9. Consideration of Effects on Reliability
and Overall Costs to Electric Customers
SB 1368 directs that we consider "the effects of the standard on system reliability and overall costs to electricity customers" in developing and implementing the EPS.330 We have done so in several ways. First and foremost, by ensuring that new long-term commitments to baseload generation will only be with facilities that emit no more than the GHG emissions rate of a CCGT, we have designed an interim EPS that will protect electricity customers from reliability problems and high compliance costs in the future. As discussed in today's decision, we have ensured this outcome by designing the EPS as the Legislature intended, namely, as a minimum standard of GHG emissions performance for covered procurements similar to an appliance efficiency standard. As SB 1368 recognizes, the resulting reduction in GHG emissions will mitigate adverse impacts on "the economy, health and environment," thereby reducing overall costs to all Californians, including electricity customers.331
In addition, the EPS is designed to capture the largest percentage of impact on GHG emissions without compromising system reliability. This is accomplished by defining covered procurements as new long-term commitments to baseload generation, thereby excluding the types of procurements that the LSE is most likely to need for system reliability requirements, i.e., short-term power purchases, long-term contracts with load-following and peaking generation facilities, or new construction of non-baseload powerplants. This focuses compliance on the types of facilities and commitments over which the LSE has the most discretion and choice, thereby minimizing the costs of compliance to the LSE and its electricity customers. In particular, as discussed in this decision, the definition of covered procurements will not subject the millions of dollars in the LSE's already-built facilities to a standard that is being developed to prevent backsliding in LSE decisions made for future investments. In the event that unforeseen reliability concerns and associated costs arise during implementation of the EPS, we have also provided for Commission review of requests for reliability exemptions on a case-by-case basis. Finally, we note that no showing has been made in this proceeding that new, EPS-compliant procurements will not be available at reasonable costs to ratepayers.
In sum, today's adopted EPS fulfills both the letter and the spirit of SB 1368 by effectively "raising the bar" for the GHG emissions performance of new long-term commitments with baseload generation serving California as we transition to a statewide GHG emissions cap.
330 § 8341 (d)(6).
331 § 8341 1(a).
