ALJ/VSK/hl2 Mailed 4/16/2007
Decision 07-04-038 April 12, 2007
BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
In the Matter of the Application of SOUTHERN CALIFORNIA EDISON COMPANY (U 338-E) for Approval of Renewables Portfolio Standard Power Purchase Agreement with MM Tajiguas Energy LLC and for Authority to Recover the Costs for Such Power Purchase Agreements in Rates. |
Application 07-01-001 (Filed January 2, 2007) |
OPINION APPROVING RENEWABLES PORTFOLIO STANDARD
POWER PURCHASE AGREEMENT BETWEEN
SOUTHERN CALIFORNIA EDISON COMPANY
AND MM TAJIGUAS ENERGY, L.L.C.
This decision approves a renewable resource power procurement agreement (PPA) between Southern California Edison Company (SCE) and MM Tajiguas Energy, LLC (Tajiguas). This PPA (Tajiguas PPA) commits the output of an existing 2.84 megawatt (MW) biomass facility in Goleta, California, as well as the output of an expansion that would raise total output to 4.34 MW, for a term of 20 years.1 This decision authorizes the Tajiguas PPA to be considered as meeting certain of SCE's Renewable Portfolio Standard (RPS) requirements pursuant to Decision (D.) 05-07-039. Furthermore, as the contract price is at or below the Market Price Referent (MPR),2 prices will be fully recoverable in rates over the life of the contracts, subject to Commission review of SCE's administration of the contracts. This proceeding is closed.
1. Introduction
The California RPS Program was established by Senate Bill (SB) 1078 (Chapter 516, statutes of 2002, effective January 1, 2003) and codified at California Public Utilities Code Section 399.11, et seq. The statute requires that a retail seller of electricity such as SCE purchase a certain percentage of electricity generated by Eligible Renewable Energy Resources (ERR). Originally, each utility was required to increase its total procurement of ERRs by at least one percent of annual retail sales per year so that 20 percent of its retail sales are supplied by ERRs by 2017.
The Energy Action Plan (EAP) called for acceleration of this RPS goal to reach 20 percent by 2010.3 This was position was reiterated again in the Order Instituting Rulemaking (R.04-04-026) issued on April 28, 2004,4 which encouraged the utilities to procure cost-effective renewable generation in excess of their RPS annual procurement targets5 (APTs), in order to make progress towards the goal expressed in the EAP.6 This acceleration was codified in 2006 by the enactment of SB 107.7
The Commission has issued a series of decisions that establish the regulatory and transactional parameters of the utility renewables procurement program. On June 19, 2003, the Commission issued its "Order Initiating Implementation of the Senate Bill 1078 Renewable Portfolio Standard Program," D.03-06-071. On June 9, 2004, the Commission adopted in D.04-06-025, its MPR methodology for determining the Utility's share of the RPS seller's bid price, as defined in Public Utilities Code Sections 399.14(a)(2)(A) and 399.15(c). On the same day, the Commission adopted standard terms and conditions for RPS PPAs in D.04-06-014 as required by Public Utilities Code Section 399.14(a)(2)(D). Instructions for evaluating the value of each offer to sell products requested in a RPS solicitation were provided in D.04-07-029.
1 Tajiguas is an existing project currently operating under a Standard Offer 1 PPA with SCE. That contract will terminate and the term of the new PPA will commence on the first day of the first full calendar month after the date on which this decision, approving the new PPA, becomes final and non-appealable.
2 See Exhibit 2, page 1.
3 The EAP was jointly adopted by the Commission, the California Energy Resources Conservation and Development Commission and the California Power Authority. The Commission adopted the EAP on May 8, 2003.
4 http://www.cpuc.ca.gov/Published/Final_decision/36206.htm.
5 A Load Serving Entity's (LSE) APT for a given year is the amount of renewable generation an LSE must procure in order to meet the statutory requirement that it increase its total eligible renewable procurement by at least 1% of retail sales per year.
6 Most recently reaffirmed in D.06-05-039.
7 SB 107, Chapter 464, Statutes of 2006.
