Advice Letter Required Showing
In addition to the format question, the ALJ ruling asked parties to comment on the required showing for a utility's certification in any advice letters under Section 399.2.5(c)(1) and (2) that the utility expects the facility will be necessary to facilitate achievement of RPS.
A few parties commented that little showing was required. For example, SDG&E comments that the Commission should not limit the flexibility of the utility in the advice letter and it should suffice for the utility to state simply that "it expects the facility will be necessary to facilitate achievement of the RPS," as long as the utility provides a sufficiently complete explanation of the basis for that expectation. The LSA recommends the Commission evaluate advice letters on a case-by-case basis, as long as the utilities support their advice letters with information relevant to at least one significant criterion relative to the existing "three-prong test" the Commission identified in Decision (D.) 07-03-012 to determine whether a transmission line is necessary to facilitate the achievement of the renewables portfolio standard.4 The LSA suggests the Commission consider further structure or guidance for the advice letters after the Commission and utilities develop experience with them.
SCE and PG&E both provided greater detail on guidelines for the advice letter showing. SCE echoes SDG&E's comment that the specific showing may differ from project to project and the Commission need not adopt a standardized checklist of prerequisites for the showing. Nevertheless, SCE provides a list of numerous indicators that it claims the Commission could use to evaluate whether a project is necessary to achieve RPS goals, and any of these indicators alone would be sufficient to satisfy the showing required in the advice letter. SCE suggests these indicators include, but are not limited to:
· Whether the transmission project is included in a Renewable Energy Transmission Initiative (RETI)5 report;
· Whether the transmission project is included in the statewide California Transmission Planning Group6 transmission plan;
· Whether there are pending generator interconnection requests through the California Independent System Operator (CAISO)7 that interconnect to or trigger the need for the transmission project; and
· Whether the renewable energy projects that propose to interconnect to the transmission project have power purchase agreements with any load serving entity.
In addition, SCE states that a declaration or affidavit detailing the utility's demonstration of its showing should be sufficient.
Similarly, PG&E recommends that the utility provide sufficient guarantees in the advice letter that it has performed due diligence and has a sufficient basis for its expectation that the proposed transmission project will be necessary to achieve RPS goals. The advice letter should describe the basis for the expectation, explain supporting studies, which may be submitted confidentially, and attach certification regarding the utility's expectation that the project will facilitate achievement of RPS goals.
According to PG&E, the showing should be required to include a determination by the relevant Regional Transmission Organization (RTO) or CAISO that the transmission project in question is reasonably likely to support the state's RPS goals, or an equivalent showing providing a similar level of certainty. PG&E asserts that either Category 1 or Category 2 approval by the CAISO under its Renewable Transmission Planning Process would satisfy this requirement, because the CAISO plan would be built upon evidence of actual competitive renewable projects to determine what transmission projects are needed to meet RPS goals. In cases where RTO/CAISO approval is still pending, the utility could provide equivalent assurances, such as that the project falls within either 1) a new high-voltage bulk-transfer transmission facility designed to service multiple RPS-eligible generators, or 2) a major new transmission project to manage the grid in light of the remote location and intermittent nature of certain renewable resources.
DRA offers yet a different approach. It also recommends the Commission use the three-prong test adopted in D.07-03-012 as a starting point for the required showing, although DRA proposes modifications to the existing language of the three-prong test. DRA contends its suggested modifications will improve the usefulness of the utility's showing that a project will be necessary to facilitate achievement of the RPS. Specifically, DRA suggests the first prong be amended to specify the project will bring renewable generation that would otherwise be undeliverable to the grid. For the second prong, DRA suggests additional language to specify the area within the proposed transmission line's reach is in a competitive renewable energy zone (CREZ) or area that has been vetted through RETI, or a similar stakeholder process. For the third prong, DRA proposes language modification to specify that the cost of the line be compared to the alternative cost of RPS compliance under the scenario where the line is not constructed. DRA suggests the Commission require the advice letter filing to include an attestation by an officer at the vice president level or higher.
We will adopt a combination of the items suggested by SCE and PG&E as part of a standardized checklist that the utility should use to prepare its advice letter showing that supports the utility's reasonable expectation that the proposed facility will be necessary to facilitate achievement of RPS goals. To support the utility's reasonable expectation, the advice letter should contain publicly available evidence and a supporting declaration by a utility officer at the vice president level or higher of at least one item from the following checklist:
1. A determination by an RTO or CAISO that the transmission project in question is reasonably likely to support the state's RPS goals, pursuant to a transmission planning process that is fully compliant with FERC Order 890. For CAISO, evidence would include Category 1 or 2 approval in CAISO's Transmission Planning Process; OR
2. Evidence that the proposed facility runs through one or more RETI-identified CREZs, or a Renewable Energy Study Area identified by the Desert Renewable Energy Conservation Plan, or has one terminus in such a preferred area. Evidence would include maps of the proposed transmission project and the most recent relevant information from RETI or the Desert Renewable Energy Conservation Plan, including the generation potential and economic and environmental information for the relevant area; OR
3. Evidence the facility would be a new 200 kilovolt or larger transmission facility, whether network or generation intertie, designed to serve multiple RPS-eligible generators. Evidence would be at least two generator interconnection agreements either executed or tendered by the transmission owner to developers of RPS-eligible technology that identify a need for the transmission project.
The Director of Energy Division is authorized to develop standardized formats and documentation requirements for these showings.
We decline to adopt the DRA proposal to use the three-prong test with modifications. This test was developed to evaluate the merits of an application for a certificate of public convenience and necessity (CPCN) for authority to construct a transmission project. We agree with PG&E that the applicable standard is not whether the project is necessary but whether the utility has a reasonable expectation that the facility will be necessary to facilitate the achievement of RPS goals.
The Commission is not making the final need determination for the project or authorizing the utility to proceed with construction under Section 399.2.5(c)(1) and (2) through these advice letters. Rather, as PG&E explains, the Commission is evaluating whether the project is eligible for cost recovery subject to a future need determination. The statute specifically distinguishes a Commission finding under Section 399.2.5(c)(1) or (2) that a utility has a reasonable expectation that a facility will be needed from a finding of actual need under Section 399.2.5(a). The initial finding of an expectation under Section 399.2.5(c)(1) or (2) is distinct from and does not bear on a later need determination in CPCN proceedings. Moreover, we agree with SDG&E that use of the three-prong test in this advice letter context would impose more requirements than the statute requires.
4 In D.07-03-012, the Commission stated that in order to rely on Section 399.2.5 to establish the need for a project, "a proponent must demonstrate: (1) that a project would bring to the grid renewable generation that would otherwise remain unavailable; (2) that the area within the line's reach would play a critical role in meeting the RPS goals; and (3) that the cost of the line is appropriately balanced against the certainty of the line's contribution to economically rational RPS compliance." (D.07-03-012 at 16.)
5 See www.energy.ca.gov/reti.
6 See www.ctpg.us.
7 See www.caiso.com.
