8. Assignment of Proceeding
Michael R. Peevey is the assigned Commissioner, and Burton W. Mattson and Anne E. Simon are the assigned ALJs for this proceeding.
1. Parties generally do not recommend rejection of proposed Plans, but recommend specific improvements without wholesale or extensive changes to Plans before their acceptance by the Commission.
2. No motion for hearing was filed.
3. IOUs seek acceptance of including solicitation of short-term (as well as long-term) contracts within the 2008 solicitation, and do not request postponing or foregoing the 2008 solicitation.
4. IOU procurement plans (particularly for SCE and SDG&E) must be amended to incorporate provisions for solicitation of short-term contracts.
5. In May 2007, the Commission adopted a condition relative to use of short-term contracts (D.07-05-028).
6. For purposes of flexible compliance rules, "0.25% of prior year retail sales" is equivalent to "25% of IPT."
7. IPT does not apply to 2010 and beyond under current provisions of the RPS Program.
8. A shortfall in RPS procurement created by lack of transmission raises questions regarding how to formulate a flexible compliance mechanism with regard to insufficient transmission, but does not make it impossible to do so.
9. The current RPS reporting format requires an LSE to choose the specific contract and energy deliveries it elects to earmark.
10. Unlimited carry-forward of an RPS deficit would make the 20% target meaningless, eliminate any need for reasonable planning and procurement margins of safety, and shift substantial burden for achieving RPS Program goals from electric corporations to developers of generation and transmission projects.
11. Existing flexible compliance rules are in the context of the legislatively required growth of no less than 1% per year to 2010, and continuation of existing rules in 2010 and beyond is not necessarily unreasonable when approximately the same annual growth factor underlying those rules is expected to continue.
12. Considerable work relative to renewable energy potential and transmission issues is now underway as a result of RETI, and modifying the TRCR process (to calculate transmission adders based on actual bids rather than information obtained prior to actual bids) would introduce the potential for undesirable delay in creation of project short-lists by IOUs.
13. IOUs currently provide information and status updates on transmission lines in quarterly AB 970 reports and other venues, including RETI.
14. It is reasonable to expect IOUs to take an active approach and work with certain customers (i.e., water, wastewater, other) and Commission staff regarding potential development of relatively smaller renewable projects using tariffs/standard contracts implemented pursuant to § 399.20 and D.07-07-027.
15. Each IOU's Plan requires projects to be at least 1.0 MW in size in order to participate in a solicitation, while IOU tariffs/standard contracts pursuant to D.07-07-027 are available for projects up to 1.5 MW.
16. It is reasonable to slightly increase the minimum size of projects participating in RPS solicitations, given the availability of the tariff/standard contract option for smaller projects.
17. The information in each IOU's Plan regarding its current consideration of whether or not to build its own renewable resources to reach 20% by 2010 is, as it was in previous plans, relatively short and generally inconclusive.
18. IOU Plans continue to be relatively complex documents (including many attachments, different model contracts, and multiple related forms), and continuing with incremental improvements toward more uniformity in form and format is likely to be desirable while also advancing goals of increased simplicity, transparency, efficiency and competition.
19. SCE does not necessarily seek approval of its Biomass Program, or the three related standard contracts, as part of its 2008 Plan.
20. Regarding integration cost, IOUs are currently under Commission direction to use the CEC determination that integration costs are negligible, SDG&E does not point to any different determination by CEC, and we recently declined to permit SCE to include a non-zero integration cost adder.
21. No utility is so certain of achieving 20% by 2010 that it should err on the side of postponing or foregoing a solicitation; nothing prohibits an IOU from achieving 20% before 2010; and each IOU should vigorously pursue early success.
1. With some exceptions, electrical corporations are required to prepare a renewable energy procurement plan, and the Commission is required to review and accept, modify, or reject each plan.
2. PG&E, SCE and SDG&E should continue to have reasonable flexibility in the way each satisfies RPS program requirements, subject to Commission guidance, limited specific requirements, and certain specific dates for the 2008 solicitation cycle.
3. Conditional approval of each 2008 RPS Plan (including Protocol, RFO, RFP, model contracts, other forms) does not constitute endorsement or adoption of each element of each Plan; rather, each IOU remains responsible for overall program success, subject to rules for flexible compliance and tests of reasonableness (e.g., how each entity administers the program, including the extent to which each entity takes Commission guidance; demonstrates creativity and vigor in program execution; and successfully reaches program goals, targets and requirements).
4. The proposed 2008 RPS Procurement Plans of PG&E, SCE and SDG&E should each be conditionally accepted, subject to the guidance, necessary modifications, changes and clarifications stated in this order, including, but not necessarily limited to, each item summarized in Appendix A.
5. PG&E, SCE and SDG&E should each, within 14 days of the date this order is mailed, file an amended Plan, serve it on the service list, and file it on the Energy Division Director. Unless suspended by the Energy Division Director within 21 days of the date this order is mailed, each utility should use its amended Plan for its 2008 RPS program and solicitation.
6. Each 2008 Plan should permit short-term (as well as long-term) bids, revised Plans that include solicitation of short-term contracts should be subject to review by Energy Division, and the treatment of procurement under short-term contracts should be consistent with the condition adopted in D.07-05-028.
7. The Commission should not direct IOUs to either postpone or forego the 2008 solicitation.
8. Flexible compliance provisions should be modified to extend existing rules to 2010 and thereafter, and change "25% of IPT" to "0.25% of prior year retail sales."
9. Flexible compliance provisions should allow insufficient transmission as a permissible reason for failure to satisfy RPS Program targets if the retail seller makes a showing, and the Commission makes a finding, that the retail seller has undertaken all reasonable efforts to do at least all of the following: (a) utilize flexible delivery points; (b) ensure the availability of any needed transmission capacity; (c) if the retail seller is an electric corporation, to construct needed transmission facilities; and (d) done nothing to conflict with its overall procurement plan (§ 454.5). The burden of proof should rest with the entity requesting the relief and, if authorized, the deferral should be permitted up to three years.
10. For purposes of meeting RPS targets, an LSE must execute contracts that result in actual deliveries within three years, but should be allowed to satisfy a procurement deficit by using actual energy deliveries from any contract that is otherwise eligible for earmarking with respect to a given year's deficit (without being required to forecast the exact contract and energy deliveries).
11. Unlimited carry-forward of a procurement deficit is incompatible with the statutory provision that inadequate procurement in one year may be carried-forward to no more than the following three years (§ 399.14(a)(2)(c)(i)).
12. RPS procurement goals and targets, and compliance determinations for enforcement purposes, should continue to be measured in actual deliveries.
13. Retail sellers should be expected to increase RPS procurement each year toward a goal of 33% by 2020, but should not, at this time, be subject to penalties for failure to procure more than 20% by 2010.
14. The TRCR process should not be modified at this time.
15. Model contracts in the 2008 Plans should include the four non-modifiable STCs adopted in D.07-11-025.
16. SCE's understanding of treatment of STC 3 should be affirmed.
17. IOUs should not take a passive approach to implementing and administering the tariffs/standard contracts for smaller RPS facilities but should work with those customers and Commission staff, as necessary and appropriate, to facilitate reasonable development, and should also report to the Water and/or Energy Divisions, if requested, on opportunities, impediments, solutions and anything else necessary to provide reasonably complete information to the Commission.
18. IOU Plans should be accepted upon the condition that the minimum project size a bidder may submit in a solicitation is increased from 1.0 MW to 1.5 MW.
19. To the extent IOUs have reasonable flexibility in program administration (e.g., credit and collateral policies and amounts, disclaimer and waiver language, margins of safety, short-term offer schedule and pricing, election to offer or withdraw availability of Biomass Program, election to conduct 2008 solicitation), an IOU later requesting deferral or waiver of a penalty should have the burden to present a complete showing in support of that request which, among other things, demonstrates reasonable program administration within Commission guidelines.
20. Commission enforcement of each APT, and 20% by 2010, should take into account whether or not each electrical corporation undertook all reasonable actions to comply, including but not limited to, whether or not it reasonably considered building its own RPS resources.
21. IOUs should continue to make incremental improvements toward adopting a common form and format for RPS Plans, including the overall summary document and the multiple attachments (including Protocol, RFP, RFO, model contracts and multiple related forms).
22. If SCE elects to extend its Biomass Program, Commission acceptance of SCE's 2008 Plan should include SCE's Biomass Program.
23. SDG&E's proposal to include a non-zero integration cost should not be accepted.
24. The 2008 solicitation schedule in Appendix B should be adopted.
25. The same approach for Commission review and acceptance, rejection or modification of the 2009 Plan should be used as employed for prior Plans, with the assigned Commissioner setting the specific schedule and addressing TRCRs.
26. Evidentiary hearing is not necessary.
27. This proceeding should remain open.
28. This order should be effective today so that the 2008 RPS solicitation may proceed without delay.
IT IS ORDERED that:
1. Each utility-proposed renewable energy procurement plan (Plan) as part of the California Renewables Portfolio Standards (RPS) Program is conditionally accepted for the next RPS solicitation cycle. Each Plan includes, but is not limited to, Protocols, Request for Proposals (RFPs), Request for Offers (RFOs), model contracts and/or Power Purchase Agreements (PPAs). The Plans are in the following documents:
a. The Pacific Gas and Electric Company (PG&E) "2008 Renewable Energy Procurement Plan" filed August 1, 2007, amended August 10, 2007, amended September 6, 2007, including the 2008 Solicitation Protocol.
b. The Southern California Edison Company (SCE) "2008 Renewables Portfolio Standard Procurement Plan" filed August 1, 2007, amended August 10, 2007, including the 2008 RFP.
c. The San Diego Gas & Electric Company (SDG&E) "2008 Draft Renewable Procurement Plan" filed August 1, 2007, amended August 10, 2007, including the 2008 RFO.
2. Each document referenced above is adopted on the condition that:
a. Within 14 days of the date this order is mailed, PG&E, SCE and SDG&E shall each file and serve an amended Plan that is consistent with all the orders in this decision, plus all guidance in this decision with which the utility agrees, and simultaneously file a copy with the Director of the Energy Division. The orders and guidance are summarized in, but not limited to, Appendix A.
b. Unless suspended by the Energy Division Director within 21 days of the date this order is mailed, each utility shall use its amended Plan for its next solicitation.
3. The 2008 RPS procurement cycle shall be as stated in Appendix B. The schedule may be modified by the Energy Division Director as reasonable and necessary for efficient administration of this solicitation. Parties may seek schedule modification by letter to the Executive Director (pursuant to Commission Rules of Practice and Procedure).
4. The flexible rules for compliance with RPS Program targets are modified as described in this order, and summarized in Appendix D, including (a) extension of existing rules to 2010 and thereafter; (b) allowance of insufficient transmission as a permissible reason for failing to satisfy a retail seller's RPS Program targets, upon a finding by the Commission that the retail seller has undertaken all reasonable actions to do all of several things identified in the law; and (c) use of banked surpluses and pooling of earmarked deliveries.
5. SCE, PG&E and SDG&E shall each actively assist water, wastewater and other customers (including, but not limited to, Commission-regulated Class A and B water and wastewater utilities) to understand and use tariffs and standard contracts to facilitate reasonable development of smaller RPS generation projects. This may include workshops and/or meetings with customers and/or Commission staff to explain the tariff/standard contract, help identify potential, consider financing options, and other matters. If requested by either the Director of the Water or Energy Division, each investor-owned utility (IOU) shall participate in a staff-convened workshop and/or meeting, respond to data requests, and shall each submit a report to the appropriate Division Director. The report shall describe each IOU's work with its water and wastewater agency customers (and other customers to the extent requested); the generation opportunities identified; the impediments that may exist; recommended solutions, if any, to each impediment; and anything else relevant to advancing the success of tariffs and standard contracts for smaller RPS projects.
6. Consistent with all prior Commission orders and directions, each utility ultimately remains responsible for reasonable RPS program outcomes, within application of flexible compliance criteria. The Commission shall later review the results of renewable resource solicitations submitted for Commission approval, and accept or reject proposed contracts based on consistency with each approved Plan. The Commission shall also judge contract results, program results, and non-compliance pleadings by, but is not limited to, considering the degree to which each utility implements Commission orders; reasonably elects to take or reject the guidance provided herein; reasonably demonstrates creativity, innovation and vigor in program execution; reaches program targets and requirements; and shows it took all reasonable actions to achieve compliance, including but not limited to the factors identified in this and prior orders.
7. The assigned Commissioner or Administrative Law Judge (ALJ) in this proceeding (or its successor proceeding with regard to ongoing implementation and administration) shall set a schedule for the filing and service later this year of draft RPS Plans for the 2009 solicitation, and subsequent draft RPS Plans, as necessary. The assigned Commissioner or ALJ shall set a schedule for matters related to Transmission Ranking Cost Reports (TRCRs) to be used in the ranking of bids in an RPS solicitation. The assigned Commissioner shall assess the adequacy of each TRCR based on filed comments and reply comments, and shall determine whether each TRCR shall be accepted, modified, or other steps taken before a TRCR is used in ranking bids in an RPS solicitation.
8. Rulemaking 06-05-027 remains open.
This order is effective today.
Dated February 14, 2008, at San Francisco, California.
MICHAEL R. PEEVEY
President
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
TIMOTHY ALAN SIMON
Commissioners
APPENDIX A
REVIEW OF AND CHANGES TO 2008 PLANS
The attached decision reviews and conditionally accepts the 2008 Procurement Plans of Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE) and San Diego Gas & Electric Company (SDG&E). The orders and guidance (while not limited by this summary) are summarized below.
1. Short-Term Contracts: Each 2008 solicitation may include requests for bids for contracts that are short-term (less than 10 years) as well as long-term (10 years and longer). The Plans will be subject to Energy Division review for consistency with this order and program protocols, and may be suspended by Energy Division. Energy deliveries from short-term contracts may count toward renewables portfolio standard (RPS) compliance to the extent permitted by Decision (D.) 07-05-028.
2. 2008 Solicitation: No delay is ordered in the 2008 solicitation.
3. Flexible Compliance: Provisions for flexible compliance are modified to extend existing rules to 2010 and thereafter, and recognize insufficient transmission, as further summarized in Appendix D.
4. Standard Terms and Conditions (STCs): Each Plan and model contract must include four non-modifiable STCs. (See D.07-11-025.) The remaining 10 modifiable STCs are accepted as proposed by each investor-owned utility (IOU) in this proceeding. SCE's interpretation of STC 3 is affirmed (to the extent still relevant).
5. Tariffs for Smaller RPS Projects: Each IOU shall actively work with its customers to facilitate understanding and reasonable use of tariffs and standard contracts for smaller RPS generation projects. This may include an IOU holding workshops and meetings as reasonable and appropriate (e.g., to facilitate understanding, help customers identify potential projects, address impediments, consider opportunities to solve impediments). Each IOU shall participate in any staff-convened workshop or meeting on this topic, and shall respond to data requests from Commission staff. If requested, each IOU shall file a report with the Director of the Water and/or Energy Divisions. The report shall address the IOU's work with its water and wastewater agency customers (and other customers to the extent requested); the generation opportunities identified; the impediments that may exist; recommended solutions, if any, to each impediment; and anything else relevant to advancing the success of tariffs and standard contracts for smaller RPS projects.
6. Minimum Size of Projects to Participate in Solicitation: Solicitation Plans are accepted on the condition that the minimum size project which may submit a bid is increased from 1.0 megawatt (MW) to 1.5 MW. IOUs should work with Energy Division staff, as appropriate, to identify evaluation criteria for emerging, pilot and demonstration projects, and such projects should be submitted for Commission consideration in filings which are separate and clearly identified from other projects.
7. Utility Ownership of RPS Projects: IOUs must actively consider utility ownership of such facilities, particularly where such ownership will put downward pressure on prices, in unique circumstances when competitive bidding is otherwise infeasible to meet California's vital energy and environmental goals, and where ratemaking options are now available to facilitate reasonable development and ownership.
8. Coordination of Plans: IOUs must continue to consider and make incremental improvements in the form and format of RPS Procurement Plans to help reduce transaction time and costs, and make the overall RPS Program simpler and more transparent, efficient and competitive.
9. PG&E:
a. Short-Term Schedule: Consider employing the same dates for short-term and long-term bids.
b. Short-Term Price: Consider using same provisions for TOD and capacity factors for all bidders.
c. Bidder Workshop: PG&E is commended for holding a bidder workhop, and other IOUs should follow PG&E's lead where doing so will advance the RPS Program.
10. SCE: If SCE elects to extend its Biomass Program into 2008, SCE's Biomass Program is accepted as part of SCE's 2008 Plan (for purposes of judging whether contracts are or are not consistent with the Plan). Specific decisions on SCE's three standard contracts and prices are reserved to a subsequent filing wherein SCE states that it will seek approval of such agreements.
11. SDG&E:
a. Integration Cost: SDG&E's Plan is accepted on the condition that it does not include SDG&E's proposal for treatment of a non-zero integration cost.
b. 2008 Solicitation: Absent very compelling reasons to the contrary (which SDG&E would present in a subsequent pleading, such as to avoid a non-compliance penalty), SDG&E should conduct a solicitation at least once each year, including in 2008.
12. Schedule:
a. 2008: The schedule is adopted as stated in Appendix B.
b. 2009: The assigned Commissioner or Administrative Law Judge will set the specific schedule. The assigned Commissioner shall rule on the proposed Transmission Ranking Cost Reports.
(END OF APPENDIX A)
APPENDIX B
ADOPTED SCHEDULE
FOR 2008 SOLICITATION
[Note: This is essentially the same as 2007 Schedule]
LINE NO. |
ITEM |
NO. OF DAYS |
DATES |
1 |
Commission's Conditional Approval of RPS Plans |
0 |
|
2 |
IOUs file amended RPS Plans |
14 |
|
3 |
IOUs issue RFOs (unless amended Plans are suspended by Energy Division Director by Day 22) |
21 (a) |
(a) |
4 |
IOUs notify Commission when bidding is closed |
113 |
|
5 |
IOUs submit short lists to Commission and PRG |
151 |
|
6 |
IOUs submit report on evaluation criteria and section process; Independent Evaluators submit Preliminary Reports |
165 |
|
7 |
IOUs submit ALs with PPAs for Commission consideration (as necessary for earmarking) |
By ___ |
by 12/31 |
Note: The Energy Division Director may change these dates. Party requests for changes must be directed to the Executive Director (Rule 16.6).
(a) An IOU may adjust this date to a day after day 21, as necessary, without Commission approval.
(END OF APPENDIX B)
APPENDIX C
SUMMARY OF 2008 RPS PROCUREMENT PLANS
A brief summary of the 2008 RPS Procurement Plans of Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE) and San Diego Gas & Electric Company (SDG&E) follows.
1. Pacific Gas and Electric Company
PG&E says the main purpose of its 2008 Plan is to describe actions PG&E will take to meet California's goal that 20% of PG&E's retail sales are from renewable resources by 2010. PG&E reports it is currently on track to meet the 2010 goal using flexible compliance, and plans to sign additional renewable energy contracts of about 1% to 2% of its annual retail sales as a result of the 2008 solicitation (approximately 750 gigawatt-hours (GWh) to 1,500 GWh22).
In particular, PG&E says its combined current deliveries plus signed contracts for future deliveries have increased from 9% in 2003 to 18% in 2007, and it anticipates its combined percentage will meet or exceed 20% of retail sales by 2010. PG&E says actual deliveries of 20% will initially occur in the 2011 or 2012 timeframe. To meet its goals, PG&E says it will use both its annual solicitation process and outreach efforts on a bilateral basis.
PG&E's 2008 Plan is influenced by its long-term electric procurement needs, according to PG&E. PG&E states that among the key assumptions from its current Long-Term Procurement Plan (LTPP) used in formulating the 2008 RPS Plan are:
· A 75% average renewal rate is assumed on baseline RPS contracts.
· The incremental procurement mix is 50% wind, 20% solar, 15% geothermal, 10% biomass and 5% other (but this likely to change based on expansion of procurement efforts and availability of new technologies).
· The average lead times (from solicitation to delivery) are three years for wind and four years for all other projects.
PG&E says the optimal offers are those with the best combination of market value, project viability and scores on other evaluation criteria.23 PG&E is seeking offers for deliveries in 2008 and beyond, with earlier deliveries preferred to later deliveries. PG&E's Solicitation seeks proposals for (a) power purchase, (b) power purchase and buyout option, (c) purchase and sale of generating facility, (d) purchase of site for development, and (e) short-term offers.
PG&E's 2008 RPS Plan is largely similar to, and builds on, previous Plans. PG&E identifies the following seven important changes from its 2007 Plan:
· Changes in the evaluation process leading to creation of the shortlist for purposes of further streamlining:
o Offers will be ranked by market value rather than partial ordering, then considered for the shortlist based on information and scores from other evaluation criteria, judgment and PRG feedback, and
o Portfolio fit is modified to be a qualitative criterion, seeking to balance projects on the shortlist regarding location, technology, online date and counterparty concentration.
· Collateral will be based on a portion of average rather than maximum revenue.
· Bidders submitting projects for PG&E ownership are encouraged, but no longer required, to provide fixed prices for operations and maintenance or fuel supply, where applicable.
· The Power Purchase Agreement Cover Sheet is removed for simplification.
· STCs will be conformed to the upcoming decision on petition for modification of D.04-06-014.
· Permission is requested to conduct a short-term RPS solicitation (i.e., contracts less than 10 years).
· Authority may later be sought to make changes to the 2008 Plan if REC trading is authorized.
PG&E reports that lessons learned from prior solicitations contributed to several of the seven important changes noted above. In addition, PG&E says for the first time in its 2007 RPS Solicitation it conducted not only a bidders conference, but also a bidders' workshop in order to inform bidders of the details of solicitation forms and contracts, and to answer general procurement questions. The workshop proved effective, according to PG&E, with 2007 offer packages on a whole more complete than in prior years. PG&E says it intends to conduct a bidders' workshop again with its 2008 Solicitation.
As part of its 2008 RPS Plan, PG&E asks that:
1. Flexible Compliance: The Commission incorporate SB 107 flexible compliance provisions into the Commission's compliance rules by finding that the carrying forward of an energy deficit for up to three years after the deficit is incurred applies to any year and not just for a deficit first incurred up to or through 2009.
2. Solicitation of Short-Term Contracts: PG&E be authorized to conduct a solicitation for short-term contracts as part of its 2008 RPS Plan.
3. Expedited Review of Short-Term Contracts: Short-term contracts be subject to an expedited review process per PG&E's proposal in R.06-02-012.
2. Southern California Edison Company
SCE'S 2008 RPS Procurement Plan states SCE seeks to procure renewable resources to augment those under contract from prior solicitations and those executed pursuant to the 2006 and 2007 solicitations. SCE says it is difficult to assess its procurement needs for 2008, however, given that it has only recently completed its 2006 solicitation, and only within the last few months completed the initial evaluation and project short-list from the 2007 solicitation. In this context, however, SCE explains that its procurement plan is straightforward. That is, SCE says it will secure resources from the 2008 solicitation as necessary to ensure that SCE meets the overall goal of 20% renewables as soon as possible, and with a reasonable margin of safety.
In addition to procuring resources to meet the 20% goal as soon as possible, SCE reports that it intends to procure renewables based on its High Need Case scenario.24 Transmission is a serious impediment to bringing these resources on line, however, given SCE has received relatively few bids from renewable generators that do not require significant transmission upgrades, according to SCE. SCE states it needs both near-term and long-term renewable energy but its evaluation criteria will favor proposals for near-term deliveries.
As is the case with PG&E's Plan, SCE's 2008 RPS Plan is largely similar to, and builds on, previous SCE Plans. SCE identifies the following seven important changes from its 2007 Plan:
· Common Format: Coordination with PG&E and SDG&E on a common organizational structure for the 2008 Plan, with the actual contents of the Plan in a separate document.
· TOD Factors: Updated its time-of-delivery (TOD) factors to reflect (a) changes in SCE's valuation methodology, and (b) more current market information.
· STCs: Changes to certain STCs to conform more closely with the STCs in D.04-06-014 (e.g., SEPs, delivery term), with all non-modifiable STCs highlighted to conform to PG&E's format and discourage changes.
· Interconnection: Delivery point for CAISO interconnected facilities now at the first point of interconnection with the CAISO operated grid rather than at SP-15. 25
· MRTU Risk: Computation and sharing of risks related to Market Redesign and Technology Update (MRTU) implementation are eliminated.
· Wind: Sharing of the price risk associated with changes in capacity factors for wind development projects that do not have a final wind report.
· Procurement Protocol: Changes in SCE's Procurement Protocol for consistency with substantive changes in the model contracts (e.g., delivery point, delivery term), clarification of instructions to potential sellers (e.g., interconnection process, interconnection costs, conditions for return of bid deposit, necessary information from sellers in their proposals, alternate performance standard for wind facilities), and updated information since the last solicitation.
As part of its 2008 RPS Plan, SCE asks that:
1. Flexible compliance be clarified or modified as follows:
a. 2010 and beyond: The Commission allow flexible compliance for all years of the RPS program based on § 399.14(a)(2)(C), with the most logical path being, according to SCE, for the Commission to adopt and apply current flexible compliance rules to the years 2010 and beyond.
b. Transmission: The Commission include insufficiency of transmission as a basis for forgiving shortfalls in meeting RPS goals based on § 399.14(a)(2)(C)(ii).
c. Earmarking and Banked Procurement: The LSE may use its banked excess procurement to fill a deficit if an LSE earmarked future deliveries from a project toward its APT but the project fails to deliver enough actual output to fill the APT prior to the end of the third year after the compliance year.
d. Earmarking and Other Contracts: The LSE may use actual energy deliveries from any other contract eligible for earmarking to satisfy a deficit if the future deliveries earmarked by an LSE fail to materialize within three years.
2. STC 3 (SEPs): The SEP STC be affirmatively clarified to permit an LSE to recover certain pre-approval payments in the event the Commission ultimately denies payment of prices above MPR.
3. Standards for all LSEs: That all LSE's, not just the IOUs, be held to the same standards for achieving 20% renewables by 2010.
4. Short-Term Solicitation: SCE be permitted to solicit short-term contracts as part of its 2008 solicitation.
5. In-State Delivery: The Commission considers relaxing or removing the in-state delivery requirement for the RPS program.26
3. San Diego Gas & Electric Company
SDG&E's 2008 RPS Procurement Plan states SDG&E expects renewable energy in 2008 to not only meet but exceed its 2008 APT (assuming all current resources deliver as contracted), with surplus banked to cover future APTs. SDG&E says it submits its 2008 Procurement Plan with the goal of achieving 20% by 2010 but, in order to accomplish this, it has identified several needs: flexible compliance in 2010 and thereafter, short-term contracts, and new transmission lines. In order to provide a margin of safety in the event contracted resources do not achieve commercial operation by 2010, SDG&E says it plans to contract for deliveries of 24% to 26% in 2010.
SDG&E's 2008 RPS Plan is largely similar to, and builds on, previous Plans. SDG&E identifies the following nine items it characterizes as important changes from its 2007 Plan:
· Type of Solicitation/Contract Term: Emphasized the need to solicit short-term agreements with terms from one to nine years.
· Bid Evaluation: Added integration costs as part of the LCBF analysis.
· Bilateral Negotiations: Indicated the need for bilateral agreements to achieve 20% by 2010.
· Procurement: Added comments regarding procuring 24% to 26% (rather than 20%) in order to provide a margin of safety in the event of failed contracts.
· Flexible Compliance Mechanism: Added the ability to earmark contracts, carry forward shortfalls for three years, utilize unbundled RECs, and the ability to carry forward without limit any shortfall that is created by (a) the failure of a developer to perform under contract and (b) any shortfall that resulted from a delay caused by the lack of transmission. Indicated the urgency of the Commission to establish flexible compliance rules for 2010 and encouraged workshops to identify other flexible compliance mechanisms.
· Transmission/Congestion/Impediments to Reaching 20% by 2010: Identified need for the Sunrise Powerlink transmission line to enable delivery to the California grid of renewable projects located in Imperial Valley, east San Diego County and northern Mexico. Identified transmission delay affecting the Pacific Wind project located in the Tehachapi. Stated that without the Sunrise Powerlink it is highly unlikely that SDG&E will achieve 20% by 2010.
· Lessons Learned: Identified problems with the TRCR process and recommended performing the analysis on actual bids received pursuant to the RFO.
· Available Renewable Resources: Identified resources in the La Rumorosa area of Mexico.
· Development Specifications: Removed wind facility specifications and asked bidder to provide.
SDG&E also identifies the following two items as new for its 2008 Plan:
· Green Attributes: The definition of Green Attributes was changed pursuant to D.07-05-057.
· Resource Adequacy: SDG&E simplified the definition of Resource Adequacy provided at Attachment D to its model contract.
As part of its 2008 RPS Plan, as amended, SDG&E recommends several things, and asks that the Commission address the following:
1. Flexible Compliance:
a. SDG&E says it will avail itself of existing flexible compliance mechanisms, and asks that the Commission consider others, such as unbundled RECs and the ability of an IOU to carry forward without limit any shortfall created by either (a) the failure of a developer to perform up to contract commitments or (b) shortfalls resulting from lack of transmission.
b. SDG&E proposes that the Commission clarify that flexible compliance rules currently in effect will remain in effect through 2010 and beyond.
c. SDG&E recommends that workshops be held as soon as possible to allow participants to offer other flexible compliance rules.
2. Shorter Term: Solicitation be permitted of contracts less than 10 years.
3. Integration Costs: Integration costs be calculated and included in the LCBF evaluation.
4. TRCR: The TRCR be completed based on actual bids received pursuant to the RFO (rather than as done now based on a request for information from possible developers before the RFO is released).
5. 2008 Solicitation: Each IOU be permitted to decide on its own whether or not to conduct a 2008 RFO based on each IOU's progress in completing contracts pending pursuant to existing offers.
6. Solicitation for Short-Term Contracts: Any changes to the 2008 RFO to include a solicitation for less than 10 years would be reviewed by the PRG and transmitted to the Executive Director for approval prior to issuance.
7. Margin of Safety: The Commission should make clear that it approves of a prudent contract margin as a hedge against contract failure.
8. RPS and LTPP Procurements: The RPS procurement should be combined with the LTPP procurement process beginning with the 2008 solicitations.
(END OF APPENDIX C)
APPENDIX D
FLEXIBLE COMPLIANCE PROVISIONS
Commission flexible compliance provisions are summarized below:
1. Flexible compliance provisions apply in all years.
2. Surpluses may be banked and applied in any year (past, present or future).
3. Allowed deficits are allowed for up to three years after the year of the deficit.
4. Up to 100% of IPT in first year of IPT (1% of prior year sales): retail seller may defer up to 100% of IPT for the first year in which retail seller has an IPT without stated reason; deferral may be for up to three years.
5. Up to 25% of the IPT in any year of IPT (0.25% of prior year sales27): retail seller may defer this amount for up to three years after the year of the deficit without stated reason.
6. Greater than 0.25% of prior year retail sales in any year: deficit permitted if retail seller makes a convincing showing relative to:
a. Insufficient response to a solicitation,
b. Earmarking,
c. Inadequate SEPs,
d. Seller non-performance,
e. Lack of competition,
f. Deferral would promote ratepayer interests and overall procurement objectives of RPS Program, or
g. Other good cause.
7. Pooling: Earmarking does not require identification and application of a specific contract to a specific deficit; rather, eligible contracts (to be considered for earmarking in a particular solicitation year) may be treated as a pool from which a retail seller may draw an amount to apply to a specific deficit.
8. Transmission: Upon a Commission finding, a deficit may be excused for up to three years where, as a result of insufficient transmission, the retail seller demonstrates that it has undertaken all reasonable efforts to do at least all of the following:
a. Utilize flexible delivery points,
b. Ensure availability of any needed transmission capacity,
c. If retail seller is an electric corporation, to construct needed transmission facilities, and
d. Not conflict with any requirement relative to the retail seller's overall procurement plan.
(END OF APPENDIX D)
22 This is about 107 aMW to 214 aMW at an 80% capacity factor (CF).
23 These include portfolio fit, credit, RPS goals, transmission cost adders and integration costs, and contract modifications.
24 According to SCE, its Base Case assumes a 100% on-time delivery of all currently executed contracts, and its High Need Case assumes 70% delivery from executed, but not yet delivering, contracts.
25 Path 15 is a transmission interface located in the southern portion of PG&E's service area that is in the middle of the CAISO control area. It is comprised of several high voltage lines, and runs approximately 90 miles between the Los Banos and Gates substations in the San Joaquin Valley. SP-15 is the zone south of Path 15. (D.03-05-083, pp. 11-12.)
26 Doing so would likely require legislation, according to SCE.
27 A factor of 0.25% of prior year sales is equivalent to 25% of IPT. Because IPT does not apply to years 2010 and beyond, we agree with SCE and change the standard to 0.25% of prior year retail sales as it applies to 2010 and beyond.
