2. Background
Today's decision has its roots in the 1973 oil embargo, nearly 35 years ago. California responded to the significant disruption and great uncertainty by developing many innovative programs to promote conservation and alternative generation. By 1979, the Commission had determined it was just and reasonable, along with promoting conservation, efficiency and equity, to purchase electricity generated by cogenerators and small power producers using standard offers priced at the buying utility's full avoided cost. This included purchases of electricity from the same types of renewable resources at issue here.3
A successful program evolved in California during the 1980s, and existed in various ways until electric market restructuring in the 1990s. As restructured, California anticipated that market forces would determine the type of resources to be built, by whom, where and when.
The energy crisis of 2000-2001 forced California to reassess its reliance solely on the market. It provided an opportunity to reexamine how to optimally balance supply and demand, and reconsider the range of reasonable ways to promote the development of alternative supplies. As part of that effort, in 2002 the Commission initiated the current program of procuring electricity generated by renewable resources.4
In 2003, the Renewables Portfolio Standard (RPS) Program was added to the Public Utilities Code. The RPS Program requires that each California electrical corporation or retail seller, with limited exception, procure a minimum quantity of electricity each year from eligible renewable energy resources. Further, it specifies that the minimum quantity increase by at least 1% each year, and reach 20% of total retail sales by no later than 2010.5
In 2006, the Legislature found that the development of new energy supplies was not keeping pace with the state's increasing demand. It also found that the development of new renewable resources had been slower than anticipated, and was limited by existing transmission constraints. It determined that public water and wastewater facilities are strategically located and interconnected in a manner that optimizes delivery to load.
The Legislature responded to these concerns and opportunities by adding § 399.20 to the Public Utilities Code (AB 1969). Under this new law, each electrical corporation must establish a tariff for the purchase of RPS-generated electricity from certain water and wastewater customers, and purchase that electricity at a market price determined by the Commission. The electricity applies toward the electrical corporation's RPS Program annual targets. The tariff must be made available until the combined statewide cumulative rated capacity of eligible sellers reaches 250 megawatts (MW), with each buyer required to offer service until it meets its proportionate share of the 250 MW based on the ratio of its peak demand to total statewide peak demand.
On March 12, 2007, the assigned Commissioner filed an amended Scoping Memo and Ruling regarding implementation of § 399.20. The ruling required each respondent electrical corporation to file a proposed tariff, a proposed standard contract (if it elected to offer one), and address various implementation and policy questions.
On or about April 11, 2007, proposals were filed by seven electrical corporations: Southern California Edison Company (SCE), Pacific Gas and Electric Company (PG&E), San Diego Gas & Electric Company (SDG&E), PacifiCorp, Sierra Pacific Power Company (Sierra), Bear Valley Electric Service Division (BVES - a division of Golden State Water Company), and Mountain Utilities (MU). Also on or about April 11, 2007, notice of the proposals was provided by each electrical corporation to potentially interested water, wastewater and other customers.
On or about May 2, 2007, comments were filed by Inland Empire Utilities Agency (IEUA), the Commission's Division of Ratepayer Advocates (DRA), the Center for Energy Efficiency and Renewable Technologies (CEERT), and jointly by Sustainable Conservation and RCM International (RCM). On or about May 9, 2007, reply comments were filed by SCE, PG&E, PacifiCorp, and jointly by Sustainable Conservation and RCM.
Motions for evidentiary hearings were due by May 14, 2007. No motions were filed. By ruling dated May 29, 2007, respondents were directed to file limited additional information, and a workshop was scheduled.
On June 4, 2007, PG&E filed and served an amendment to its initial proposal (now including a proposed tariff).6 A workshop was held on June 5, 2007, at which respondents and parties addressed issues identified in the ruling and raised by parties.7
On June 13, 2007, PacifiCorp amended its proposal (to include its previously referenced proposed standard contract in the record). Also on June 13, 2007, SCE filed responses to inquiries from the Administrative Law Judge (ALJ) in two subject areas (capacity allocations; standard terms and conditions). On June 22, 2007, SCE filed certain items regarding its Biomass Program.
3 This approach was subsequently adopted and implemented as a national standard by the Federal Energy Regulatory Commission (FERC) in its implementation of the Public Utility Regulatory Policies Act (PURPA).
4 Decision (D.) 02-10-062 in Rulemaking (R.) 01-10-024.
5 § 399.11 et seq. (Senate Bill (SB) 1078 in 2002, as amended by SB 107 in 2006.)
6 PG&E had previously proposed only a standard contract.
7 Notice of the Workshop was provided beginning May 22, 2007 by electronic mail and publication in the Commission's Daily Calendar.
