2. Background
2.1. I.05-09-005
This Investigation and Rulemaking will build on the progress made in I.05-09-005. That proceeding resulted in several important advances. In response to the consensus view expressed in workshops, the California Public Utilities Commission (CPUC or Commission) adopted a backstop cost recovery mechanism for renewable resource transmission projects as a key component of California's effort to meet its RPS goals.4 In response to requests in those same workshops that the Commission streamline its transmission permitting processes, the Commission's Executive Director issued streamlining directives July 13, 2006.5 These directives have thus far been quite effective in speeding the transmission permitting process of the Commission.6
Additionally, through collaboration between the Commission's transmission and RPS staff, with information provided by the investor owned utilities (IOUs), the Commission now tracks the transmission status of each RPS project under contract. This helps identify RPS projects that may be at risk for lack of identified transmission.
I.05-09-005 also identified certain kinds of transmission system upgrades that do not require formal Commission approval to facilitate delivery of renewable resources. The Investigation also provided the framework for the Commission to work with the CAISO to gain FERC approval on April 19, 2007 for the CAISO to establish a wholesale rate financing mechanism in its tariff to encourage proactive development of renewable transmission projects.
The Commission and the CAISO have continued to work collaboratively to implement California's RPS goals. This is evidenced by approval of the above wholesale rate financing mechanism,7 the CAISO's approval of the Tehachapi Renewable Transmission Project plan of service, and most recently, a concerted coordinated effort to address reform of the CAISO interconnection process and queue.
Like I.05-09-005, this Investigation and Rulemaking will not be business as usual. To the extent available to us, we will rely on informal processes, including filed comments and workshops, to learn about and take action on issues hindering the development of transmission to renewable resources. Among other things, we will explore possible improvements to the CPUC's already-streamlined transmission permitting procedures, and the potential for adopting environmental siting guidelines.
2.2. The Renewable Energy Transmission Initiative
Despite the successes of I.05-09-005 and earlier Commission proceedings, work remains to be done to meet California's ambitious renewable energy goals. The Commission initiated the formation of RETI in the summer of 2007 to create a statewide focus on these goals. RETI is a collaborative study effort among California stakeholders seeking to develop renewable generation and associated transmission. The RETI effort is overseen by a Coordinating Committee composed of the Commission, the CEC, the CAISO, the Southern California Public Power Authority, the Northern California Power Agency, and the Sacramento Municipal Utility District. The Stakeholder Steering Committee is comprised of investor-owned utilities, publicly-owned utilities, renewable developers, federal land use agencies, environmental organizations, consumer organizations, local government organizations, and others. The RETI effort will identify renewable resource areas in California and neighboring areas, and the cost of the generation and transmission needed to develop those areas. RETI will then identify the "competitive renewable energy zones" (CREZs) that it determines can be developed in the most cost-effective and environmentally benign manner. RETI will rely on existing transmission planning processes to identify the transmission infrastructure necessary to deliver the generation output from the highest-ranked CREZs to load centers. The goal of RETI is to ensure that transmission plans of service are produced that have collaborative input and support from virtually all stakeholders - contributing to a more streamlined transmission siting process, among other benefits.
While we do not currently anticipate the need for any specific Commission action or decision with regard to the work of the RETI effort, this Investigation and Rulemaking will serve as a forum for such actions or decisions in the event they become necessary.
2.3. Obligation to Study Demand Side Resources Pursuant to Pub. Util. Code § 1002.3
Pursuant to California Pub. Util. Code § 1002.3,8 this Commission is required to consider "cost-effective" alternatives to transmission facilities, including specific demand-side alternatives. That section provides:
In considering an application for a certificate for an electric transmission facility pursuant to Section 1001, the commission shall consider cost-effective alternatives to transmission facilities that meet the need for an efficient, reliable, and affordable supply of electricity, including, but not limited to, demand-side alternatives such as targeted energy efficiency, ultraclean distributed generation, as defined in Section 353.2, and other demand reduction resources.
Since adoption of Section 1002.3, the Commission has complied with this provision through its environmental analysis of a proposed transmission project. However, these analyses primarily address environmental impacts, not cost-effectiveness, and typically do not evaluate an explicit demand-side alternative. The Commission seeks input in this Investigation and Rulemaking as to how to accomplish compliance with Section 1002.3 consistent with California's RPS goals and the need for renewable transmission, and input regarding the process by which the Commission should comply with § 1002.3 going forward.
The Commission seeks input on whether it is appropriate to continue addressing Section 1002.3 provisions in the environmental phase of our review of transmission lines, and what factors need to be taken into consideration to meet the statutory requirements. For example, should applicants be required to submit a demand-side alternative, and if so, should these analyses explicitly address cost-effectiveness? If Section 1002.3 provisions are instead addressed in the need determination or other phase of the Commission's review, should such analyses take into consideration the environmental impacts as well as economic impacts of the alternatives?
4 Decision (D.) 06-06-034 (June 15, 2006).
5 The Streamlining Directives are available at www.cpuc.ca.gov/puc/energy/environment/060713_transmissionprojectreviewstreamliningdirective.pdf.
6 The CPUC's transmission line permitting process was recently evaluated by the Bureau of State Audits and found to take less time than both the Energy Commission's generation permitting process and the ISO's interconnection approval process. See California State Auditor, "Solar Energy: As the Cost of This Resource Becomes More Competitive With Other Renewable Resources, Applications to Construct New Solar Power Plants Should Increase," January 2008 Report 2007-119 at 37, Figure 7.
7 Order Granting Petition for Declaratory Order, 119 FERC ¶ 61,061 (2007).
8 Added by Stats. 2005, Ch. 366, Sec. 5. Effective January 1, 2006. All future statutory references shall be to the California Public Utilities Code unless specifically stated otherwise.
