7. Assignment of Proceeding
Michael R. Peevey is the assigned Commissioner and Burton W. Mattson is the assigned ALJ in this proceeding.
1. STC 6 is a Commission-required standard term and condition for RPS contracts, and some contracts include related terms to define commercially reasonable efforts.
2. Administration of an RPS contract includes administration of all clauses.
3. Utility contract enforcement is an integral part of utility contract administration.
4. Using more words than necessary, particularly when the proposed additional language is nuanced or subtle, can make dicta or findings vulnerable to misinterpretation or misunderstanding.
5. Ratepayers reasonably expect electricity delivered pursuant to RPS contracts, with very limited exception, to be RPS-eligible given the seller warrants throughout the term of the contract that (i) the project is an ERR and (ii) project output qualifies under the California RPS program.
6. The only exception to this electricity being RPS-eligible is in relationship to a change in law.
7. Ongoing achievement of RPS goals is too important for a utility buyer to passively accept that its purchases are RPS-compliant if and when they are not; and it is too important, in the case of a change in law, for the utility buyer to passively accept that seller has engaged in commercially reasonable efforts to comply with the change in law if and when that is not the case.
8. A utility buyer can devise reasonable ways to become informed with regard to violations of STC 6.
9. The categorization of this proceeding is ratesetting.
10. No hearing is necessary.
1. The application to modify four resolutions should be granted in part by reverting to simpler, more direct language used in similar prior resolutions; modification of two resolutions adopted after the filing of this application should be accomplished herein; and the application should be denied in all other respects.
2. Each utility with an RPS obligation should devise a method to actively monitor each RPS seller's compliance with STC 6, administer that active monitoring, and make an affirmative showing in each ERRA (or other appropriate) proceeding of its active monitoring method and results; with the affirmative showing to be part of the utility's ERRA (or other appropriate) showing of its reasonable contract administration of all contract terms, inclusive of obligations both before and after the project's commercial operation date, as appropriate.
3. Disallowance of requested rate recovery is appropriate when the utility's showing relative to contract administration and active monitoring fail to establish that the utility's contract administration is reasonable through clear and convincing evidence.
4. The Commission neither expects nor requires unreasonable contract enforcement.
5. This decision should be effective immediately so that SCE may proceed with the affected contracts with increased certainty and without delay.
IT IS ORDERED that:
1. The application is granted in part and denied in all other respects. Six resolutions are modified as provided in Attachment A.
2. As part of its renewables portfolio standard program, Southern California Edison Company shall (a) devise a method to actively monitor each seller's compliance with Standard Term and Condition 6 and related contract terms, (b) administer that active monitoring, and (c) make an affirmative showing in each Energy Resource Recovery Account proceeding of its method for active monitoring and the results of that monitoring. This shall be part of Southern California Edison Company's showing of reasonable contract administration of all contract terms, inclusive of obligations both before and after the project's commercial operation date, as appropriate.
3. Each electric utility under the Commission's jurisdiction, pursuant to the renewables portfolio standard program, shall (a) devise a method to actively monitor each seller's compliance with Standard Term and Condition 6 and related contract terms, (b) administer that active monitoring, and (c) make an affirmative showing in each Energy Resource Recover Account (or other appropriate cost-recovery) proceeding of its method for active monitoring and the results of that monitoring. This shall be part of each electric utility's showing of reasonable contract administration of all contract terms, inclusive of obligations both before and after the project's commercial operation date, as appropriate. The Executive Director shall serve a copy of this order on the service list in Rulemaking 08-08-009, thereby performing service on each Commission-regulated electric utility with a renewables portfolio standard program obligation. These utilities are Southern California Edison Company, Pacific Gas and Electric Company, San Diego Gas & Electric Company, PacifiCorp, Sierra Pacific Power Company, Bear Valley Electric Service Division (a division of Golden State Water Company), and Mountain Utilities.
4. This proceeding is categorized as ratesetting and no hearing is necessary.
5. Application 10-03-009 is closed.
This order is effective today.
Dated June 3, 2010, at San Francisco, California.
MICHAEL R. PEEVEY
President
DIAN M. GRUENEICH
JOHN A. BOHN
TIMOTHY ALAN SIMON
NANCY E. RYAN
Commissioners
ATTACHMENT A
MODIFICATIONS TO RESOLUTIONS
Resolutions E-4293, E-4263, E-4300, and E-4295 are modified as follows:
1. Language in Resolution E-4293 at 11 and 17 (Finding 10); Resolution E-4263 at 8 and 11 (Finding 10); Resolution E-4300 at 10 and 13 (Finding 13); and Resolution E-4295 at 10 and 13 (Finding 11) is changed as follows:
From:
Provided the generation is from an eligible renewable energy resource, or Seller is otherwise compliant with Standard Term and Condition 6, set forth in Appendix A of D.08-04-009 and included in the terms of the PPA, payments made by SCE under the PPA are fully recoverable in rates over the life of the PPA, subject to Commission review of SCE's administration of the PPA.
To:
Payments made by SCE under the PPA are fully recoverable in rates over the life of the PPA, subject to Commission review of SCE's administration of the PPA.
2. Language in Resolution E-4293 at 18 (Finding 16); Resolution E-4263 at 12 (Finding 12); Resolution E-4300 at 14 (Finding 15); and Resolution E-4295 at 14 (Finding 14) is changed as follows:
From:
The immediately preceding finding shall not be read to allow generation from a non-RPS eligible renewable energy resource under this PPA to count towards an RPS compliance obligation. Nor shall that finding absolve SCE of its obligation to enforce compliance with Standard Term and Condition 6, set forth in Appendix A of D.08-04-009, and included in this PPA.
To:
The immediately preceding finding shall not be read to allow generation from a non-RPS-eligible renewable energy resource under this PPA to count towards an RPS compliance obligation. Nor shall that finding absolve SCE of its obligation to enforce compliance with this PPA.
3. Language in Resolution E-4293 at 14; Resolution E-4263 at 9-10; Resolution E-4300 at 11; and Resolution E-4295 at 12 is changed as follows:
From:
Therefore, while we include the required finding here, this finding has never been intended, and shall not be read now, to allow the generation from a non-RPS eligible resource to count towards an RPS compliance obligation. Nor shall such a finding absolve any contracting party of its obligation to obtain CEC certification and/or to pursue remedies for breach of contract to ensure that only RPS-eligible generation is delivered and paid for under a Commission-approved contract. Such contract enforcement activities shall be reviewed pursuant to the Commission's authority to review the administration of such contracts.
To:
Therefore, while we include the required finding here, this finding has never been intended, and shall not be read now, to allow the generation from a non-RPS-eligible resource to count towards an RPS compliance obligation. Nor shall such finding absolve the seller of its obligation to obtain CEC certification, or the utility of its obligation to pursue remedies for breach of contract. Such contract enforcement activities shall be reviewed pursuant to the Commission's authority to review the administration of such contracts.
4. Language in Resolution E-4316 at 12 (Finding 9) is changed as follows:
From:
Provided the generation is from an eligible renewable energy resource, payments made by SCE under the amended PPA are fully recoverable in rates over the life of the amended PPA, subject to Commission review of SCE's administration of the amended PPA.
To:
Payments made by SCE under the amended PPA are fully recoverable in rates over the life of the amended PPA, subject to Commission review of SCE's administration of the amended PPA.
5. Language in Resolution E-4316 at 9 is changed as follows:
From:
Provided the generation is from an eligible renewable energy resource, payments made by SCE under the amended PPA are fully recoverable in rates over the life of the PPA, subject to Commission review of SCE's administration of the amended PPA.
To:
Payments made by SCE under the amended PPA are fully recoverable in rates over the life of the amended PPA, subject to Commission review of SCE's administration of the amended PPA.
6. Language in Resolution E-4325 at 15 (Finding 12) is changed as follows:
From:
Provided the generation is from an eligible renewable energy resource, or is otherwise compliant with Standard Term and Condition 6, set forth in Appendix A of D.08-04-009 and included in the terms of the Agreements, payments made by SCE under the Agreements are fully recoverable in rates over the life of the Agreements, subject to Commission review of SCE's administration of the Agreements.
To:
Payments made by SCE under the Agreements are fully recoverable in rates over the life of the Agreements, subject to Commission review of SCE's administration of the Agreements.
7. Language in Resolution E-4325 at 2 is changed as follows:
From:
Provided the generation is from eligible renewable energy resources, deliveries pursuant to the proposed Agreements are reasonably priced and fully recoverable in rates over the life of the contract, subject to Commission review of SCE's administration of the Agreements.
To:
Deliveries pursuant to the proposed Agreements are reasonably priced and fully recoverable in rates over the life of the contracts, subject to Commission review of SCE's administration of the Agreements.
8. Language in Resolution E-4325 at 11 is changed as follows:
From:
Provided the generation is from an eligible renewable energy resource, or Seller is otherwise compliant with Standard Term and Condition 6, set forth in Appendix A of D.08-04-009 and included in the terms of the Agreements, payments made by SCE under the Agreements are fully recoverable in rates over the life of the Agreements, subject to Commission review of SCE's administration of the Agreements.
To:
Payments made by SCE under the Agreements are fully recoverable in rates over the life of the Agreements, subject to Commission review of SCE's administration of the Agreements.
9. Language in Resolution E-4325 at 15 (Finding 14) is changed as follows:
From:
The immediately preceding finding shall not be read to allow generation from a non-RPS eligible renewable energy resource under these Agreements to count towards an RPS compliance obligation. Nor shall that finding absolve SCE of its obligation to enforce compliance with Standard Term and Condition 6, set forth in Appendix A of D.08-04-009, and included in these Agreements.
To:
The immediately preceding finding shall not be read to allow generation from a non-RPS eligible renewable energy resource under these Agreements to count towards an RPS compliance obligation. Nor shall that finding absolve SCE of its obligation to enforce compliance with these Agreements.
10. Language in Resolution E-4325 at 12-13 is changed as follows:
From:
Therefore, while we include the required finding here, this finding has never been intended, and shall not be read now, to allow the generation from a non-RPS eligible resource to count towards an RPS compliance obligation. Nor shall such a finding absolve a seller from its obligation to obtain CEC certification or absolve the purchasing utility of its obligation to enforce compliance with Standard Term and Condition 6, set forth in Appendix A of D.08-04-009, and included in the PPA. Such contract enforcement activities shall be reviewed pursuant to the Commission's authority to review the administration of such contracts.
To:
Therefore, while we include the required finding here, this finding has never been intended, and shall not be read now, to allow the generation from a non-RPS eligible resource to count towards an RPS compliance obligation. Nor shall such a finding absolve a seller from its obligation to obtain CEC certification, or the utility of its obligation to pursue remedies for breach of contract. Such contract enforcement activities shall be reviewed pursuant to the Commission's authority to review the administration of such contracts.
(END OF ATTACHMENT A)
