6. Rejected Comments and Other Clarifications
We here discuss the more important comments which do not change, or are not incorporated into, the adopted revised methodology. We do this to further explain the adopted approach, and provide other guidance going forward.
6.1. Reject 100% Earmarking
We recently considered and declined to adopt full earmarking, but said we might consider it further in this decision. (D.06-05-039, p. 24.) PG&E continues to argue here for full earmarking. Neither PG&E nor any party, however, presents anything substantially new that requires additional consideration or comment beyond what we already stated in our May 2006 order.
Further, earmarking largely has to do with penalty avoidance. The matter at issue here is reporting. Parties may present arguments at the appropriate time on whether or not penalties should apply. Those arguments are for the most part premature now, and are unpersuasive with respect to modifying our reporting structure. Therefore, we decline to change our policy on earmarking. We discuss full earmarking further below in the context of flexible compliance.
6.2. Flexible Compliance in 2010 and Thereafter
Several parties assert that flexible compliance must be permitted for deliveries in 2010 and thereafter. This is not the case pursuant to existing rules, but may be shortly, as explained below. CEERT recommends placing an "end-date" on flexible compliance. We do so by restating existing policy, but note that we may consider this further based on additional evidence to be filed in this proceeding.
We determined (before accelerating the 2017 target to 2010) that:
"The language requiring utilities to procure 20 percent of retail sales no later than December 31, 2017 is clear and unequivocal. The 2017 deadline is absolute." (D.03-06-071, p. 40; emphasis in original.)
Within this deadline, we developed flexible compliance rules. Those rules, however, did not change the determination that 20% by the end of 2017 is an absolute deadline. We also ordered that failure "to meet the 20% renewable procurement obligation by the end of 2017 will result in additional penalties." (Id., Ordering Paragraph (OP) 24, as modified by D.03-12-065, OP 1(h).)
Our approach is clear: flexible compliance rules apply to incremental progress leading to 20%. There was, and is, no language indicating that a deficit in 2017 may be carried forward for three years before the utility may be subject to a penalty. In fact, the opposite is true. We clearly said "by the end of 2017." (Id., OP 24.) We did not say, for example: "by the end of 2020 (i.e., due to flexible compliance)."
The state energy agencies accelerated the 20% by 2017 to 20% by 2010.13 In doing so, no language stated that the absolute deadline in 2017 was not similarly accelerated to be an absolute deadline in 2010. To the contrary, the most recent language is as clear and unequivocal as that said in our 2003 order regarding the attainment of 20%: "The year 2010 is the year by which the Commission expects 20% of energy sold to retail end-users to be delivered from eligible renewable resources." (D.06-05-039, Finding of Fact (FOF) 8.)
Several parties argue for perpetual flexible compliance. PG&E argues, for example, that long lead times and lack of transmission facilities make it difficult to select the best mix of renewable resources while achieving actual deliveries of 20% by 2010. PG&E asserts that the absolute need to have 20% by 2010 discourages LSEs from contracting for the development of a potential mix that is the best fit, including recognition of emerging technologies. LSEs are forced to accept bids offering a 2010 on-line date, according to PG&E, even if those bids reflect inferior value to customers in violation of the principle behind least cost/best fit (LCBF). PG&E concludes that flexible compliance must be permitted in 2010 and every year of the RPS program.
We are not convinced. We have already considered and dismissed these arguments. (D.06-05-039, pp. 24-33.) We are as committed as is each LSE to achieving the LCBF mix. Neither PG&E nor any other party, however, presents compelling evidence on the cost of various mixes, or the cost savings from potential emerging technologies. There will always be concerns and unknowns with regard to project lead times, transmission issues, possible technology improvements, potential cost reductions, and other variables. The state policy of attaining 20% by 2010, however, already balances various factors, and the state's public policy officials have determined that the benefits justify the accelerated target.
We agree with CEERT that the IOUs:
"apparent effort to discredit projects with the `shortest on-line date'...seems peculiar at best and disturbing at worst especially if that project results in steel in the ground and renewable power being produced to meet current targets. Such a project would also seem to carry far less risk in terms of confirming project viability than projects that have much longer lead times and/or are transmission constrained." (CEERT Reply Comments, p. 3.)
We take these near-term lost opportunities seriously. LSEs should also.
In addition, and related, to flexible compliance for 2010, PG&E, SCE and SDG&E also recommend allowing earmarking for more than three years. (SCE Reply Comments, p. 19.) In support, they argue that this will, in a fair and reasonable way, address impediments due to long lead time development and other events beyond their control. We are not persuaded. Rather, GPI has it right:
"If the current RPS compliance targets are in fact unreasonable, then the solution should be to re-examine and reset the targets, and possibly to restructure the program, not to weaken the compliance system. In this regard the flexible compliance proposals of both PG&E and SCE must be rejected, or the result will be a gutted RPS program. We do not think it is in anybody's best interest to let that happen, certainly not the citizens of California who strongly support the RPS program objectives." (GPI Reply Comments, p. 4.)
The current RPS compliance targets are reasonable, and we are not persuaded to weaken the compliance system. If targets are not met, LSEs will have ample opportunity to present defenses at the appropriate time.
We also note that flexible compliance is limited to allowing deficits to run forward for no more than three years. (§ 399.14(a)(2)(C).) Thus, we are not persuaded that a deviation for earmarking beyond three years is permitted but, even if allowed, we are not convinced to do so.
Our flexible compliance rules are in the context of reaching the 20% goal. They recognize, for example, the lead time to conduct solicitations and build new plant through 2009. In this context, existing flexible compliance rules are likely to lose considerable relevance once the 20% goal is reached. Nonetheless, we will consider parties' recommendations before adopting specific flexible compliance rules for 2010 and thereafter, as described below.
That is, flexible compliance may or may not have some separate usefulness after a "steady-state" of 20% is reached (or 33% as discussed below). In a steady-state context, for example, it may be a better balance of competing interests to more strictly apply the "no more than the following three years" statutory language. (§ 399.14(a)(2)(C).) This may result in restricting flexible compliance to a period less than the full three years.
Similarly, flexible compliance in the current context (both without and with an excuse) is in relationship to IPT (e.g., up to 25% of IPT and over 25% of IPT). IPT no longer has meaning after an LSE reaches 20% of retail sales (or other steady-state). There may, however, still be normal fluctuations in the RPS generation base (e.g., good or bad wind or water years) or unexpected variations in total retail sales. Flexible compliance in a steady-state context might be more reasonable as a percentage variation in total renewable generation or retail sales rather than IPT. It may or may not also be reasonable to adjust the percentage trigger for permissible deficit carry-forward without an excuse and with an excuse (e.g., from 25% of IPT to something other than 25% of total retail sales).
We also note that the state's stated goal is to increase RPS generation from 20% to 33% of total retail sales by 2020. (See Energy Action Plan II.) Reasonable flexible compliance rules may need further revision in the context of reaching this higher goal.
The August 21, 2006 Scoping Memo already seeks comments on this issue. (Scoping Memo, Attachment A, Issue 6, pp. 12-13.) We will adopt specific flexible compliance rules for use in 2010 and thereafter based on the further record that is being developed.
We also observe that recently enacted SB 107 will become effective January 1, 2007. At that time, new language will provide that: "The flexible rules for compliance shall apply to all years, including years before and after a retail seller procures at least 20 percent of total retail sales of electricity from eligible renewable resources." (New § 399.14(a)(2)(C)(i).) We anticipate implementing this new language pursuant to our consideration of comments noted above, or supplemented, as needed, when SB 107 becomes effective.
Nothing presented here convinces us now to alter the clearly stated requirement of 20% by 2010. To the contrary, we maintain that the reportable target by 2010 is 20% of retail sales. The reportable result is actual deliveries.
We are similarly not persuaded to adopt earmarking for more than three years. We will address enforcement and penalty matters as they arise later.
Existing flexible compliance rules are in the context of reaching 20% by 2010. Nothing convinces us to change prior decisions by an immediate, wholesale implementation of existing rules to a steady-state or other condition. Rather, we will give further consideration to this based on additional comments filed pursuant to the August 21, 2006 Scoping Memo, and as we implement SB 107. Within this context, each retail seller must procure 20% of its retail sales no later than December 31, 2010, consistent with prior policy and new statute (new § 399.15(b)(1), effective January 1, 2007, pursuant to SB 107.)
6.3. Flexible Compliance Prior to 2010
SDG&E asserts that failure to permit flexible compliance in 2010 and beyond "would essentially deprive the utilities of these mechanisms after 2006." (Comments, p. 8.) We disagree. Flexible compliance prior to 2010 does not change. A deficit in 2009 may be carried forward for up to three years (e.g., 2010, 2011, 2012), but must be satisfied by the end of the third year (i.e., end of 2012).14
SDG&E is also concerned that an LSE may not be able to achieve the 20% by 2010 target despite its best efforts due to transmission issues, plant permitting issues, or developer contract failures. SDG&E states that it supports the 20% by 2010 goal, but believes that adding certainty to the process will benefit all parties. SDG&E urges the Commission to address these and related matters sooner rather than later. (Comments, pp. 8-9.)
We do so by clarifying that the current flexible compliance scheme (e.g., deficit carry-forward for up to three years based on one of four predetermined reasons) applies only in the context of reaching 20%, as provided in prior Commission decisions. (See D.03-06-071.) This currently applies up to and through 2009. It does not apply in the same way to 2010 and thereafter, since the requirement is for each RPS-obligated LSE to have actual renewable energy deliveries of 20% by 2010, or be out of compliance. Failure to meet a target may occur for any number of reasons, as SDG&E clearly states (e.g., transmission issues, permitting issue, developer contract failures). An LSE may seek temporary or permanent waiver of any resulting penalty at the appropriate time based on what the LSE believes to be justifiable reasons.15
SCE and others argue that the law contains an absolute limit on procurement, wherein an electrical corporation cannot be required to further increase its renewable procurement after reaching 20%.16 (Reply Comments, pp. 15-16.) Under this theory, SCE and others argue that the Commission cannot require makeup of any under-procurement in years through 2009 after the entity reaches 20%, such as in 2010. This is not the case.
Pursuant to the legislation, each electrical corporation shall increase its total procurement of eligible renewable resources by at least an additional 1% of retail sales per year. (§ 399.15(b)(1).) This is mandatory, not discretionary. It is separate and discrete from the 20% target. Further, Commission adoption of flexible compliance rules is mandatory. Those rules may permit applying inadequate procurement in one year to no more than the following three years. (§ 399.14(a)(2)(C).) Existing flexible compliance rules do not excuse shortfalls, but permit makeup within a period of time. Entities subject to the RPS Program are required to procure additional eligible resources in subsequent years to compensate for a failure to procure sufficient resources in a given year to meet an APT. (§ 399.15(b)(3).17) The Commission shall exercise its authority to require compliance with adopted plans by entities subject to the RPS Program. (§ 399.14(d).18) These are mandatory provisions.
Read as a whole, and giving effect to each provision, an electrical corporation that has reached 20% in a given year is excused from increasing its procurement the next year only if it has met the APT in each of the prior years. A reading that excuses an entity from making up past shortfalls because it has reached the 20% target would negate the separate and discrete APT requirement in prior years, undercut the purpose underlying the statutory requirement regarding rules for flexible compliance, negate the requirement to procure additional eligible resources in subsequent years to compensate for a failure to procure sufficient resources in a given year to meet an APT, and void the requirement that the Commission exercise its authority to require compliance. Such reading would not reasonably harmonize all statutory provisions.
That is, for example, under SCE's theory an entity that failed to reach its APT in 2007, 2008 and 2009 could otherwise claim in 2010, upon reaching 20%, that there is no requirement to procure more than 20% to make up prior shortages.19 If this were true, the statutory mandate of each year fulfilling the APT, and the annual increase in procurement of at least 1% of retail sales, could be ignored. In fact, at the extreme, the entity could elect to wait to acquire the entire 20% in 2010, and nothing before. This is clearly unreasonable, however, given that each APT, the 1% growth, and Commission enforcement of the APT within flexible compliance rules, are all mandatory.
As an alternative, the flexible compliance rules could provide that procurement of sufficient energy to fill prior shortages must be satisfied by no later than December 31, 2009. That is, the statute provides that inadequate procurement may be applied for no more than the following three years. If the 20% in 2010 is read to be an absolute maximum, meaningful flexibility of no more than three years could be reasonably provided only by slowly reducing the time allowed for deferral from three years to zero.20 We have not done so, and do not do so here. Rather, a more reasonable reading of the RPS legislation as a whole, while giving reasonable reading to its individual parts, is to permit deferral for up to three years after 2009, even if that requires in excess of 20% to be procured in some years. Once all deferrals are satisfied and the 20% has been achieved, however, the entity is excused from increasing its procurement beyond 20% in any following year. While this discussion is in relationship to the 20% goal, we also note that California has adopted a 33% goal, and the same considerations apply.21
6.4. Procurement Deficit Must Continue to be Reported
Several parties contend that when three years have tolled after a deficit year, there is no need to continue to report the deficit. They argue this is particularly true once a penalty has been paid.
To the contrary, the deficit must continue to be reported until it is made up or otherwise "written off" by Commission order. That is, as appropriate and reasonable, the Commission may later allow LSEs to no longer report deficits after considering the relevant reports and reasons for non-procurement. While the program is being developed, however, we decline to adopt a generalized rule permitting elimination of deficit reporting absent further consideration. Whether or not penalties apply is a separate matter, as discussed further below.
6.5. APT and IPT Based on Retail Sales
PG&E and others argue that APT and IPT should be based on actual procurement. We disagree.
The RPS legislation requires that we establish an APT, and that it grow by at least 1% per year. The APT is a target. It is initially made up of a baseline amount, calculated as a percentage of retail sale procured from renewable energy. (§ 399.15.) This is the only time actual procured energy is used in relationship to the targets. Going forward, the APT is made up of the prior year's APT plus an IPT. The required minimum annual growth reflected in the IPT is relative to actual retail sales per year. (§ 399.15(b)(1).) Neither the APT nor IPT are related to actual renewable procurement (other than once, when creating the baseline). Rather, each is a target related to retail sales. Actual procurement is measured against targets to assess progress. Actual procurement does not reset the targets.
Moreover, banking surpluses would be largely or completely meaningless if actual results were automatically incorporated into the APT for the next year (because there could never be a surplus when calculated based on actual procurement rather than a target). Similarly, some deficits might never need to be made up (at least before 2013, based on three year carry forward), and APTs could actually decrease year to year, if actual under-procurement in any year was essentially "forgiven" by only increasing the target by 1% from the prior actual deliveries (rather than 1% of retail sales).
Thus, we do not base the target for the next year on the actual procurement result in the prior year. Rather, we agree with the comment that an "LSE's targets should not be affected by its actual procurement." (SCE Comments, p. 25.)
6.6. Estimation of Penalties
Several parties state that penalties should not be estimated with the report due each March. Rather, they assert that one of the four reasons stated in D.03-06-071 permitting non-compliance may apply, and no penalty is "automatic," as might be inferred from a penalty calculation. We agree no penalty is "automatic," but are unconvinced that a penalty should not be estimated and reported.
The estimated penalty related to a reported deficit may be calculated when the deficit in any particular year is known. That does not make the penalty due and payable. Rather, parties are correct that the LSE may identify one of the four conditions which permit deferral or temporary waiver. (D.03-07-071, pp. 50-51). Alternatively, the LSE may seek to demonstrate lack of effective competition, that deferral promotes ratepayer or program interests, or other good cause. (D.03-06-071, p. 53; D.03-12-065, p. 8.)
The ability to assert deferral or temporary waiver, however, does not excuse stating an estimated potential penalty. Rather, the report each March and August (with May update) should state the applicable deficit for the prior year, if any, and the accompanying estimated penalty. The same report may cite earmarking or another reason why the penalty is, or should be, deferred or temporarily waived. We will then assess the stated reason why a penalty should be deferred or temporarily waived. (See D.03-06-071, p. 53.) We may hold hearings, if necessary and appropriate. (See R.06-05-027, p. 5; August 21, 2006 Scoping Memo in R.06-05-027, p. 3.) If we determine the reason is insufficient or inadequate, we will take the appropriate action at that time. Knowing the estimated penalty will reasonably inform respondents, parties and the Commission of relevant information during consideration of appropriate action, if any.
PG&E asserts that, as a publicly traded corporation, it must disclose events that have a potentially adverse impact upon the value of its stock. PG&E contends that the requirement to report an estimated penalty presumes wrong-doing, is overly broad, will create confusion over actual liability, and unnecessarily harms PG&E's reputation even if PG&E is later determined to have acted reasonably. PG&E concludes that an LSE should not be required to include a penalty calculation with its procurement reports.
We are not convinced. PG&E fails to convincingly show that its disclosure obligation, if any, is not already reasonably triggered under the existing regime but would be triggered pursuant to PG&E reporting an estimated penalty. That is, we have already clearly said that the issue of pre-determined penalties will not be re-litigated. (D.03-06-071, p. 51, footnote 46.) Within this penalty structure, PG&E says it is unnecessary for an LSE to estimate the penalty because "interested parties can estimate potential penalties based upon utility's semi-annual procurement reports." (Comments on proposed decision (PD), p. 12.)
Thus, the penalty structure is not subject to future litigation, and it is reasonably easy to estimate based on periodic reports. If PG&E must disclose events that have a potentially adverse impact upon its stock, this obligation would seemingly be triggered based on the pre-determined penalty structure and the report of a deficit. We are not convinced by PG&E that stating an otherwise easy-to-calculate estimated penalty, along with one or more reasons why the estimated penalty is likely not then due and payable based on existing Commission provisions, triggers a disclosure that, if required at all, was not previously required.
We are also not convinced that it presumes wrong-doing, is overly broad, or unnecessarily harms an LSE's reputation. Rather, in its report the LSE may state one or more reasons (including one of four pre-determined reasons) why a penalty may be properly deferred. This information can be reasonably explained to the public, if and as necessary.
6.7. Ongoing Penalties
SCE and others contend that once an LSE is penalized for a deficit that has not been made up within the allowed three years, the deficit should be retired, and no further penalties applied. We disagree and comment on this as it relates to reporting, penalties, and deferral or waiver.
The deficit must continue to be reported until actual, physical deliveries satisfy the deficit. That is because the RPS program is established to achieve certain actual, physical goals: growth in procured renewable energy each year of at least 1% of retail sales, and an overall level of procured renewable energy of 20% of retail sales. It is neither framed in the law, nor in Commission decisions, such that an LSE may simply pay a penalty and thereafter be forgiven from achieving the minimum 1% growth per year, or an absolute level of 20%.
Said differently, deficits are no longer reportable only after they have been satisfied by actual deliveries of renewable energy. We agree with TURN and UCS that "deficits are retired through procurement of eligible renewable resources, not through the payment of financial penalties." (Joint Comments of TURN/UCS, p. 4.) Separately below we address other situations in which deficits may reasonably qualify for no longer being reported.
Regarding penalties, SCE argues that:
"If the deficit were not retired after the LSE is penalized on the deficit, then the LSE would be required to make up the same deficit it had already been penalized on in the next year, and the next year, and the next year, and so forth, and the LSE would be subject to double, triple, quadruple, or more penalties on the exact same kWhs of IPT deficit." (Comments, p. 24.)
We make no final decisions here regarding enforcement and penalties. Nonetheless, we note three items as guidance to LSEs.
First, the APT each year is a separate target. Each separate target must be met, subject to flexible compliance rules and possible deferral or waiver of penalties. Whether or not a deficit occurs in one year and a penalty is paid, the entire APT for the next year is a separate, enforceable target.
Second, a continuing violation of a Commission order can involve separate and distinct offenses.22 Failure to make up a deficit from year 1 within the following three years, and continuing failure to make up that deficit in years after year 4, may expose an LSE to a penalty for the year 1 deficit each year after year 4 in which the deficit has not been made up. To that extent, SCE may be correct. This is the nature of a continuing offense and may or may not be applicable in any particular case based on the facts.
Third, pre-determined penalties are not the only remedy available to the Commission to enforce its orders. What we said before merits repeating: "We remind utilities that section 399.14(d) does not limit us to only one means to ensure compliance with the RPS program. Therefore, utilities are on notice that, if necessary, we shall use other remedies authorized under section 399.14(d)." (D.03-12-065, pp. 12-13.) In fact, each RPS-obligated LSE is on such notice.
SCE argues that the threat of unending penalties for failure to reach an APT violates fundamental rules of fairness, and fails to promote the goals of the program. As a result, SCE continues to assert that once an LSE pays a penalty associated with a shortfall the deficit should be retired, and the LSE should no longer be exposed to penalties. We are not persuaded.
SCE presents an example in support of its assertion that ongoing penalties produce absurd and punitive results. SCE's example assumes that a one-time shortage in 2007 cannot be filled with actual deliveries until 2013. According to SCE, this exposes the LSE to the maximum $25 million in penalties each year for 6 years, or $150 million. 23
We restate that we make no final decisions here regarding enforcement and penalties. The focus of this order is reporting and compliance. Enforcement and penalties, if any, will be determined after LSE's have adequate opportunity to present all relevant information and defenses.
Nonetheless, SCE's example is incomplete, and thereby not compelling. It fails to address any of the many ways a penalty may be deferred or waived (e.g., insufficient response to a solicitation, earmarking, inadequate public goods funds, seller non-performance, lack of effective competition, promotion of ratepayer/program interests, showing of good cause). That is, upon a convincing showing of any of several reasons, neither the $25 million, nor the $150 million total, would be assessed.
In further support of its proposal, SCE asserts that "problems surrounding transmission and market response are beyond the control of the RPS-obligated entities" and, thus, the shortage should be waived upon payment of the penalty. (Comments on PD, p. 5.) We will amend flexible compliance rules to recognize insufficient transmission (as required by new § 399.14(a)(2)(C)(ii) added by SB 107), but expect to do so only after first hearing from parties. Existing rules address "market response" (e.g., insufficient response, lack of effective competition, other good cause). Thus, the only reasons in support advanced by SCE are (or will be) addressed in the program.
AReM also argues in support of no further reporting of a deficit upon payment of a penalty. AReM contends something must be seriously wrong if an LSE cannot make up a deficit within a reasonable time. (Comments on PD, p. 10.) We generally agree, but note again that this decision is with respect to reporting. We require continued reporting until the facts regarding non-compliance are known. We may later determine that continued reporting of a deficit is unnecessary based upon payment of a penalty and/or subsequent facts (e.g., insufficient response to a solicitation, earmarking, inadequate public goods funds, seller non-performance, lack of effective competition, promotion of ratepayer/program interests, showing of good cause). That issue, however, is beyond the scope of this order.
6.8. Alternative Approach
CEERT recommends not just an alternative methodology, but an alternative approach. CEERT asserts little if any renewable generation is being delivered from projects constructed pursuant to the RPS program, and significant program changes appear necessary to meet the 20% by 2010 goal. CEERT supports a simpler and more transparent program. DRA, GPI, SDG&E and others endorse some or all of CEERT's recommendations (e.g., a more holistic approach, more streamlining), while others argue CEERT's proposals are beyond the scope intended for this decision.
We agree with those who contend that most of CEERT's comments are beyond the scope of the task before us. For example, CEERT recommends abandoning separate proceedings for renewables, other generation and transmission. Rather, CEERT advocates a holistic approach to renewables procurement, with full integration of renewable procurement within all other procurement and transmission planning proceedings and decisions. CEERT recommends LSE and Commission development of an integrated RPS implementation workplan. CEERT proposes phasing out of Procurement Review Groups (PRGs), with assumption of PRG duties by ED and the Commission. CEERT also proposes the streamlining of the renewable procurement process and full integration with long term procurement planning.
These are not unmeritorious goals. To the extent feasible, for example, the Legislature intends that the Commission's review of proposed RPS procurement plans be part of a general procurement plan process. (§ 399.14(a).) We expect to do so when this proceeding is completed. The August 21, 2006 Scoping Memo in this proceeding, for example, asks for specific recommendations on how and when to transition the RPS bidding process to the all-source procurement process. (Scoping Memo, Attachment A, p. 2.) Further, the Assigned Commissioner in our proceeding to integrate procurement policies and consider long-term procurement plans recently issued a Scoping Memo. (September 29, 2006 Scoping Memo in R.06-02-012.) As a result, we will there explore additional integration of the broad range of activities in complete, comprehensive long-term procurement plans.
The task here, however, is more limited. We seek to consolidate, define and clarify the sometimes complex concepts and terms used for reporting and compliance, and thereby assist the Commission and parties with reporting obligations and measurement of program progress. We agree with PG&E and several other parties that this is the time and place to make incremental improvements, and not begin an overall new course of action. (PG&E Reply Comments, p. 11.)
Nonetheless, we adopt two of CEERT's proposals. First, as CEERT recommends, we clarify and place an "end-date" on existing flexible compliance rules to promote transparent and non-discriminatory compliance, for the reasons discussed above.
Second, we order parties to develop a transparent compliance report, with adoption by the ALJ after public comment, as discussed more below. We also require a periodic report with information through 2020 which will be (or may be a component of) an integrated implementation workplan. This is consistent with CEERT's overall goals of more transparency, tracking and verification in a public venue.
13 See Energy Action Plan (EAP) I (May 2003), p. 2; EAP II (October 2005), p. 8; Commission Decision (D.) 05-07-038 (pp. 14-15); D.05-11-025 (p. 24, COL 1); D.06-05-039 (p. 24, FOF 8); California Energy Commission (CEC) 2003 Energy Report; CEC 2004 Energy Report Update; CEC 2005 Integrated Energy Policy Report.
14 That is, up to 25% of the 2009 IPT may be carried forward without explanation through the end of 2012. It must be fulfilled by actual energy deliveries by the end of 2012, or penalties may apply. The amount of 2009 deficit in excess of 25% of the 2009 IPT may be carried forward through the end of 2012 if one of four conditions is met, there is a lack of effective competition, deferral would promote ratepayer interests and the overall procurement objectives of the RPS Program, or upon a showing of good cause. (D.03-06-071, pp. 49-50, 53; D.03-12-065, p. 8.) If one of the four conditions or other circumstances are not met for this portion of the 2009 procurement deficit upon a showing in 2010, the penalty may be applied in 2010. If one of the four conditions or other circumstances are met for this portion of the 2009 procurement deficit upon a showing in 2010, however, the deficit may be carried forward but must be fulfilled by actual energy deliveries by the end of 2012, or penalties may apply in 2013.
15 "The utility may reduce or eliminate the pre-determined penalty upon showing of good cause." (D.03-12-065, p. 8.)
16 "An electrical corporation with 20 percent of retail sales procured from eligible renewable energy resources in any year shall not be required to increase its procurement of such resources in the following year." (§ 399.15(b)(1).)
17 This becomes § 399.15(b)(4) effective January 1, 2007.
18 This becomes § 399.14(e) effective January 1, 2007. At that time it will also include Commission enforcement of comparable penalties on any retail seller that fails to meet its APTs.
19 Under the "up to three years" provision, the entity would be permitted to make up a shortage in 2007 by the end of 2010, a shortage in 2008 by the end of 2011, and a shortage in 2009 by the end of 2012.
20 In this interpretation, the entity would be permitted to make up a shortage in 2006 by the end of 2009, a shortage in 2007 by the end of 2009, and a shortage in 2008 by the end of 2009, and any shortage in the early portion of 2009 by the end of 2009.
21 State goals expressed by the Governor include 33% by 2020 and, as expressed by the Commission and CEC, include 33% by 2020 in light of cost-effectiveness and risk analysis. (Energy Action Plan II, Specific Action Area 3, Key Action 5, p. 8.) The Assigned Commissioner has sought comment on flexible compliance after 2010, including consideration of the 33% goal. (August 21, 2006 Scoping Memo, Attachment A, p. 12.) Based on an additional record, we may later address whether flexible compliance regarding makeup of deficits on the path of reaching 33% require an entity to procure more than 33% in any year.
22 "Every violation of the provisions of this part or of any part of any order, decision, decree, rule, direction, demand, or requirement of the commission, by any corporation or person is a separate and distinct offense, and in case of a continuing violation each day's continuance thereof shall be a separate and distinct offense." (§ 2108.)
23 The example assumes the LSE's APT is 15,000 GWh each year, the LSE meets this APT each year except one (2007), the LSE meets 20% in 2010, the one-time shortage in 2007 is 500 GWh, and the shortage is not filled until 2013. According to SCE, the LSE faces a penalty of $25 million per year (500 GWh at $0.05/kWh) for six years (2007-2012), for a potential total of $150 million. (SCE Comments in PD, p. 4.) SCE did not cite this example back to the record, as otherwise required by Rule 14.3. Nonetheless, we grant this limited deviation from the rules and address it here because of the apparent strongly held concern. Our additional explanation should assist parties going forward with the RPS Program.
