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COM/LYN/epg Mailed 6/23/2003

Decision 03-06-071 June 19, 2003

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking to Establish Policies and Cost Recovery Mechanisms for Generation Procurement and Renewable Resource Development.

Rulemaking 01-10-024

(Filed October 25, 2001)

ORDER INITIATING IMPLEMENTATION OF THE SENATE BILL 1078
RENEWABLE PORTFOLIO STANDARD PROGRAM

TABLE OF CONTENTS

Title Page

ORDER INITIATING IMPLEMENTATION OF THE SENATE BILL 1078
RENEWABLE PORTFOLIO STANDARD PROGRAM
22

Procedural Background 22

The Parties 33

Preliminary Issue: Creditworthiness 44

Preliminary Issue: Renewable Energy Credits 88

Market Price 1515

Least Cost and Best Fit 2828

Flexible Rules for Compliance 4040

Standard Contract Terms and Conditions 5555

Confidentiality 5959

Next Steps 5959

Comments on Proposed Decision 6161

Assignment of Proceeding 6666

Findings of Fact 6666

Conclusions of Law 6969

ORDER 7272

ORDER INITIATING IMPLEMENTATION OF THE SENATE BILL 1078
RENEWABLE PORTFOLIO STANDARD PROGRAM

California Senate Bill (SB) 1078 established the California Renewables Portfolio Standard (RPS) Program, with a stated intent of attaining a target of 20 percent renewable energy for the State of California. To reach that goal, the legislation requires an increase in procurement of renewable energy of at least 1 percent per year. The Legislature found that increasing California's reliance on renewable energy resources may have significant economic, social, health, and environmental benefits. (Pub. Util. Code § 399.11.) SB 1078 requires the Commission to adopt, not later than six months after its effective date: 1) a process for determining the market price of electricity; 2) a process that provides criteria for the rank ordering and selection of least-cost and best-fit renewable resources to comply with the annual obligations of the RPS program; 3) flexible rules for compliance in cases of excess or inadequate annual procurement; and 4) standard contract terms and conditions. (Pub. Util. Code § 399.14(a)(2).) This decision takes these first steps in the process of implementing SB 1078.

Procedural Background

Consistent with SB 1078, the Commission is working collaboratively with the California Energy Commission (CEC) in this proceeding. (See, Administrative Law Judge's (ALJ's) Ruling Issuing Workplan and Collaboration Guidelines, dated February 3, 2003.)

Because of the statutory deadline, this proceeding had a highly expedited schedule, particularly given the complexity of the tasks involved:

February 25, 2003 Workshop: Developing Flexible Compliance
Mechanisms

March 4 Workshop: Determining the Market Price Referents

March 11 Workshop: Establishing Standard Contract Terms and
Conditions

March 18 Workshop: Defining Least Cost and Best Fit and Bid
Ranking Criteria

March 27 Testimony

April 7-16 Evidentiary Hearings

April 28 Concurrent Opening Briefs

May 5 Concurrent Reply Briefs

May 20 Proposed Decision

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