2. Procedural Background

The Order Instituting Rulemaking (OIR) established two phases for this proceeding, designating the first phase as the forum to review the CAISO's LCR study and to establish local procurement obligations for 2009. Noting that it was adopting a shortened procedural schedule, the Commission restricted the addition of other issues in Phase 1 to those which "the assigned Commissioner determines may be processed under this expedited schedule without unduly burdening participants or delaying the Phase 1 decision." (OIR, p. 7.)

The Assigned Commissioner's Phase 1 Ruling and Scoping Memo (Phase 1 Scoping Memo) was issued on February 22, 2008, following initial comments and replies on procedural matters. In addition to the local RA issues as ordered by the OIR, the following RA program refinement topics were identified for possible consideration in Phase 1: (1) review of the rules for counting the net qualifying capacity (NQC) of intermittent resources, (2) review of outage counting rules to ensure coordination of the RA program with CAISO tariff provisions, (3) monthly true-ups of local procurement obligations for load migration impacts, (4) review of the counting rules for new resources, (5) review of whether and how QF resources whose contracts are extended pursuant to Decision (D.) 07-09-040 count for RA compliance, and (6) modification of the RA compliance filing procedure to reduce paperwork and the need for corrections. While these topics were deemed "reasonable candidates for exploration in the Phase 1 workshops and comments," the Energy Division was authorized to suspend discussions on them in the event of controversy or delay associated with any need for data or analysis. (Phase 1 Scoping Memo, p. 4.)

The Phase 1 Scoping Memo provided for a possible seventh topic based on a then-pending motion by the Alliance for Retail Energy Markets (AReM) to address timing issues associated with capacity credits from energy auctions. AReM's motion for inclusion of this issue in Phase 1 was granted by ruling of the Administrative Law Judge (ALJ) on March 7, 2008 with the caveat that, like the other Phase 1 topics, the issue may be deferred to a later phase as necessary.

Pursuant to the schedule and procedure established by the Phase 1 Scoping Memo, the Commission's Energy Division facilitated workshops on March 24 and 25, 2008. In conjunction with the workshop process, the Energy Division coordinated the exchange of informal proposals by and among workshop participants. On April 15, 2008, the Energy Division served a report reviewing the RA program's experience in 2007. On April 18, 2008, the Energy Division served summaries of the Phase 1 workshops and related documents. Following a stakeholder process that began in 2007, on May 1, 2008 the CAISO posted its "2009 Local Capacity Technical Analysis, Final Report and Study Results" (2009 LCR Study) on its website and served notice of the report's availability. These workshop discussions, informal proposals, and reports served to inform the formal comments and replies, filed May 12 and 19, 2008, respectively, that constitute the Phase 1 record.

AReM; CAISO; California Wind Energy Association (CalWEA); Division of Ratepayer Advocates (DRA); Dynegy Morro Bay, LLC, Dynegy Moss Landing, LLC, Dynegy Oakland, LLC, and Dynegy South Bay, LLC (Dynegy); Independent Energy Producers Association (IEP); Pacific Gas and Electric Company (PG&E); Southern California Edison Company (SCE); San Diego Gas & Electric Company (SDG&E); Sempra Energy Solutions, LLC (SES); and The Utility Reform Network (TURN) filed comments. Replies were filed by AReM, Cogeneration Association of California (CAC), CAISO, CalWEA and American Wind Energy Association, California Large Energy Consumers Association and California Manufacturers and Technology Association, DRA, Dynegy, IEP, PG&E and TURN, SCE, SDG&E, and SES.

Today's decision concludes Phase 1 of this proceeding. Phase 2 will commence upon issuance of the assigned Commissioner's scoping memo for Phase 2.