3. Positions of the Parties

In its comments, SCE states that the ALJs' proposed framework "correctly interprets and implements the legislative intent of section 399.25."⁸ PG&E concurs with SCE in this regard. PG&E provides additional comments, some of which seek clarification of certain aspects of the framework, and others that present PG&E's view of the larger context in which the framework must operate. In particular, PG&E argues that one aspect of the statute - the requirement that the Commission make findings that specific transmission facilities provide benefit to the transmission network - interferes with Federal Energy Regulatory Commission's (FERC) jurisdiction over transmission ratemaking, and is therefore preempted by federal law.

IEP expresses concern that the RPS bid-ranking process requires a calculation of the indirect costs associated with particular transmission projects, but those costs will not be known until completion of the later CPCN process. As a solution, IEP suggests that the Commission use a transmission cost proxy (for indirect transmission costs) in the RPS ranking process.

CalWEA is critical of the proposed framework, arguing that it will excessively delay development of transmission facilities and creates uncertainty by linking transmission planning and construction to the outcome of the RPS bidding process. In particular, CalWEA claims that, until the Commission makes "network benefit" findings, developers will not know if they are responsible for certain transmission upgrade costs.⁹ CalWEA also faults the proposed framework for not considering the possible alternative methods of achieving RPS goals, i.e., through sales to unregulated service providers, rather than through the utility procurement process.

Upon completion of conceptual transmission studies, CalWEA recommends that the Commission promptly hold a hearing to determine whether the proposed transmission project is (1) necessary to facilitate the RPS program goals and (2) provides benefits to the transmission network. In making these determinations, CalWEA urges the Commission to construe § 399.25 as requiring "only that the transmission project will enhance significantly the likelihood that renewable projects will be developed."¹⁰ Under CalWEA's proposal, the Commission would require commencement of the CPCN application immediately after issuing a final decision that makes these determinations. As a corollary proposal, CalWEA recommends that: "if the Commission identifies a transmission project in its renewables transmission plan, then there should be a presumption that such a transmission project is needed to facilitate RPS Program goals."¹¹ In addition, CalWEA proposes that the costs of all transmission studies be credited to the renewable developers in proportion to their shares of the network facilities ultimately built as a result of the studies.

TURN expresses concern that sequentially phasing all § 399.25 findings after an RPS auction could jeopardize the feasibility of cost-effective renewable generation projects. TURN recommends that the Commission consider a more expansive definition of this test that would allow advanced proceedings to commence under § 399.25 for transmission projects that could serve large amounts of cost-effective renewable generation. TURN also echoes CalWEA's concern that the proposed framework limits the application of § 399.25 to contracts signed by the IOUs.

In their reply comments, the utilities argue that CalWEA's proposed approach favors generators to the detriment of ratepayers. In particular, SCE criticizes CalWEA's approach as promoting a quick project approval process, regardless of whether it produces the correct outcome of "least cost, best fit," and placing unnecessary risks on the ratepayers.

SDG&E contends that CalWEA misunderstands the complexities of transmission planning, permitting and licensing. As a consequence, SDG&E argues that CalWEA's proposal to initiate CPCNs and PTCs for all potential transmission projects before winning bidders are determined would have the undesired effect of slowing the transmission siting process and wasting millions of ratepayer dollars.

PG&E argues that CalWEA does not acknowledge the fact that project developers already know what transmission facilities they have to fund under FERC interconnection policies. Therefore, PG&E contends that waiting for the results of the RPS bidding process will not create uncertainty and instability with respect to renewable resource development.