There are several intertwined issues to be resolved here, all relating to the proper interpretation of SB 1078 as it applies to ESPs, CCAs, and small and multi-jurisdictional utilities. In essence, we have to determine how much authority the statute gives this Commission over these entities for purposes of the RPS program, and determine, as a matter of law and policy, how to apply that authority.
The main area of dispute amongst the parties is around the meaning of Pub. Util. Code Section 399.12, which was enacted as part of SB 1078. The utilities (and a number of other parties) focus on the language in the statute that states that ESPs "shall be subject to the same terms and conditions applicable to an electrical corporation," and that CCAs "will participate in the renewables portfolio standard subject to the same terms and conditions applicable to an electrical corporation." (See, e.g., Pacific Gas and Electric Company (PG&E) Opening Brief, pp. 3-4; San Diego Gas & Electric Company (SDG&E) Opening Brief, pp. 1-2.)
Based on this language, the utilities argue that the Commission's authority over ESPs and CCAs is identical to its authority over utilities, that as a matter of law the Commission is required to treat ESPs and CCAs identically to the utilities, and finally that it is simply a matter of good policy and fairness that the ESPs and CCAs be treated identically to the utilities. (See, e.g., SDG&E Reply Brief, p. 2.)1
Opposing this interpretation is the Alliance for Retail Energy Markets (AReM), which represents ESPs in this proceeding. According to AReM, an "overly literal" interpretation of Section 399.12 is contrary to legislative intent (AReM Opening Brief, p. 3), and by looking at the larger context, including the legislative history, one comes to the conclusion that the Commission has relatively limited authority over ESPs (and by implication, CCAs). AReM argues:
The Commission is authorized to develop and adopt rules for determining an ESP's baseline and procurement targets and to resolve various RPS compliance-related issues (i.e., the manner in which ESPs will participate in the RPS). The Commission is not authorized, however, to require ESPs to submit procurement plans, conduct Commission-supervised bid solicitations or enter into long-term contracts for renewables. (AReM Opening Brief, pp. 3-4.)
AReM goes on to argue that not only is this outcome required by law, but also that it is practical and sound policy as well.2
The City and County of San Francisco (CCSF) agrees with AReM, and makes the same arguments as AReM in the context of CCAs, namely that only certain "fundamental aspects" of the RPS program apply to CCAs, while other aspects of CCA compliance with the RPS requirements should remain independent from Commission oversight. (CCSF Opening Brief, pp. 1-2.)
The County of Los Angeles and the City of Chula Vista, in a joint brief, make a different argument, claiming that CCAs are a form of municipal utility, and accordingly fall under Pub. Util. Code Section 387, which grants authority over implementation of the RPS program to the governing body of the local publicly-owned utility, rather than to this Commission. (County of Los Angeles and Chula Vista Opening Brief, pp. 4-9.)
Our first step is to determine the scope of our authority over ESPs for purposes of the RPS program. The statutory language at issue for ESPs reads:
The commission shall institute a rulemaking to determine the manner in which electric service providers will participate in the renewables portfolio standard. The electric service provider shall be subject to the same terms and conditions applicable to an electrical corporation pursuant to this article. (Pub. Util. Code Section 399.12(c)(3)(C).)
The fact that this language calls for ESPs to be subject to the same terms and conditions as the utilities (electrical corporations) implies that the Commission has the authority to impose those same terms and conditions on ESPs. Furthermore, as ORA points out,
The statute provides that the "Commission shall institute a rulemaking to determine the manner in which electric service providers will participate ... " PUC section 399.12.(b)(3)(C). Thus, it grants the Commission authority over the various acts or practices that comprise the "manner" in which ESP[s] participate. (ORA Reply Brief, p. 3.)
In short, there would be no point in the Commission having a rulemaking on ESP participation in the RPS program if the Commission did not have authority over ESP participation. On the other hand, there would also be no point in having a rulemaking on ESP participation in the RPS program if the Legislature intended that the ESPs participate in exactly the same manner as utilities. The Legislature's request that we determine the "manner" in which ESPs participate certainly indicates that the Commission has some discretion to make different requirements of ESPs than utilities.
Thus, there is obvious ambiguity in the statutory requirements. Although §399.12 requires that the Commission make ESPs "subject to the same terms and conditions applicable to an electrical corporation," it also requires the Commission to determine the "manner" in which those entities participate.
As TURN points out in its comments on this decision, AB 380, recently signed by the Governor, also includes the following language:
"Each load-serving entity shall be subject to the same requirements for resource adequacy and the renewables portfolio standard program that are applicable to electrical corporations pursuant to this section, or otherwise required by law, or by order or decision of the commission." (See Public Utilities Code Section 380(e).)
This language is similar to the language in Section 399.12 that says ESPs shall be "subject to the same terms and conditions applicable to an electrical corporation." However, it does not replace or otherwise modify the additional language in Section 399.12 that requires the Commission to determine the "manner" in which ESPs comply with RPS.
Therefore, in order to harmonize these competing directives, the Commission still must exercise judgment and discretion in determining the manner of ESP participation in the RPS program.
The statutory language applicable to CCAs is similar to that applicable to ESPs:
The commission shall institute a rulemaking to determine the manner in which a community choice aggregator will participate in the renewables portfolio standard subject to the same terms and conditions applicable to an electrical corporation. (Pub. Util. Code Section 399.12(c)(2).)
Thus, the same reasoning we applied above for ESPs also applies to CCAs. We believe the Legislature intended to give the Commission some discretion to make different requirements of CCAs than utilities.
The argument of the County of Los Angeles and the City of Chula Vista is based upon the assumption that CCAs are in fact municipal (local publicly-owned) utilities. From that assumption, they argue that CCAs fall under
Section 387, rather than Section 399.12, removing them from this Commission's control. This argument would render Section 399.12(c)(2) a nullity, as there would no longer be CCAs, as for RPS purposes they would be identical to municipal utilities. The assumption that CCAs are municipal utilities for RPS purposes is accordingly inconsistent with the statutory language.3
The small and multi-jurisdictional utilities are different from the three larger investor-owned utilities, but otherwise have little in common with each other. Our record in this area, with the exception of the thoughtful opening and reply briefs from Pacificorp, is relatively scanty.
However, since the small and multi-jurisdictional utilities are nonetheless utilities (electrical corporations), they are accordingly clearly subject to the requirements of the RPS program.4 To avoid questions of our jurisdiction over other states, we clarify that the obligation of multi-state utilities relates to their in-California sales, and that the generation used to count toward that requirement must meet the CEC's interconnection and deliverability requirements.5
Subsequent to the issuance of the ALJ's draft decision, Assembly Bill 200 became effective, adding Section 399.17 to the Public Utilities Code. Section 399.17 affects the RPS compliance requirements for an electrical corporation "with 60,000 or fewer customer accounts in California that serves retail end-use customers outside California." Multi-jurisdictional utilities that fall into this category are subject to specific different requirements than other utilities regarding their participation with the RPS program, and should comply with the requirements of Section 399.17. Any electrical corporation that believes it is subject to Section 399.17 shall serve a letter to that effect on the service list to this proceeding.
In addition, in its comments on the draft decision, Mountain Utilities points out that AB 2509 (Nakanishi) established Public Utilities Code Sections 2780 and 2780.1 that apply to microutilities. We believe that the specific circumstances and needs of these unique utilities, as well as those subject to Section 399.17, should be examined more closely in the implementation phase of this proceeding, following this decision.
1 The Utility Reform Network (TURN), the Center for Energy Efficiency and Renewable Technologies (CEERT), the Office of Ratepayer Advocates (ORA), the Union of Concerned Scientists (UCS), and the Green Power Institute (Green Power) generally concur with the utilities that the Commission has broad authority over ESPs and CCAs.
2 AReM previously argued that the Commission lacked the authority to require ESPs to comply with the accelerated target date of 2010, established for utilities in the Energy Action Plan. However, in its comments on this decision, AReM correctly clarifies that its members have since committed to meeting the accelerated target date.
3 Even if a CCA qualified as a local publicly-owned utility under §§ 387 and 9604, that would not remove it from the purview of § 399.12(c)(2), which specifically applies to CCAs.
4 This holding is consistent with the arguments of the UCS (Opening Brief, pp. 5-7), PG&E (Opening Brief, pp. 4-5), CEERT (Opening Brief, pp. 3-6), TURN (Opening Brief, pp. 8-9), Green Power (Opening Brief, p. 4), ORA (Opening Brief, p. 7), and SDG&E (Opening Brief, p. 2).
5 We do not address the situation in which a multi-jurisdictional utility may wish to count generation and load from other states in calculating its percentage of renewable energy for purposes of the RPS program, as that question would be properly addressed by the CEC. Some utilities may also be eligible to make use of the provisions of Public Utilities Code section 399.17.