, LSA, SCE, UCS, CEERT, and NaturEner.
24 The transferred issues are:
a. The revision of utilities' least-cost best-fit methodologies to include evaluation of REC-only contracts.
b. The process of approval of utilities' bundled energy and REC-only short-term contracts (whether bilateral or the result of solicitations) and long-term bilateral contracts.
c. 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.
The latter two issues were resolved in D.09-06-050, with the exception of short-term REC-only contracts. The first is pending in R.08-08-009.