2. Background
This LTPP proceeding is the successor to R.01-10-024, R.04-04-003, and R.06-02-013, the rulemakings initiated by the Commission to ensure that the investor-owned utilities (IOUs) could resume procurement responsibilities on behalf of their customers. The LTPP proceedings operate on a two-year cycle with the IOUs responsible for submitting procurement plans that project their need, and their action plan for meeting that need, over a ten-year horizon. Pursuant to Assembly Bill (AB) 57,5 codified as Section 454.5 in the Public Utilities Code, by approving procurement plans, the Commission establishes "up-front standards" for the IOUs' procurement activities and cost recovery. This obviates the need for after-the-fact reasonableness review by the Commission of the resulting utility procurement decisions.
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 Pacific Gas and Electric Company, Southern California Edison Company, and San Diego Gas & Electric Company for 2007-2016.
Since the 2006 LTPP proceeding was initiated, the legislature also passed AB 326 and Senate Bill (SB) 1368,7 California's Climate Change laws, providing further guidance to the Commission. "Upfront standards" for procurement must now consider carbon risk when filling net short positions with fossil resources, so as not to "crowd out" preferred resources or incur stranded costs by purchasing technology that may soon become obsolete.
As has been done before, we will use the EAP as our guidepost in this proceeding. Under the EAP, the State's energy agencies have jointly adopted the goal "for California's energy to be adequate, affordable, technologically advanced, and environmentally-sound."8 The agencies developed a set of priorities for energy policy, many of which are directly relevant to this rulemaking. A primary focus in this LTPP proceeding is implementation of the EAP loading order, in the order of EE, demand response (DR), renewables, distributed generation, and clean fossil-fuel.
We will also consider the CEC's 2007 Integrated Energy Policy Report (IEPR), for procurement-related recommendations during this and related rulemakings.9
5 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.
6 AB 32 (Stats. 2006, Ch. 488, effective September 27, 2006).
7 SB 1368 (Stats. 2006, Ch. 598, effective September 29, 2006).
8 Energy Action Plan II, at p. 2.
9 CEC 2007 Integrated Energy Policy Report, CEC-100-2007-008, November 2007. See www.energy.ca.gov/2007publications/CEC-100-2007-008/CEC-100-2007-008-CTF.PDF.
