2. Procedural Background
On October 6, 2005, we issued a Policy Statement on GHG Performance Standards (GHG Policy Statement) stating our intent to investigate the integration of GHG emissions standards into Commission procurement policies, including the Procurement Incentive Framework being developed in R.04-04-003.27
On February 16, 2006, we issued D.06-02-032 in R.04-04-003. In that decision, we adopted a load-based GHG emissions cap as the cornerstone of our Procurement Incentive Framework, noting that: "[e]stablishing a GHG cap is consistent with the Governor's objectives for climate change policy, as well as our own GHG Policy Statement."28 Under a load-based cap, the LSEs would be subject to GHG emission limits for all resources procured to serve their load, no matter from what source, including imports. We made a number of preliminary determinations in D.06-02-032 to guide the next steps in implementing a load-based cap, but left most of the design details to a subsequent implementation phase.
On April 17, 2006, we opened this rulemaking to implement the load-based cap under our Procurement Incentive Framework and to examine the integration of GHG emission performance standards into procurement policies. We identified Phase 1 of this rulemaking as the forum for considering the following threshold issues:29
(a) Should the Commission adopt an interim GHG emissions performance standard to guide electric procurement decisions while it takes the necessary steps to fully implement D.06-02-032?
(b) If the Commission elects to adopt such a standard, how should it be designed and implemented so that it can be put in place quickly to serve this purpose?
The Assigned Commissioner proceeded to solicit pre-workshop comments on these issues, and staff of the Division of Strategic Planning ("staff" or "Commission staff") held a three-day workshop on June 21-23, 2006 to obtain further input from interested parties before formulating preliminary recommendations to the Commission.30 Over 80 individuals, representing approximately 50 different stakeholders, attended one or more days of the workshop. Staff's preliminary recommendations were presented in the Draft Workshop Report: Interim Emissions Performance Standard Program Framework ("draft report"), which was issued for comment on August 21, 2006.
On September 29, 2006, Governor Schwarzenegger signed SB 1368 into law. Among other things, SB 1368 directs this Commission to establish a GHG emission performance standard through a rulemaking proceeding by February 1, 2007. It also specifies certain design elements of the GHG performance standard and associated definitions. The full text of SB 1368 is presented in Attachment 3.
Taking into consideration parties' comments on the draft report as well as the newly enacted provisions of SB 1368, staff issued its Phase 1 recommendations in the Final Workshop Report: Interim Emissions Performance Standard Program Framework ("final report") on October 2, 2006.31
On October 5, 2006, we designated this rulemaking as the procedural forum for implementing SB 1368. The Commission also amended the list of respondents in order to encompass a broader group of LSEs, consistent with the definition of that term in SB 1368.32 On that same day, the Assigned Commissioner amended the Phase 1 scoping memo to reflect these changes. The Phase 1 comment period was also extended to provide opportunity for respondents and interested parties to file written comments/legal briefs on all Phase 1 issues in the context of SB 1368, prior to our issuance of a draft decision.33
Over thirty-five parties submitted one or more sets of written comments or legal briefs during Phase 1. Attachment 4 lists the organizations that jointly or individually filed legal briefs, pre-workshop, post-workshop and/or final comments in Phase 1.
As required by SB 1368, we have consulted with the California Independent System Operator (ISO), CARB and CEC in designing the interim GHG emissions performance standard.34 Consistent with our intent to work collaboratively with these agencies in this rulemaking, Commission staff and the assigned Administrative Law Judge (ALJ) met informally with staff from the CEC, CARB and the California ISO in order to brief them on the content of the staff recommendations, controversial issues raised in comments from the parties, and likely resolution of these issues in this decision. Commission staff also sought feedback during these meetings from collaborative agency staff. These meetings took place in October and November 2006, and additional consultation occurred in January 2007 prior to final adoption of the EPS in the form of informal meetings and written exchange.
27 A copy of the GHG Policy Statement is included in Attachment 2 of the April 17, 2006 Order Instituting Rulemaking in this proceeding.
28 D.06-02-032, mimeo., p. 16.
29 Assigned Commissioner's Ruling: Phase 1 Scoping Memo and Notice of Workshop on Interim Greenhouse Gas Emissions Performance Standard, June 1, 2006. (June 1, 2006 ACR.)
30 The workshop was facilitated by Richard Cowart from the Regulatory Assistance Project, as a consultant to the Division of Strategic Planning.
31 Staff's draft and final reports, along with other workshop-related materials are posted on the Commission's website at http://www.cpuc.ca.gov/static/energy/electric/climate+change.
32 See Order Amending Order Instituting Rulemaking, October 5, 2006.
33 Assigned Commissioner's Ruling: Phase 1 Amended Scoping Memo and Request for Comments on Final Staff Recommendations, October 5, 2006. (October 5, 2006 ACR.)
34 § 8341 (d)(1) and (6).
