3. Long-Term Procurement Plan Proceeding: 2008-2010

Previous LTPP rulemakings have reviewed and addressed a diverse, complex, and wide-ranging array of issues regarding procurement plans, practices and procedures. As such, we understand that the fundamental aspects of the LTPP program have been settled, at least for the present time. For example, the Commission determined that there was not sufficient investment in new generation in California to sustain the future needs of the utilities. To encourage new power plant investment, the Commission, in D.06-07-029, directed the IOUs to enter into long-term contracts for power to meet the energy needs of their entire distribution area, and established a cost allocation mechanism (CAM) whereby all benefiting customers will share in the capacity rights and costs pursuant to the CAM.

Further, the 2006 LTPP Rulemaking directed the utilities to consolidate the vast body of procurement-related policies and procedures into one, single, comprehensive, and authoritative document - the 2006 LTPPs. It was our intent to have the approved 2006 LTPPs supersede all the previous procurement authority, including advice letter amendments, and to incorporate all other Commission and legislative directives related to procurement policies and practices. D.07-12-052 approved the 2006 LTPPs, subject to the IOUs making compliance filings that comport with the orders set forth in the decision. We are, however, continuing to work towards one approved, integrated LTPP for each IOU. Accordingly, we envision this LTPP proceeding as a fine-tuning of the LTPP program, and not a broader restructuring. In addition, we do not intend this proceeding to be an opportunity to re-litigate major policy issues decided in prior Commission decisions.

While the LTPP process is designed to provide for a biennial review of the IOUs LTPPs, because the 2006 process just concluded with a decision on December 20, 2007, we will not require the IOUs to file new 2008 LTPPs at this time. D.07-12-052 is based on recent information concerning the IOUs' need assessments, such as the most current CEC demand forecast;¹⁰ it directs the IOUs to make compliance filings that include up-dated relevant data; and it extends procurement authority through 2015.

Given these adjustments made in D.07-12-052, this successor rulemaking will not review and approve a new set of LTPPs. Rather, this rulemaking will address a series of policy proposals to refine technical practices used to develop procurement plans, and consider other procedural matters. Any new policies, practices and procedures adopted in this proceeding will in turn be incorporated into the next cycle of LTPPs. The 2010 LTPP cycle, which will cover the 2011-2020 planning period, is anticipated to begin early 2009.

The Commission is cognizant that between now and late 2010, the IOUs' net short positions could deviate from the estimates upon which the 2006 LTPP authorizations were based. To the extent that additional procurement authority is needed to fill any identified widening gap within an IOU service territory, we leave open the possibility of granting interim procurement authority through a publicly vetted compliance update or by expediting the 2010 LTPP cycle if necessary, for example, to ensure procurement for a summer peak season that would have otherwise been missed under the revised LTPP schedule.

¹⁰ California Energy Demand 2008-2018 Staff Revised Forecast, CEC-200-2007-015-SF2, November 2007.