5. Preliminary Scoping Memo

As required by Rule 7.1(d)¹⁴ of the Commission's Rules of Practice and Procedure (Rules), this Order includes a preliminary scoping memo. In this Preliminary Scoping Memo, we describe the issues to be considered in this proceeding and the timetable for resolving the proceeding.

5.1. Long-Term System and Local Reliability Resource Plan

The purpose of the system resource plan is to identify CPUC-jurisdictional needs for new resources to meet system or local RA over a long term planning horizon, including issues related to long-term renewable resource development, and need for replacement infrastructure to eliminate reliance on power plants using OTC. In addition to maintaining an adequate reserve margin, we anticipate that the electricity system needs to: 1) integrate renewable resources; 2) support OTC policy implementation; 3) maintain local reliability; 4) respond to variations in load; and 5) meet GHG goals. These needs will be the primary drivers for any need for new resources identified in this proceeding. Furthermore, we may address or reassess assumptions from other proceedings to determine future need.¹⁵

Our long-term resource planning efforts will take into consideration emerging policy discussions related to the retention of existing flexible capacity resources at risk of retirement due to current market conditions; and an assessment of the state's reliance on nuclear power in light of the expected expiration of nuclear licenses near the end this planning horizon. We may consider expanding our planning horizon from current 10-year outlook to a 20-year outlook.

Finally, because the long-term planning studies conducted in this proceeding will affect utilities' future procurement activities, we will have information on which to base policy choices applicable to all jurisdictional LSEs. While 33% renewable portfolio standards (RPS) implementation scenarios will likely remain a central focus of this proceeding, additional scenarios to assess other cost-effective resource strategies to achieve GHG goals, including scenarios considering transmission, distributed generation, and OTC may also be considered. The nature and extent of the scenarios that are covered in this proceeding will be addressed in a later ruling.¹⁶

The assigned Commissioner or Administrative Law Judge (ALJ) will issue a ruling shortly after the issuance of this Order presenting staff's proposed standardized planning assumptions. Parties will be given an opportunity to comment before final planning assumptions are adopted for the purposes of this proceeding. As indicated by the schedule below, we anticipate a decision on these issues by the end of 2012.

This proceeding will also address broad rule and policy issues related to procurement plans. Specially, we intend to consider issues that were not resolved in Track III of R.10-05-006, and other emerging procurement topics. The issues include, but may not be limited to, the following:

1. Multi-year Flexible Capacity Procurement Rules - We may consider adoption of new rules for forward procurement of flexible resources to support grid reliability, for either local reliability reasons and/or grid integration of renewable resources. In conjunction, we may review our policy and consider refinements to our existing rules concerning long-term contract solicitations.

2. Procurement Rules to Comply with SB 695 on the Cost Allocation Methodology - Senate Bill (SB) 695¹⁷ codified aspects of the cost allocation rules established in D.06-07-029 and D.07-09-044. D.11-05-005 narrowly reconciled differences between SB 695 and our prior procurement rules. This proceeding will consider any necessary modifications to fully implement the RA provision of SB 695.

3. Clarification Refinement of Existing Procurement Rules through the Development of a Procurement Rulebook - A staff proposal for a Procurement Rulebook was considered in R.10-05-006, but not adopted. The concept of a Procurement Rulebook was first proposed in the 2006 LTPP proceeding to provide a comprehensive source of procurement rules and requirements. This proceeding will consider the adoption of a Procurement Rulebook.¹⁸

4. CAISO Corporation Market-Related Procurement Implementation Issues - The CAISO instituted a new market structure in 2009, previously known as the Market Redesign and Technology Upgrade. This proceeding will consider procurement issues that arise from recent CAISO market initiatives.

5. GHG Procurement Policy -Consider any GHG product procurement policies to facilitate the implementation of California Air Resources Board's cap-and-trade program.

6. Other Procurement Rule Changes - Parties should be prepared to discuss other potential rule changes at the PHC, including OTC power procurement policies, timelines associated with IOUs' transaction of RA products, nuclear fuel procurement policy, or refinements to the Procurement Review Group process.

Some of these policies and rules should be resolved prior to the filing of the IOUs' updated bundled procurement plans expected in 2013. We invite parties to comment in their PHC statements on the timing of resolution of policies and rules.

5.2. IOU Section 454.5 Bundled Plans

This proceeding will consider individual IOU procurement plans pursuant to § 454.5. Each IOU shall file proposed updates to its individual bundled plan consistent with guidance to be provided in the Scoping Memo and any related rulings or decisions.

We anticipate that the IOUs shall file their updated bundled plans in 2013 and associated testimony, to be followed by intervenor testimony, following a decision on the Long-Term System and Local Reliability Resource Plan. We expect these IOU bundled filings to reflect changes subsequent to D.12-01-033. Evidentiary hearings are anticipated, followed by a round of post-hearing briefs and reply briefs.

5.3. Issues Not Within the Scope of This Proceeding

We recognize the potential that the LTPP proceeding, as the umbrella proceeding, may attract "forum-shopping" proposals from parties that have had their ideas rejected, or have yet to be considered, in other proceedings. As in the predecessor proceeding, the Commission finds it necessary to adopt a scoping standard for this proceeding, in order to highlight what constitutes an issue that is legitimately in the scope in this proceeding.

LTPP Scoping Standard. The LTPP scoping standard is defined as follows:

· Any procurement-related issue(s) not already considered in other procurement-related dockets in Table 1 below may be considered, subject to the following conditions. The issue(s) must:

(1) Materially impact procurement policies, practices and/or procedures;

(2) Be narrowly defined; and

(3) Demonstrate consistency with one or more of the LTPP proceeding goals.

Therefore, issues that do not meet this standard are not in the scope of this proceeding.

¹⁴ "An order instituting rulemaking shall preliminarily determine the category and need for hearing, and shall attach a preliminary scoping memo. The preliminary determination is not appealable, but shall be confirmed or changes by assigned Commissioner's ruling pursuant to Rule 7.3, and such ruling as to category is subject to appeal under Rule 7.6." (Rule 7.1(d).)

¹⁵ We will not consider new energy efficiency (EE) goals in this proceeding. However, we may review the energy efficiency planning assumptions adopted in other proceedings for procurement purposes.

¹⁶ This may also include the common assumptions that parties will use in specific scenarios.

¹⁷ SB 695 (Stats. 2009, ch. 337, effective October 11, 2009).

¹⁸ While this document is known informally as the "Rule Book," its final implementation may be in one of several different forms, including as a General Order.