3. Revised Methodology
Parties generally agree the ED staff White Paper facilitates program administration by bringing complex issues and definitions into one document, and providing reasonable explanations and examples. Parties disagree with staff on various issues, which we address and resolve below.
3.1. Guiding Principles
SCE proposes 9 Guiding Principles (GPs) to use in developing the methodology for RPS accounting and reporting. PG&E concurs with these 9 principles. We think they are generally helpful, and employ them to guide our work, as discussed below. These principles are:
GP 1: The rules must comply with RPS legislation.
GP 2: The rules should adhere to prior decisions.
GP 3: The rules should be fair.
GP 4: The rules should be applied equally to all LSEs.
GP 5: Simpler is better.
GP 6: The rules should not create market power for LSEs, renewable generators or other market participants.
GP 7: Each kilowatt-hour (kWh) of renewable energy should only be counted once.
GP 8: The rules should not unfairly advantage or disadvantage any type of renewable technology.
GP 9: The rules should account for the realities of the renewable energy market and the transmission infrastructure in California.
We briefly discuss and clarify some GPs immediately below, and later in this order as needed.
We agree with SCE that the rules must adhere to prior Commission decisions, but that the Commission retains flexibility to clarify or adopt modifications to prior decisions, as necessary. This flexibility is important particularly, as SCE correctly points out, where past decisions were ambiguous, led to confusion, or turn out to not be the best method for achieving RPS program goals (e.g., carry forward in relation to IPT (not APT), as explained more below).
The adopted reporting methodology applies equally to all LSEs. Issues raised by parties in comments on the initial proposal which are unique to ESPs, CCAs, or small and multi-jurisdictional utilities are not addressed in this order (e.g., whether or not to set the initial baseline at zero, whether or not to grow the baseline at more than 1% per year). Rather, we focus here on a reporting methodology that applies equally to all LSEs. Unique elements of implementation for ESPs, CCAs, or small and multi-jurisdictional utilities, if any, have been, are, or will be, addressed in R.06-02-012.
We agree with several parties that simpler is better, but only as long as the reporting methodology is consistent with law and includes the proper incentives. Each report must also state targets and results necessary to measure whether or not program goals have been-or are in the process of being-met. As explained more below, we find that an APT-based methodology does this.
As recommended by SCE, the adopted reporting system counts each kWh only once. Thus, we only identify the APT once annually, and count the energy to fulfill the APT only once annually. A continuing deficit for more than one year, however, is not the same thing, as explained further below.
GPI takes issue with GP 8, saying resource neutrality is not part of the original legislation, and is not consistent with §§ 383(a)(2), 383(a)(3) and 389. GPI contends there may be legitimate cost and other reasons to give advantage to specific renewable technologies. In comments on the proposed decision, GPI clarifies its view that resource neutrality is the correct approach for reporting and compliance, but not necessarily for the RPS program generally. We agree to the extent explained below.
We have implemented the RPS Program on a resource (technology) neutral basis. For example, we have consistently rejected the use of "resource stacks," and explicit or implicit preferences based thereon. (D.06-05-039, pp. 38-40.) While we require reporting of results by technology type, reporting is itself neutral with respect to technology.
Nonetheless, on April 25, 2006, the Governor issued Executive Order S-06-06. This Executive Order sets a target for the use of biomass in the generation of electricity at 20% within the already established renewable generation goals for 2010 and 2020.6 The August 21, 2006 Scoping Memo in this proceeding identifies this as an issue for parties' comments. We expect parties to address how the Governor's goal should be implemented here, and in other proceedings, as relevant. Thus, we adopt GP 8 here for purposes of guiding us in the reporting and compliance methodology, not necessarily all aspects of the RPS Program.
3.2. Methodology Based on Reporting
In deciding disputed issues related to the adopted methodology, we point out that our decisions herein are largely based on reporting matters rather than compliance and enforcement. That is, we address compliance to the extent compliance relates to reporting (e.g., banking of surpluses; carrying deficits forward for up to three years; reporting up to, during and after 2010). Similarly, we address enforcement only as necessary to clarify aspects of reporting or as desirable to provide limited guidance (e.g., each APT is a separate annual target independently subject to reporting, compliance and enforcement; estimated penalties may be reported even if not due and payable).
We emphasize that the adopted reporting methodology itself is neutral with respect to enforcement and penalties. Respondents and parties later-in appropriate subsequent proceedings-will have the opportunity to present all material and relevant facts and argument within the adopted reporting framework to reasonably permit proper measurement of compliance and application of enforcement, including penalties, as necessary.
The result of our using the 9 GPs, with a focus on reporting, is a revised reporting method based on AP and APT. ED staff has prepared a revised document which incorporates this reporting structure and other decisions made herein. (See Attachment A). The adopted reporting document states definitions, equations, flexible compliance rules, and provides examples.
We adopt Attachment A as the fundamental methodology document to guide LSE reporting of RPS program targets and results. It promotes a uniform understanding of necessary concepts and terms. Further, it permits consistent reporting of program progress and results.
PG&E correctly notes, however, that reporting and compliance rules are multi-faceted and complex, and must be fully understood by application to specific circumstances. We do not preclude future modifications based on such understanding. We make incremental improvements here. The Commission will be reasonable, but we remind each LSE that within the RPS structure each LSE must in turn do everything reasonable to meet the 20% by 2010 goal.
6 For example, 20% biomass within the goal of 20% renewables by 2010 means a target of 4% biomass by 2010.
