22. Assignment

The assigned Commissioner is Michael R. Peevey and the assigned Administrative Law Judge is Peter V. Allen.

1. SCE's proposed bundled procurement plan incorporates position limits and maximum rates of transactions that provide an upper boundary on the amount of SCE's pre-approved procurement.

2. The proposed bundled procurement plans of PG&E and SDG&E initially did not include position limits or maximum rates of transactions, but were revised to include them.

3. The proposed bundled procurement plans of PG&E and SDG&E initially did not incorporate an upper boundary on the amount of their pre-approved procurement, but were revised to include one.

4. The standardized planning assumptions developed by Commission staff are the foundation of the record in this proceeding.

5. SCE proposes alternative assumptions to some of the standardized planning assumptions.

6. PG&E and SDG&E initially largely disregarded the standardized planning assumptions.

7. Utility procurement must comply with the Commission's established loading order.

8. The past flat-rate utility hedging methodology has been very protective, but expensive and confusing.

9. Hedging levels indexed to system average rates will result in more consistent hedging levels.

10. Increasing the CRT should result in lower hedging costs.

11. Elimination of the 125% of CRT threshold for utility and PRG action will increase ratepayer protection and reduce confusion.

12. The Renewable Integration Products sought to be procured by SCE and PG&E are not clearly defined.

13. Including the maximum allowable phase-in of new direct access sales permitted under SB 695, as recommended by SCE and MEA, is a more accurate approach than using the Standardized Planning Assumptions.

14. Using the CHP megawatt targets approved in D.10-12-035 for the Initial Program Period is more accurate than the standardized planning assumptions.

15. Using an assumption of zero megawatts for the Second Program Period is likely to be less accurate than the standardized planning assumptions, and is inconsistent with the loading order.

16. SDG&E has a specific CHP megawatt target for the Second Program Period set forth in D.10-12-035.

17. The California Energy Commission determines what resources are RPS-eligible.

18. This Commission has an open RPS docket (R.10-05-005) that may address how certain resources are counted for RPS compliance.

19. PG&E's Nuclear Fuel Procurement Plan seeks authorization to contract beyond the expiration of the operating license for Diablo Canyon.

20. Some suppliers of nuclear fuel and services are seeking to cap their own liability, shifting liability for nuclear accidents onto the utilities.

21. The Commission recently approved convergence bidding in D.10-12-034.

22. Issues relating to the duration of RPS contracts are being addressed in R.11-05-005.

23. The Commission currently applies a "strong showing" standard for justification of bilateral contracts.

24. The Commission currently limits pre-approval of bundled procurement contracts to "less than five years."

25. Other Commission decisions and regulations apply to contracts of less than five years.

26. The utilities are currently authorized to participate in RFPs issued by generators.

27. Other market participants, including other LSEs, also issue RFPs and RFOs.

28. The utilities have been authorized to participate in electronic auctions, but not in other forms of electronic solicitations.

29. The Commission has existing rules directing when and how an IE is to be utilized.

30. Gas-fired QFs receive payments that vary based on the price of natural gas.

31. A voluntary fixed price for SRAC floating swap mechanism would provide a hedge against natural gas price exposure for gas-fired QFs.

32. Existing processes allow the utilities to request extension of their procurement authorization.

1. Commission-approved procurement plans must result in just and reasonable rates under Section 454.5.

2. The structure of SCE's proposed bundled procurement plan, which includes position limits and maximum rates of transactions, is generally consistent with § 454.5.

3. The structure of the proposed bundled procurement plans of PG&E and SDG&E was initially inadequate to ensure just and reasonable rates under Section 454.5.

4. The structure of the revised proposed bundled procurement plans of PG&E and SDG&E, incorporating position limits and maximum rates of transactions, is generally consistent with Section 454.5.

5. Standardized planning assumptions are necessary and useful for the Commission to evaluate utility procurement plans.

6. It is sometimes appropriate to adjust or depart from the standardized planning assumptions in order to improve forecasting accuracy.

7. Satisfying Commission-established targets for certain resources does not alter their place in the loading order.

8. Utility hedging should shift from a flat-rate to being indexed to system-average rates.

9. Utility hedging should be made simpler and less expensive.

10. The CRT should be increased to 10% of system average rates.

11. The 125% of CRT threshold for utility and PRG actions should be eliminated.

12. There is inadequate information on the record to approve utility procurement of "Renewable Integration Products."

13. Direct access forecasts should comply with SB 695.

14. CHP forecasts should comply with D.10-12-035, the loading order, and the standardized planning assumptions.

15. This is not an appropriate proceeding for addressing whether biomethane is RPS eligible.

16. Nuclear fuel procurement authority should not extend beyond expiration of the nuclear plant's operating license.

17. An expedited advice letter process provides an insufficient basis for utility ratepayers to assume potential liability for nuclear accidents.

18. It is too soon to revisit issues relating to convergence bidding.

19. This is not an appropriate proceeding for addressing the duration of RPS contracts.

20. It is not necessary to change the current standard for justification of bilateral contracts.

21. Other requirements relating to procurement contracts of less than five years must be taken into consideration before altering that existing limit.

22. It is reasonable to allow the utilities to participate in RFOs and RFPs issued by other market participants, including other LSEs.

23. It is reasonable to allow the utilities to participate in other forms of electronic solicitation as long as those are competitive, and are not for utility-owned resources.

24. It is not necessary at this time to change the existing rules applicable to IEs.

25. It is reasonable to allow SCE to offer a voluntary fixed price for SRAC floating swap mechanism.

26. It is not necessary to change the existing method for utilities to request extension of their procurement authorization.

ORDER

IT IS ORDERED that:

1. The bundled procurement plans of Southern California Edison Company, Pacific Gas and Electric Company and San Diego Gas & Electric Company are approved as modified by Ordering Paragraphs 2 through 22 below.

2. Approval of Pacific Gas and Electric Company's and San Diego Gas & Electric Company's bundled procurement plans includes the incorporation of position limits and maximum rates of transactions, as proposed by the companies in their comments on the Proposed Decision.

3. The Commission approves the use of standardized planning assumptions.

4. Utility procurement must comply on an ongoing basis with the Commission's loading order.

5. The Customer Risk Tolerance applicable to utility hedging is changed from one cent per kilowatt-hour to 10% of a utility's system average rate.

6. The 125% of Customer Risk Tolerance threshold metric is eliminated.

7. The request of Southern California Edison Company and Pacific Gas and Electric Company to procure "Renewable Integration Products" is denied.

8. Southern California Edison Company is authorized to use its proposed direct access assumptions, and the other utilities should procure consistently with those assumptions.

9. Southern California Edison Company and Pacific Gas and Electric Company are authorized to use combined heat and power megawatt target numbers from Decision (D.) 10-12-035 for the Initial Program Period, and from the standardized planning assumptions for the Second Program Period. San Diego Gas & Electric Company should use combined heat and power megawatt target numbers from D.10-12-035 for both the Initial and Second Program Periods.

10. The Commission declines to find biomethane to be Renewables Portfolio Standard eligible in this proceeding.

11. Pacific Gas and Electric Company is authorized to enter into nuclear fuel contracts with a duration no longer than the expiration of the operating license for its nuclear power plant.

12. Any contract that seeks to impose additional liability for nuclear accidents on Pacific Gas and Electric Company and its ratepayers must be approved by an application, not an advice letter.

13. Southern California Edison Company's proposed modifications to its convergence bidding authorization are denied.

14. Southern California Edison Company's proposal to enter into short-term renewable energy transactions is not approved, but may be addressed in the Renewables Portfolio Standard proceeding, Rulemaking 11-05-005.

15. Pacific Gas and Electric Company's proposed revisions to the existing criteria for bilateral contracts are denied.

16. Southern California Edison Company's and Pacific Gas and Electric Company's proposals to alter allowable contract length are denied.

17. Pacific Gas and Electric Company's request to allow utilities to participate in requests for proposals and requests for offers issued by market participants, including other load serving entities, is granted. Existing Independent Evaluator rules will apply.

18. Pacific Gas and Electric Company's request to allow utilities to participate in competitive electronic solicitations other than auctions that do not involve utility-owned resources is granted. Existing Independent Evaluator rules will apply.

19. Pacific Gas and Electric Company's and Pacific Environment's proposals to change the role of the Independent Evaluator are denied.

20. Southern California Edison Company's proposal to offer a voluntary fixed price for short-run avoided cost floating swap mechanism is granted.

21. Pacific Gas and Electric Company's proposal to eliminate the expiration of utility procurement authorization is denied.

22. Pacific Gas and Electric Company, Southern California Edison and San Diego Gas & Electric Company shall each file a Tier 3 Advice Letter conforming their bundled procurement plans to incorporate the modifications made in this decision no later than 90 days from the effective date of this decision.

23. This proceeding remains open.

This order is effective today.

Dated January 12, 2012, at San Francisco, California.

Previous PageTop Of PageGo To First Page