IX. Renewable Portfolio Standards (RPS)
The RPS Program requires each IOU to increase "its total procurement of eligible renewable resources by at least an additional 1% of retail sales per year so that 20% of its retail sales are procured from eligible renewable energy resources no later than December 31, 2017."63 The EAP and the current RPS implementation proceeding, R.04-04-026, have announced a policy of accelerating the target date to 2010.
As stated above, following the "loading order" contained in the Joint Agency Energy Action Plan is the first priority for IOU resource procurement, meaning that energy efficiency and demand-side resources should be employed first. When these opportunities are exhausted, renewable generation is to be procured to the fullest extent possible - whenever an IOU issues an RFO for generation resources, it must be prepared to defend its selection of fossil generation over renewable generation offers. In other words, selection of renewable generation is the rebuttable presumption guiding IOU generation procurement.
In general, IOUs are directed to procure the maximum feasible amount of renewable energy in the general solicitations authorized by this decision, and will be allowed to credit this procurement towards their Renewables Portfolio Standards (RPS) targets in 2005 and beyond. If an IOU succeeds in procuring sufficient renewable resources to meet its 2005 RPS Annual Procurement Target (APT) via an all-source RFO, it will not be required to undertake an RPS-specific solicitation next year. This is in keeping with the Legislature's clear intent, in creating the RPS program, that renewable procurement be integrated as closely as possible with general IOU procurement practices. To further this effort, we will be working over the course of the next LTPP cycle to fully imbed the RPS into long-term planning, placing renewable energy development where it belongs - central to the IOUs' resource planning efforts.
To further the state's clear goal of promoting environmentally responsible energy generation, we also adopt a policy that reflects and attempts to mitigate the impact of greenhouse gas (GHG) emissions in influencing global climate patterns. As described in this decision, the IOUs are to employ a "carbon adder" when evaluating fossil generation bids. This method, which will be refined in future proceedings, will serve to internalize the significant and under-recognized cost of GHG emissions, and will continue California's leadership in addressing this important problem.
This will have the effect of improving the economic viability of renewable energy resources in all-source IOU RFOs. In time, as this method is refined to include all appropriate environmental externalities - and, crucially, to value them accurately - it may be possible to recast the RPS program as more central to IOU procurement than a set-aside for particular types of resources.
63 Pub. Util. Code Section 399.15(b)(1).
