10. Assignment of Proceeding

Michael R. Peevey is the assigned Commissioner and Anne E. Simon and Burton W. Mattson are the assigned ALJs for this proceeding.

1. New sources of RPS-eligible generation will be necessary to meet the goal of 20% of retail sales from eligible renewable energy resources by December 31, 2010.

2. Long-term contracts are an important tool in developing new RPS-eligible generation.

3. Other contracting and financing methods to encourage new RPS-eligible generation may be available to California LSEs.

4. All RPS-obligated LSEs have a responsibility to contribute to the development of new RPS-eligible generation.

5. RPS-obligated LSEs vary widely in their size and in the resources they have available for RPS procurement.

6. All RPS-obligated LSEs have the capacity to contribute to the development of new RPS-eligible generation, though for some LSEs that capacity may be relatively modest.

7. A straightforward way to implement an incentive to develop new renewable resources within the structure of § 399.14(b)(2) is to measure the contracted-for energy in signed contracts, not the energy delivered.

8. For purposes of fulfilling the requirements of § 399.14(b)(2), both long-term contracts (with either an existing or new facility) and contracts with new facilities are of equal weight and value.

9. Prior year's retail sales of RPS-obligated LSEs are regularly reported as part of the RPS compliance process.

10. An LSE's prior year's retail sales are a sound basis for calculating the LSE's obligations under § 399.14(b)(2) because prior year's sales are regularly reported and reasonably straightforward, while avoiding potentially complex regulatory and compliance interpretations that might apply to the use of APT, including various flexible compliance elements.

11. Use of 1% of an LSE's prior year's retail sales for this measure would be equivalent to the full amount of the IPT, and would unreasonably require 100% of the LSE's growth in renewable procurement to be from long-term contracts or contracts with new facilities, while use of 0.25% of prior year's sales provides an incentive without being excessive.

12. It is reasonable to impose an obligation, on an annual basis, to enter into long-term contracts and/or contracts with new facilities for energy deliveries equivalent to 0.25% of an RPS-obligated LSE's prior year's retail sales as a condition of allowing an LSE to use energy deliveries from short-term contracts with existing facilities for purposes of RPS compliance.

13. It is reasonable to allow LSEs to carry forward contracted-for energy in long-term contracts and short-term contracts with new facilities that is in excess of the 0.25% requirement in the year such contracts are signed, to be used for compliance with the 0.25% requirement in future years, but not to carry forward any deficit in meeting the 0.25% requirement.

14. It is reasonable to allow LSEs to use long-term contracts that have been repackaged from long-term contracts with RPS-eligible generation facilities, and short-term contracts that have been repackaged from contracts with new RPS-eligible generation facilities, for compliance with § 399.14(b)(2) requirements, so long as the use of such contracts is properly documented and reported to this Commission and the RPS eligibility of the both the repackaged and underlying contract is verified by the CEC.

15. It is reasonable to require RPS-obligated LSEs to report on their compliance with the requirements of § 399.14(b)(2) in their annual compliance reports, and more often if required to do so by the Director of Energy Division.

16. Applying § 399.14(b)(2) until an LSE meets the goal of 20% of retail sales from eligible renewable resources (or an increased goal upon later application) will provide an additional incentive for an LSE to meet RPS goals early, while also being simple to enforce.

1. All RPS-obligated LSEs should contribute to the development of new RPS-eligible generation.

2. Section 399.14(b) gives this Commission discretion to shape conditions and incentives to encourage all RPS-obligated LSEs to contribute to the development of new RPS-eligible generation.

3. Our discretion should be applied to create conditions that encourage all RPS-obligated LSEs to contribute to the development of new RPS-eligible generation, while not creating complex, administratively burdensome new elements for the RPS program.

4. For purposes of fulfilling the requirements of § 399.14(b)(2,) both long-term contracts, with either an existing or new facility, and contracts with new facilities should be accorded equal weight and value.

5. An LSE's prior year's retail sales should be used for calculating the LSE's obligations under § 399.14(b)(2).

6. All RPS-obligated LSEs should, on an annual basis, sign long-term contracts and/or contracts with new facilities for a sufficient amount of energy to contribute to the development of new RPS-eligible generation.

7. All RPS-obligated LSEs should, on an annual basis, enter into long-term contracts and/or contracts with new facilities for energy deliveries equivalent to 0.25% of an RPS-obligated LSE's prior year's retail sales, as a condition of allowing an LSE to use energy deliveries from short-term contracts with existing facilities for purposes of RPS compliance.

8. RPS-obligated LSEs should be allowed to carry forward contracted-for energy in long-term contracts and short-term contracts with new facilities that is in excess of the 0.25% requirement in the year such contracts are signed, to be used for compliance with the 0.25% requirement in future years, but should not be allowed to carry forward any deficit in meeting the 0.25% requirement.

9. RPS-obligated LSEs should be allowed to use long-term contracts that have been repackaged from long-term contracts with RPS-eligible generation facilities, and short-term contracts that have been repackaged from contracts with new RPS-eligible generation facilities, for compliance with § 399.14(b)(2) requirements, so long as the use of such contracts is properly documented and reported to this Commission, and the RPS eligibility of the both the repackaged and underlying contract is verified by the CEC.

10. The minimum quantity requirement should continue until an LSE reaches the goal of 20% of retail sales obtained from eligible renewable resources.

11. In order to allow RPS procurement to proceed expeditiously, this order should be effective immediately.

INTERIM ORDER

IT IS ORDERED that:

1. Beginning in calendar year 2007, each load-serving entity (LSE) obligated under the renewables portfolio standard (RPS) program must, in order to be able to count for any RPS compliance purpose energy deliveries from contracts of less than 10 years' duration ("short-term") with RPS-eligible facilities that commenced commercial operation prior to January 1, 2005 ("existing facilities"), in each calendar year enter into contracts of at least 10 years' duration ("long-term") and/or short-term contracts with facilities that commenced commercial operation on or after January 1, 2005 ("new facilities") for energy deliveries equivalent to at least 0.25% of that LSE's prior year's retail sales (the "minimum quantity").

2. If an LSE fails to meet the requirement in any calendar year, beginning with 2007, that it enter into long-term contracts and/or short-term contracts with new facilities for energy deliveries equivalent to at least 0.25% of that LSE's prior year's retail sales, any energy deliveries resulting from contracts the LSE enters into in that calendar year of less than 10 year's duration with existing facilities shall not be used for any RPS compliance purposes in any year.

3. RPS-obligated LSEs may carry forward contracted energy in long-term contracts and short-term contracts with new facilities that is in excess of the 0.25% requirement in the year such contracts are signed, to be used for compliance with the 0.25% requirement in future years, but may not carry forward to future years any deficit in meeting the 0.25% requirement.

4. RPS-obligated LSEs may use contracts that have been repackaged from contracts signed by other entities with RPS-eligible generation facilities, so long as the repackaged contracts are long-term (with existing or new facilities) or short-term with new facilities, for compliance with § 399.14(b)(2) requirements, and so long as the use of such contracts is properly documented and reported to this Commission, and the RPS eligibility of the both the repackaged and underlying contract is verified by the California Energy Commission.

5. The minimum quantity requirement shall continue until an LSE reaches the goal of 20% of retail sales obtained from eligible renewable resources, and shall terminate the calendar year after the LSE attains the 20% goal.

6. The requirements of this Order shall apply to an LSE newly commencing operations in California beginning in its second calendar year of retail operations.

7. The Director of Energy Division may require the submission of appropriate documentation to verify compliance with the requirements set forth above.

This order is effective today.

Dated May 3, 2007, at San Francisco, California.

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