X. IOU Positions on Renewable Energy in the LTPPs
PG&E projects that under the load assumptions of its medium load scenario, if the utility increases its renewables procurement by 1% annually and obtains the assumed wind repowering, it will achieve its 20% RPS target in 2010.64 On June 30, 2004, the ED approved PG&E's Renewable Energy Procurement Plan, and in accordance with that approval PG&E issued an RFO on July 15, 2004, for renewable resources. PG&E's 2004 annual procurement target is 9,474 GWh per year. To meet the 20% renewable energy target by 2010, PG&E anticipates incremental energy deliveries from newly-contracted resources at an average rate of approximately 700 to 800 GWh per year. PG&E does not identify a preferred resource stack because the utility does not want to thwart market innovations that may occur over the course of the plan and believes the market is the best determiner of what resource is bid.
SCE's long-term plan includes a scenario for achieving the 20% target by 2017 and an accelerated target for achieving the 20% target by 2010. Under both scenarios SCE expects to achieve the 20% target by 2007. SCE's long-term plan does not foreclose procurement that would result in SCE's exceeding the 20% RPS target. SCE states that it will consider renewable resources as part of its all-source solicitation and evaluate the bid without regard to whether the 20% target will be exceeded. SCE does not express any preference for a technology type, but instead intends to procure the least-cost, best-fit (LCBF) renewable resources. SCE fears expressing a preference for technology types would create a bias for future renewable solicitations and could elevate a "preference" as a consideration over LCBF. 65
SDG&E's LTPP includes an aggressive renewables resource plan that is designed to meet an overall renewables resource goal of 20% by 2010. SDG&E's aim is to attain a diversified portfolio resulting in a renewable resource mix consisting of Bio-Gas, Bio-Mass, Wind, Geothermal, Solar and Small Hydro technologies. SDG&E developed this portfolio stack and technology mixes based upon information obtained from its 2002 renewable RFO process, discussions with potential developers, bilateral negotiations, information from the CEC and the utility's "best estimates" of the types and amounts of resources likely to be available in the future.66 In order to achieve the target by 2010 with an ideal mix of technologies, SDG&E plans on procuring an additional 2,496 GWh through bilateral contracts and RPS RFP solicitations, including exploring the possibility of utility ownership.
While SDG&E is aggressively working towards achieving the 20% target by 2010, it realistically knows that a number of factors, including the availability of renewable resources, in and out of area, transmission access to sources in other areas, availability of funding, utility ownership, pricing issues, and the ability to procure and trade Renewable Energy Credits (REC)67 may affect its ability to met its goal. SDG&E issued its first RPS RFO on July 1, 2004, and does not yet know the final results of that solicitation.
Many intervenors expressed agreement with the approach SDG&E took in identifying a renewable resource stack, estimating costs and benefits of each and identifying potential barriers to access. PG&E and SCE did not include the same level of specificity in their discussion of future RPS procurement and many parties urged the Commission to direct these utilities to supplement their LTPPs. PG&E and SCE retorted that they want to be open for what ever mix of resources presents itself in a RPS RFO and do not want to prejudge what bids will be the LCBF.
A. Parties' Positions
The City of San Diego focused on SDG&E's LTPP and especially on the utility's RPS goals to ensure that they comport with the direction the city is headed. Specifically, CSD is concerned that the utility will replace renewable DG with imported renewables, especially if the requested 500kV transmission line is approved. Instead, CSD would like SDG&E to balance its RPS goals with net-metered generation. While CSD supports the concept of tradable renewable energy certificates (TRECs), it argues that the utility should not be able to take DG RECs in an effort to achieve its RPS target. Instead SDG&E should pay for the RECs.68
UCS was one of the intervenors that wants PG&E and SCE to supplement their filings and provide more detailed annual analysis of renewable resource potential over the next 10 years. Specifically, the renewable resource analysis should include (1) assumptions for renewables procurement for the next 10 yrs., (2) development of a resource "stack," identifying the preferred potential resources, estimated costs and benefits of each, and potential barriers to access, and (3) identification of transmission upgrades that the utility believes will be needed in order to access sufficient renewable energy to meet its RPS goals.69
UCS also urges the Commission to direct the utilities to file their 2005 RPS procurement plans and on a going-forward basis, to include renewable resources in any and all future resource solicitations, regardless of whether the IOUs have already met their RPS targets. If the Commission adopts debt equivalency (DE) then LT renewable contracts should have a lower DE (5%) than non-renewable contracts. And finally, UCS wants the transmission constraints on renewable resources that SDG&E discusses addressed in the January 2005 supplement.70
Strategic Energy proposes that the Commission not require SDG&E to achieve the 20% RPS target by 2010, unless a REC trading system is established. Strategic is concerned that if SDG&E enters into long-term renewable contracts, and there is no REC trading, there will be stranded costs if load migration occurs.71
NRDC seeks clarification that the RPS targets establish a floor, not a cap. The IOUs should not curtail their procurement of renewables once the target is met, but should consider investments in all cost-effective renewable resources beyond 20%. Also, transmission planning should involve an integrated comparison of alternative resources.72
CEERT agrees with UCS that PG&E's and SCE's renewable procurement plans are inadequate and require immediate revisions. PG&E and SCE should supplement or amend their LT plans, no later than January 15, 2005, to include a comprehensive and credible renewable procurement plan consistent with that submitted by SDG&E. CEERT also adopts the same recommendations made by UCS for the renewable resource analysis. Also, CEERT wants SCE to report on the status of its 2003 interim procurement negotiations.73
We agree that the renewable procurement sections in SCE's and PG&E's LTPPs are inadequate and need revision. However, the revisions, with a detailed analysis, will be developed in the IOUs' 2005 RPS procurement plans, which will be filed in R.04-04-026, following the guidance to be developed in that docket. All IOUs will provide detailed annual analysis of renewable resource potential over next 10 years in their 2006 LTPPs. All IOUs will need to include transmission planning for renewable resources in their 2006 LTPPs. Transmission issues will be further addressed in I.00-11-001, in coordination with the RPS docket.
We also find that RPS targets are a floor - not a ceiling. EAP loading order places renewables above conventional generation. "...clear direction was given to the utilities to consider all cost effective energy efficiency, demand response, and renewable resources prior to considering the addition of conventional supply or transmission resources in meeting future resource needs."74
With regards to using unbundled RECs for RPS compliance, this is a complex issue and the record here is insufficient. To make a determination on this policy in this proceeding at this stage is premature. R.04-04-026 will consider this issue as appropriate.
64 PG&E opening brief, p. 37, citing Ex. 34, PG&E/LaFlash, pp. 5-12.
65 SCE opening brief, p. 39.
66 SDG&E opening brief, p. 53.
67 TRECs allow the positive environmental attributes associated with renewable energy generation to be sold independently of the underlying electricity. In concept, an entity obligated under the RPS - or some other environmentally-derived procurement restriction - could purchase a TREC instead of electricity to satisfy its obligations.
68 CSD opening brief, pp. 4, 10, 11.
69 UCS opening brief, p. 8.
70 UCS opening brief, pp. 4, 8, 17, 18, 19 and 24.
71 Strategic opening brief, p. 11.
72 NRDC opening brief, pp. 57-58.
73 CEERT opening brief, pp. 15 and 26.
74 D.04-01-050 pg.53.
