IV The Framework for an Improved Transmission Planning Process

In order to achieve a comprehensive, coordinated infrastructure plan for California, Staff builds upon the guidance and direction provided in D.02-10-062 and recommends linking the procurement and transmission planning processes.

D.02-10-062 states:

In modifying their procurement plans, the utilities should undertake a resource planning effort to include procurement from a mixture of different sources with various environmental, cost, and risk characteristics. Utilities fully responsible for meeting their customers' resource needs should plan among all of the following options: conventional generation sources (with a variety of types of ownership structures), renewable generation (including renewable self-generation), distributed and self-generation, demand-side resources, and transmission.

Staff suggests that the Commission's transmission determination made as part of its review of the IOUs long-term procurement plans should be reflected in the CAISO's transmission planning process. In short, the starting point for infrastructure planning should be a comprehensive analysis of how to meet need in a cost-effective, efficient, and environmentally sensitive manner. That starting point should be the comprehensive analysis that takes place in the proceeding that examines the IOUs long-term procurement plans.

Once the Commission determines that transmission is needed after balancing competing options such as generation and demand side alternatives, that determination would be reflected in the CAISO's planning process, where a detailed analysis occurs for specific transmission projects⁵. The Commission's upfront determination on transmission need in the procurement process would accomplish two objectives: 1) a comprehensive analysis of the alternatives available to meet customer resource requirements; and 2) an upfront determination that transmission is needed and fits within the comprehensive infrastructure plan that can be recognized once a specific project has been developed in the CAISO planning process and, if required, is before the Commission for a CPCN.

Staff also suggests that transmission and generation can be linked in the Commission's procurement policy if deliverability is a criteria for a resource to qualify as a capacity resource and transmission related costs are reflected in bilateral contracts. We anticipate that the procurement related issues outlined here and in the staff report will be resolved when the Commission issues another decision on the IOUs long-term procurement plans in R.01-10-024. Following a comprehensive review at the Commission determining the required resource mix (e.g. generation, transmission, demand-side options), the IOUs would incorporate the transmission components into the CAISO transmission planning process. The CAISO would then analyze the economics and reliability criteria of transmission projects utilizing an agreed upon economic and reliability assessment for IOU projects. That is, the CAISO would conduct a need determination using a Commission adopted methodology. If a project requires a CPCN, the Commission would not revisit the question of need as it already would have been determined by the CAISO using a Commission adopted methodology. We note that by deferring to the CAISO's determination of need, the Commission necessarily must accept the CAISO planning horizon, which is typically 10 years⁶. This longer-term outlook would replace the 5-year time horizon that the Commission has typically used to assess when and whether a project is needed.