6. Assignment of Proceeding
Loretta M. Lynch is the assigned Commissioner and Meg Gottstein and Charlotte F. TerKeurst are the assigned Administrative Law Judges in this proceeding.
1. The language of § 399.25 does not modify the generation project developer's cost responsibility for either gen-ties or transmission network upgrades under current FERC policies. Generators pay for the former. Ratepayers pay for the latter; however, the generator pays the cost upfront and is credited back those costs over a number of years (with interest) once the generation project comes on line.
2. AB 1078 (§ 399.25) provides for the possibility of rolled-in ratemaking for network upgrade costs, as we define those terms in today's decision, should the Commission make certain findings based on an evidentiary record.
3. PG&E's interpretation of AB 1078 would render § 399.25(b)(4) superfluous, whereas the ALJs' interpretation is consistent with the language of the statute in its entirety.
4. Under rolled-in ratemaking, the project developer would not have to finance network transmission upgrades upfront and await recovery of those costs over time. Instead, utilities would finance the upgrades as part of rate base and seek cost recovery through rates. Under this scenario, assuming that the costs were prudently incurred, ratepayers would assume the risk that the generator may not come on line.
5. Under CalWEA's proposed framework, the Commission would make § 399.25 findings regarding project need and rolled-in ratemaking and utilities would file CPCN and PTC applications for all potential transmission projects related to renewable generation before winning bidders are determined under the RPS procurement process. As discussed in this decision, this approach would be inefficient and impose unreasonable costs on ratepayers.
6. CalWEA's interpretation of § 399.25 would render the word "necessary" completely meaningless. This interpretation conflicts with the rule of construction that statutes are to be interpreted according to their plain language, so that none of the language of the statute becomes surplusage.
7. The Joint Ruling recognizes that the provisions of § 399.25 apply to applications for transmission line construction/upgrades subject to the Commission's siting jurisdiction.
8. The Joint Ruling does not explicitly acknowledge that the provisions of § 399.25 do not apply to gen-ties, since they are not subject to the Commission's siting jurisdiction.
9. The Joint Ruling's interpretation of § 399.25 recognizes that the statute specifically states that a transmission project must be "necessary" to the achievement of the RPS goals, and establishes a further level of scrutiny to ensure that the proposed transmission project is the appropriate option among possible alternatives.
10. In general, it is only during the CPCN or PTC application that the Commission develops an evidentiary record that allows it to consider alternate routes, locations or configurations for a proposed transmission upgrade.
11. The Joint Ruling acknowledges that bifurcating the issue of network benefits from the evaluation of project need and project alternatives would generally be confusing to public participants and could strain both the Commission's and interested parties' limited resources on transmission issues.
12. Inconsistencies in the methods used to assess the network benefits across CPCN and PTC proceedings could develop under the ALJs' proposed framework, unless Energy Division monitors these developments and intercedes with recommendations, as appropriate.
13. The ALJs' proposed framework focuses on the results of the IOUs' procurement process, and does not address the applicability of § 399.25 to the procurement practices of other RPS-obligated retail sellers. However, it is premature to address this issue until the rules for these sellers are more clearly defined in coming phases of RPS implementation.
14. Determining need for the purposes of § 399.25 based on the SB 1038 Renewables Transmission Study would commit ratepayer funds for potentially hundreds of millions of dollars based on a general assessment of renewable resource potential, and without the benefit of knowing which projects would actually win the bid and where they would locate their generation facilities. However, a set of transmission system upgrades related to renewable resource development may emerge from the study as being likely to be required over the next few years, based on the geographic location and magnitude of resource development projected by the CEC.
15. It is premature to consider whether or not the evidentiary record on the Tehachapi Transmission Project, scheduled for evidentiary hearings in early June, 2003, will support Commission findings regarding § 399.25 matters.
16. The general procedures for implementing § 399.25 adopted in today's decision are compatible with the annual procurement process adopted in D.03-06-071.
17. Timely comments on the draft decision in this matter did not depend upon the completion of information exchange between Geo-Energy and SCE concerning the Conceptual Study North of Inyokern.
1. The ALJs' interpretation of § 399.25 conforms with the basic rules of statutory construction.
2. With the clarifications discussed in this decision, the framework for implementing § 399.25 proposed in the Joint Ruling should be adopted.
3. The authority granted to the Commission by § 399.25(b)(1) to make findings that specific transmission facilities provide benefit to the transmission network does not interfere with the FERC's jurisdiction over transmission ratemaking such that it would be preempted by federal law.
4. In order to proceed as expeditiously as possible with the implementation of § 399.25, this decision should be effective today.
5. Geo-Energy's motion to accept late-filed comments on the draft decision should be denied.
IT IS ORDERED that:
1. As a general framework for incorporating the requirements of Public Utilities Code Section 399.25 into the Renewables Standard Portfolio (RPS) planning process, we adopt the following:
· The provisions of § 399.25 apply to network transmission facilities that come before the Commission in the form of a Certificate of Public Convenience and Necessity (CPCN) or Permit to Construct (PTC) application. "Network" transmission facilities are defined as those that are needed to ensure reliable electric service and full delivery of a generator's output with the addition of generation. The provisions of § 399.25 do not apply to transmission facilities needed to bring power from the plant to the first point of interconnection with the existing transmission grid.
· The procurement proceeding will develop the rules and procedures for the RPS planning process and RPS renewables bidding program. If the transmission facility is an integral part of a renewables project approved pursuant to the RPS process, (i.e., a winning renewables bid), that creates a prima facie finding that the network upgrade will facilitate achievement of the renewable power goals set forth in Article 16 of Senate Bill 1078.
· The Commission will make § 399.25(a) and § 399.25(b)(1) findings on whether a proposed transmission project is "necessary" to facilitate achievement of renewable power goals in the applicable CPCN or PTC proceeding, based on the results of the RPS procurement process and General Order (GO) 131-D considerations of alternatives to the proposed project. The evaluation will not, however, reconsider the selection of the winning generation project.
· In the applicable CPCN or PTC proceeding, the Commission will make § 399.25(b)(1) findings regarding whether the transmission project undertaken to ensure reliable electric service with the addition of generation will also provide benefits to the transmission network.
· The Commission will continue to perform the appropriate review of CPCN and PTC applications under the California Environmental Quality Act, which may include consideration of project alternatives.
2. As discussed in this decision, there may be circumstances that warrant addressing § 399.25 issues for transmission projects related to renewables development prior to the completion of the RPS bid solicitation or before the CPCN or PTC filings are made. The assigned Administrative Law Judge, in consultation with the Assigned Commissioner, may identify such circumstances in the scoping and scheduling of issues in this proceeding.
3. As discussed in this decision, Energy Division shall monitor the methods being utilized across the various CPCN and PTC proceedings to assess network benefits, and develop recommendations to enhance the use of sound, consistent methods, as needed. Energy Division shall present any recommendations on this issue in the form of a report, to be filed and served on all the parties to this
proceeding and Rulemaking 01-10-024. In developing its recommendations, Energy Division shall obtain public input through workshops or written comments. The Assigned Commissioner or assigned Administrative Law Judge in this proceeding shall establish a procedural schedule for addressing Energy Division recommendations.
18. The Motion of Geo-Energy Partners-1983 LTD. to Late File Opening Comments on the Draft Interim Opinion, dated July 7, 2003, is denied.
This order is effective today.
Dated July 10, 2003, at San Francisco, California.
MICHAEL R. PEEVEY
President
CARL W. WOOD
LORETTA M. LYNCH
GEOFFREY F. BROWN
SUSAN P. KENNEDY
Commissioners
ATTACHMENT 1
List of Acronyms and Abbreviations
AB - Assembly Bill
ALJ - Administrative Law Judge
CalWEA - California Wind Energy Association
CEC - California Energy Commission
CEQA - California Environmental Quality Act
CPCN - Certificate of Public Convenience and Necessity
FERC - Federal Energy Regulatory Commission
GO - General Order
I. - Investigation
IEP - Independent Energy Producers
IOU - Investor-Owned Utility
PG&E - Pacific Gas and Electric Company
PTC - Permit to Construct
R. - Rulemaking
RPS - Renewable Portfolio Standard
SB - Senate Bill
SDG&E - San Diego Gas and Electric Company
SCE - Southern California Edison Company
TURN - The Utility Reform Network
(END OF ATTACHMENT 1)
