II. The Goals of this Proceeding

In Decision (D.) 04-01-050, we adopted the long-term regulatory framework under which respondents will plan for and procure energy resources and demand-side investments, and indicated that this successor OIR would consider the following specific issues:⁴

1. The development of procurement incentives for each utility;

2. The development of a long-term policy for expiring QF contracts;

3. Review of the management audits of SDG&E's and PG&E's electric procurement transactions with affiliates;

4. Resource adequacy issues not otherwise addressed in workshops;

5. Treatment of confidential information; and

6. Review and adoption of long-term procurement plans for the three utilities.

We will fully consider all six issues, but our review of the utilities' long-term procurement plans will be the centerpiece of this proceeding. We place the parties on notice that the EAP will guide our review of the long-term plans, and stress that this has specific consequences for the conduct of this proceeding.

In addition, until we issue a separate rulemaking on avoided cost issues, this proceeding will serve as the forum for coordinating the Commission's development of avoided costs across the various resource-related proceedings. Our goal is to ensure that the data inputs and methodologies used in calculating avoided costs are consistent across the various resource applications, where appropriate.

Using the EAP as our guidepost in this proceeding reinforces our commitment to coordinate with the CEC and CPA in our decisionmaking efforts (much as we have in recent rulemaking dockets like R.02-06-001 and R.99-10-025). Under the EAP we are actively cooperating with these other energy agencies and have pledged to "...discuss critical energy issues jointly through open meetings and ongoing informal communication; to share information and analysis to minimize duplication, maximize a common understanding and ensure a broad basis for decision making."⁵

We will also redouble our efforts to ensure effective internal coordination of issues among a number of ongoing proceedings. To meet the latter goal, we will use case management tools designed to facilitate active coordination of issues between and among the resource-specific proceedings implicated by our review of the long-term procurement plans.

These actions are designed to fulfill our agreement in the EAP that "...agencies and state policy makers need to respond by carefully considering available options, balancing costs and benefits to meet state goals, selecting policy choices, and devising actions to meet those policy choices. The result must be a set of interrelated actions that complement each other, provide risk protection, and eliminate the costs and conflicts that would occur if each agency pursued isolated, uncoordinated objectives. Each agency will need to implement the action plan in its individual proceedings but in concert with each other." (EAP, p. 3.) In this particular proceeding, we will work in concert with our sister agencies to review the utilities' long-term procurement plans, including related resource adequacy and incentive issues.

We also invite the active participation of the ISO in this proceeding, particularly to help us ensure standard coordination of transmission-related issues, as well as resource adequacy issues.

The EAP envisions a loading order of energy resources, under which we will first seek to optimize all strategies to increase conservation and energy efficiency in order to minimize increases in electricity and natural gas demand. Second, we wish to see demand for new generation met by renewable energy resources and distributed generation. Third, because preferred resources require both sufficient investment and adequate time to "get to scale," we will support additional clean, fossil fuel, central-station generation. Finally, we intend to improve the bulk electricity transmission grid and distribution facility infrastructure to support growing demand centers and the interconnection of new generation. This loading order is our guidepost, and the standard against which the long-term plans will be considered, but it does not preclude us from considering other options, particularly redevelopment of existing facilities.⁶

A. Interagency Considerations

In the past two years in selected proceedings, this Commission has encouraged the active participation of the CEC and the CPA in its rulemaking endeavors on the decisionmaking side, rather than as party litigants. Such efforts have included holding joint prehearing conferences and working group meetings presided over by Commissioners from all three agencies, with support of interagency advisory staff teams.⁷ This has been an effective tool to ensure that involved state agencies are able to communicate their joint policy goals to the parties at regular intervals during the course of the proceeding. In this manner the agencies can control their common policy agenda more directly, while at the same time communicating actively with the parties who must implement statewide agency policy at the ground level. Our interagency efforts in recent rulemakings have also used working groups or technical workshops facilitated by interagency staff designed to develop actual program details.⁸

In reviewing the long-term procurement plans (as well as related resource adequacy and incentive mechanism issues), we will use interagency working groups in support of our common decisionmaking endeavors. At this point, it is too early to specify the details of the precise interagency working models that will prove to be most effective in this proceeding. However, the assigned Commissioner and assigned administrative law judge (ALJ) will work together to develop the necessary interagency working models that will support successful decisionmaking here. Based on their past experience, parties may wish to comment on the pluses and minuses of various interagency models used by this Commission in prior rulemaking efforts, and they may do so in prehearing conference statements. While the parties' input may be very useful, however, the Commission and the involved agencies must be the final arbiters of how they wish to structure working groups supporting their common decisionmaking tasks.

B. Case Management Issues

We have explicitly recognized that the utilities' procurement plans bring together, in an integrated resource planning framework, the policies developed in dockets dealing with specific types of resources, such as energy efficiency renewables, demand response and distributed generation.⁹ We will also be developing avoided costs for a variety of resource-related applications, including, but not limited to, energy efficiency program evaluations, the ranking of bids under the Renewables Portfolio Standard (RPS) and for energy bids other than RPS for energy procurement. Although there may be legitimate reasons for differences in avoided cost calculations, depending upon the application, we need to ensure consistency in those calculations where appropriate. This underscores the need to coordinate the development of programs and policies in these other resource-specific dockets with our review of the utilities' long-term procurement plans, including our consideration of resource adequacy issues and development of incentive mechanisms.

We believe such coordination promotes cohesive and rational policy making. For this reason, we intend to use this proceeding as a vehicle to coordinate ongoing record building in eight other matters: Community Choice Aggregation (R.03-10-003); Demand Response (R.02-06-001); Distributed Generation (R.04-03-017); Energy Efficiency (R.01-08-028); Avoided Costs and QF Pricing (Rulemaking to be issued shortly); Renewables Portfolio Standard (new rulemaking to be issued shortly); Transmission Assessment Process (R.04-01-026); and Transmission Planning (I.00-11-001).

While coordinating these matters, we do not intend to formally consolidate them for any purpose at this time. By coordinating them, we simply intend to facilitate the exchange of information among and between parties and decision makers in these proceedings (all of which are at different stages), avoid duplicative or unnecessary record building among the various proceedings, and promote consistent and optimal decisionmaking outcomes. Such coordination can take many forms. Rather than prescribe these forms today, we believe the better course is to leave many of the details to those on the decisionmaking side of this rulemaking, most particularly the assigned commissioner and assigned ALJ, who are in a better position to develop the necessary tools once they have had the opportunity to assess the situation more thoroughly.

At this point, however, we can state unequivocally that we intend to use this forum as the case management "umbrella" over the other eight resource-specific proceedings. To that end, the ALJ assigned to this proceeding will convene, on a schedule the ALJ deems reasonable, periodic Case Management Conferences (CMCs) (which will be formally noticed) involving some or all (as appropriate) of these eight coordinated resource-specific dockets. The overall purpose of each such CMC will be issues and case coordination, as necessary to facilitate the consideration of the utilities' long term procurement plans. We envision such CMCs will include the ALJs and Commissioners assigned to the resource-specific proceedings noticed for the CMC, as well as all interested parties. The ALJ assigned to this proceeding will preside over the CMC, in collaboration with the ALJs assigned to the other proceedings included in the particular CMC. The presiding ALJ, in coordination with the other involved ALJs and decision makers, will prepare an agenda for each CMC, and will work with other decision makers to memorialize the outcomes of the CMC, as appropriate.