3. Preliminary Scoping Memo

We include a preliminary scoping memo in this Order Instituting Rulemaking (OIR). (Rule 7.1(d) of the Commission's Rules of Practice and Procedure (Rules).) As discussed in the sections below, this is composed of the issues, preliminary determination of category, preliminary determination of need for hearing, and schedule.

3.1. Issues

The issues for this proceeding include program modifications to implement recent statutory changes. To do so, the Commission may modify (on a present and going forward basis) some, all or none of our prior RPS Program decisions. As of today,¹⁴ these decisions include (but are not necessarily limited to):

D.03-06-071; D.03-12-065; D.04-06-014; D.04-06-015; D.04-07-029; D.04-09-036; D.05-05-011; D.05-07-039; D.05-10-014; D.05-11-025; D.05-12-042; D.06-01-029; D.06-01-046; D.06-03-016; D.06-05-023; D.06-05-039; D.06-10-019; D.06-10-050; D.07-02-011; D.07-03-046; D.07-07-025; D.07-05-028; D.07-07-027; D.07-07-044; D.07-07-057; D.07-09-024; D.07-11-025; D.08-02-008; D.08-02-010; D.08-04-009; D.08-05-029; D.08-08-028; D.08-10-026; D.09-06-050; D.09-11-014; D.10-03-021; D.10-05-018; D.10-12-048; D.11-01-016; D.11-01-025; D.11-01-026; D.11-04-004; D.11-04-007; D.11-04-008; D.11-04-030.

The issues also include continuing oversight of RPS procurement, reporting, compliance and enforcement. We identify the preliminary list of issues.

Issue 1: Modify Program to Implement Recent Legislation

Recent legislation expands the RPS requirements to 33% of retail sales by December 31, 2020. (SB 2 (1X).)¹⁵ It also makes a number of other changes to procurement, compliance, reporting, and penalty provisions. These changes include, but are not limited to:

· Establishing a cost containment mechanism for utility RPS procurement;

· Using multiple-year (rather than annual) compliance periods, and modifying compliance provisions;

· Ending the use of the market price referent as a metric to limit mandatory procurement;

· Defining three categories of RPS-eligible procurement, and setting limits on the use of each category;

· Requiring an annual compliance report with specific information;

· Modifying enforcement provisions.

A preliminary but more comprehensive list is in Attachment A.

Issue 2: Procurement Plans

Direct the filing of procurement plans consistent with new statutes.

· Review and accept, modify or reject each plan before commencement of procurement;

· Supervise plan implementation and RPS solicitation;

· Review results.

Issue 3: Compliance, Reporting And Enforcement

Monitor and enforce compliance of retail sellers with RPS requirements, including but not limited to:

· Update formats for reporting RPS-eligible procurement;

· Clarify compliance requirements for years 2010-2013;

· Act on motions, or on the Commission's own initiative, on specific compliance reports, as necessary.

Issue 4: Least Cost-Best Fit

Review and improve bid evaluation methodology, including adjustments, as necessary, for:

· Integration cost adders;¹⁶

· Tradable renewable energy credits (TRECs);¹⁷

· Resource adequacy value;¹⁸

· Congestion cost adders;¹⁹

· Appropriate allocation of risk among ratepayers, generation developers, utility shareholders, and financing entities;

· Other issues, including any new statutory requirements.

Issue 5: Implement Section 399.20, as amended

Develop requirements for standard tariffs of utilities for RPS-eligible generators of up to three megawatts capacity, including but not limited to:

· Supplement briefs already submitted in R.08-08-009 to cover new statutory requirements;

· Establish methodology to determine market price for standard tariffs;

· Set up process for expedited interconnection procedures.

Issue 6: Other Ongoing Implementation and Administration

This includes but is not limited to:

6.1 Implementation of amended or new statutes, if any.

6.2 Further consideration of rules for CCAs and ESPs, as necessary, such as but not limited to:

· When obligations start for new entrants;

· When obligations under D.07-05-028 and other procurement requirements commence.

6.3 Integration of TRECs into RPS procurement and compliance rules, such as but not limited to:

· Utility evaluation of TREC contracts;

· Commission process for reviewing TREC contracts and modification, if necessary, of fast-track advice letter procedure (D.09-06-050);

· Classification of RPS contracts using firm transmission.

6.4 Development of RPS Need Assessment Methodology.

Develop methodology to determine RPS resource need and integration into RPS procurement plans.

6.5 Revision of Standard Terms and Conditions (STCs).

Review and revise STCs²⁰ for new RPS contracts, as needed, including but not limited to:

· Green attributes;

· Eligibility;

· Whether or not to add a term that provides for ongoing Commission jurisdiction over contract terms and conditions.

6.6 Ruling on unresolved motions, including but not limited to the Amended Motion of the City of Cerritos for Certain Determinations (December 3, 2010).

6.7 Continuation of any unresolved matter in R.08-08-009 that is specifically identified as an issue in the assigned Commissioner's Scoping Memo and Ruling in this successor proceeding.

6.8 Other issues identified by parties or the Commission.

We will not address issues here that are being addressed elsewhere. This includes, for example, but is not limited to, specific issues stated in the Scoping Memos in other proceedings (i.e., issues specifically scoped in R.08-03-009, Investigation (I.) 08-03-010, R.10-05-004, R.10-05-006).

3.2. Preliminary Determination of Category

We preliminarily determine that the category of this proceeding is ratesetting. (Rules 1.3(e) and 7.1(d).) This is based on the requirement to establish an RPS procurement cost limitation, and our ongoing implementation and administration of the RPS Program (as part of the larger procurement process) which impacts respondent utilities' rates. This is consistent with our categorizations of the same or similar work in R.04-04-026, R.06-02-012,
R.06-05-027, and R.08-08-009.

3.3. Preliminary Determination of Need for Hearing

We must preliminarily determine the need for hearing. (Rule 7.1(d).) Although we expect that many of the issues may be resolved through the formal filing of comments and replies, we preliminarily determine that hearings will be needed, at least on some issues.

3.4. Schedule

We adopt the following schedule, which anticipates the proceeding to be closed within 24 months of the date of the assigned Commissioner's Scoping Memo and Ruling:

LINE NO	ITEM	DAYS (number of days from date OIR is mailed)
1	Notify ALJ of Single Lead Representative for Party Status	10
2	Motions for prehearing conference	21
3	Comments on OIR	21
4	Reply Comments on OIR	30
5	Prehearing Conference	To be determined
6	NOI or Amendment to Prior NOI	30

Within 10 days of the date this order is mailed, each party with more than one person listed on the service list in the party category shall notify the Administrative Law Judge (ALJ). The notification shall state the lead representative, as more fully described below. (See section on Parties and Service List.)

The assigned Commissioner or ALJ may set a prehearing conference (PHC) if either determines that a PHC will help with case management. Any party recommending a PHC should file a motion within 21 days of the date this order is mailed asking for a PHC. The motion should specifically identify the items the party would seek to address at the PHC, and provide any other relevant information to assist with the setting and conduct of an efficient and productive PHC.

Comments on this OIR may be filed, and those comments shall be filed and served within 21 days of the date this order is mailed. Reply comments may be filed, and shall be filed and served within nine days of the filing of comments (i.e., 30 days from the date this order is mailed). Further information on comments and reply comments is contained below. (See section on Comments.)

A notice of intent (NOI) to claim intervenor compensation should be filed, and updates to prior NOIs filed as amendments, within 30 days of the date this order is mailed, as described below. (See section on Intervenor Compensation.)

The assigned Commissioner or ALJ may alter the dates for the filing of motions for PHC, comments, reply comments, NOIs, amendments to NOIs or other dates as necessary to promote efficient and fair administration of this proceeding.

No further schedule is set here. Rather, the assigned Commissioner will issue a Scoping Memo and Ruling after considering comments and reply comments on the OIR, and a PHC, if one is held, including parties' views on issues, identified priorities, and recommendations on the schedule for addressing the substance of issues over 24 months. (See section below on Comments.)

The Scoping Memo and Ruling will rule on the issues, category, need for hearing, and schedule for the remainder of the proceeding. The final determination only as to category is subject to appeal. (Rule 7.6.)

This proceeding will conform to the statutory case management deadline for ratesetting matters set forth in Pub. Util. Code § 1701.5. In particular, it is our intention to resolve all relevant issues within 24 months of the date of the assigned Commissioner's Scoping Memo. This is consistent with the 24-month period adopted in R.06-02-012, R.08-08-009, and other similar matters.²¹ In using the authority granted in § 1701.5(b) to set a time longer than 18 months, we consider the number and complexity of the tasks, the need to coordinate with other Commission proceedings, and the need to coordinate with CEC (e.g., IEPR, RPS Verification Reports). We consider the potential for likely further legislation, and the time necessary for its implementation.²² We recognize that this is an ongoing program with some details not yet fully developed. We also recognize that the 20% RPS statutory target is now changed to incremental growth leading to 33% over approximately the next nine years (with maintenance of not less than 33% after 2020). These factors will require at least 24 months to address. In fact, these multiple responsibilities will likely require active Commission policy-making involvement beyond 2013. As such, we will likely issue a successor OIR upon the closing of this OIR.

¹⁴ Additional decisions, if any, implementing the RPS program prior to the effective date of SB 2 (1X) may also be affected.

¹⁵ The legislation was signed by Governor Brown on April 12, 2011. Since the legislation was enacted during the Legislature's 2011-2012 First Extraordinary Session, it will "go into effect on the 91st day after adjournment of the special session at which the bill was passed." (Gov't Code § 9600(a).) The First Extraordinary Session has not yet adjourned.

¹⁶ Cost adders incorporated into utilities' LCBF bid evaluations to estimate costs associated with ancillary services needed for real time balancing of the transmission system of the California Independent System Operator. (See D.04-07-029.)

¹⁷ See D.10-03-021.

¹⁸ The value assigned to bids in a utility's LCBF evaluation based on capacity values, nameplate capacity, technology, and location, to reflect a generation project's contribution to the utility's resource adequacy requirements. (See D.04-07-029.)

¹⁹ Cost adders incorporated into utilities' LCBF bid evaluations that estimate costs associated with local transmission congestion and over-generation. (See D.11-04-030.)

²⁰ Current STCs are set out in D.08-04-009, D.08-08-028, and D.10-03-021 (as modified by D.11-01-025).

²¹ See, for example, R.08-02-007, R.08-03-008, R.08-03-009, I.08-03-010, and R.10-05-004.

²² The April 12, 2011 Governor's signing letter asked the Legislature to quickly amend SB 2 (1X) to address certain implementation difficulties or inefficiencies.