I. INTRODUCTION

The California Public Utilities Commission (Commission) established Resource Adequacy Requirements (RAR) pursuant to and defined by Commission Decisions
(D.) 05-10-042 and 06-06-064. The Consumer Protection and Safety Division (CPSD) of the Commission conducted an investigation into Constellation NewEnergy, Inc.'s (CNE) compliance with its January 2009 RAR. Based on its investigation, CPSD staff concludes that CNE failed to comply with its RAR procurement obligations and that a fine should be imposed.

CNE submitted a January 2009 Month-Ahead System Resource Adequacy (RA) Compliance Filing on November 26, 2008, which showed that it had not secured adequate resources for January 2009. CNE however included three contracts totaling 180 MW, which were not valid for the month of January 2009, causing CNE to have a deficiency in this amount. On December 15, 2008, CNE submitted an amended January 2009 month-ahead filing reflecting the newly acquired capacity that corrected the deficiencies in the original filing.

The Commission, therefore, initiates this proceeding in order to consider whether to penalize CNE on the evidence of violations set forth in the CPSD Investigation Report. In this Order, we direct CNE to appear and show cause why the Commission should not find that CNE violated Commission rules by not securing the required energy resources for January 2009 by the day that CNE filed its Month-Ahead System RA Compliance Filing on November 26, 2008, and why the Commission should not impose appropriate penalties.