2. Background
This long-term procurement proceeding (LTPP) is the successor to Rulemaking (R.) 10-05-006,5 R.08-02-007,6 R.06-02-013,7 R.04-04-003,8 and R.01-10-024,9 and the rulemakings initiated by the Commission to ensure that California's major investor-owned utilities (IOUs)10 could resume and maintain procurement responsibilities on behalf of their customers.
The LTPP proceedings generally operate on a two-year cycle with the IOUs responsible for submitting procurement plans that project their needs, and their action plans for meeting those needs, over a ten-year horizon. Pursuant to Assembly Bill (AB) 57,11 codified as Public Utilities Code Section 454.5, the Commission establishes up-front standards for the IOUs' procurement activities and cost recovery by reviewing and approving procurement plans. This obviates the need for the Commission to conduct after-the-fact reasonableness reviews for the resulting utility procurement transactions that are in compliance with the upfront standards established in the approved procurement plans.
In Decision (D.) 04-01-050, the Commission established that each load serving entity (LSE) has an obligation to acquire sufficient reserves for its customer loads, endorsed a hybrid market structure, and extended utilities' procurement authority into 2005. In D.04-12-048, the Commission approved the IOUs' long-term procurement plans and gave the IOUs procurement authority for short-, medium-, and long-term contracts for the planning period 2005 through 2014. D.07-12-052 approved, with modifications and compliance filings, the LTPPs for PG&E, SDG&E, and SCE for 2007-2016. D.12-01-033 approved, with modifications, the utilities' bundled procurement plans, and extended the IOUs' upfront procurement authority through 2020.
The most recent LTPP proceeding, R.10-06-005, divided the 2010 proceeding into three tracks. Track I considered issues related to the overall long-term need for new system and local reliability resources, including adoption of system resource plans for each of the three utilities' service area to inform the next update of bundled procurement plans. These resource plans were intended to allow the Commission to comprehensively consider the impacts of state energy policies on the need for new resources. Track II considered adoption of bundled procurement plans pursuant to AB 57 for the three major electric IOUs to authorize their procurement needs for their bundled customers. Track III considered a number of rule and policy issues related to IOUs' procurement practices, such as implementing recent procurement-related legislation.
D.12-01-033 approved, with modifications, the plans of the three major California electric utilities to procure electricity for their bundled customers, consistent with § 454.5. In addition, the decision provided guidance to the utilities for their future bundled procurement plans. D.12-01-033 at 5 stated: "This decision is not intended to result in any new generation facilities being constructed, and it continues to implement the Commission's loading order and Energy Action Plan." Ordering Paragraphs 1 and 2 of the decision approved IOU bundled procurement plans, and required the utilities to incorporate position limits and maximum rates of transactions as part of a procurement risk management framework.
A proposed decision on Track I and Track III issues in R.10-05-006 was issued on February 21, 2012 to approve a multi-party settlement agreement on system need determination, and rules related to: (1) utility contracts with once-through-cooling facilities (OTC); (2) utility-owned generation versus power purchase agreements, (3) upfront procurement standards for utilities to transact greenhouse gas (GHG) market products and participate in California cap-and-trade carbon market under AB 32; and (4) refinements to our procurement oversight rules. The Commission will address that proposed decision in R.10-05-006.
For this proceeding, we will not specify different tracks at this time. Instead, we will preliminarily delineate the issues we intend to consider in the proceeding. Subsequently, parties will have the opportunity to provide prehearing conference (PHC) statements on how to procedurally address these issues; identify priority issues to resolve; and whether to separate certain issues into different tracks or phases. After a PHC, a Scoping Memo will be issued to lay out the procedural path.
5 Order Instituting Rulemaking to Establish Policies and Cost Recovery Mechanisms for Generation Procurement and Renewable Resource Development, dated May 6, 2010.
6 Order Instituting Rulemaking to Integrate and Refine Procurement Policies Underlying Long-Term Procurement Plans, dated February 14, 2008.
7 Order Instituting Rulemaking to Integrate Procurement Policies and Consider Long-Term Procurement Plans, dated February 16, 2006.
8 Order Instituting Rulemaking to Promote Policy and Program Coordination and Integration in Electric Utility Resource Planning, dated April 1, 2004.
9 Order Instituting Rulemaking to Establish Policies and Cost Recovery Mechanisms for Generation Procurement and Renewable Resource Development, dated October 29, 2001.
10 Unless otherwise specified, IOUs shall refer to Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), and Southern California Edison Company (SCE).
11 AB 57 (Stats. 2002, ch. 850, Sec 3, Effective September 24, 2002), added Pub. Util. Code § 454.5., enabling utilities to resume procurement of electric resources.
