4. Purpose of Proceeding

The development of avoided costs in our various resource-related proceedings in recent months has been coordinated through the efforts of the assigned Administrative Law Judges (ALJs) and Commissioners to broadly notice prehearing conferences (PHC) and workshops whenever avoided cost issues arise in specific proceedings, and to direct interested parties to file avoided cost related pleadings to a consolidated service list across various resource-related proceedings. As stated above, we recognized the need to coordinate the data inputs and methodologies used in calculating avoided costs across the various resource applications in R.04-04-003.²⁶ In that decision, we noted that until we issue a separate rulemaking on avoided cost issues, the procurement rulemaking proceeding would serve as the forum for coordinating the Commission's development of avoided costs across the various resource-related proceedings.

We believe that it is now time to consolidate the development of avoided cost input assumptions, avoided cost methodologies and updating procedures into a single procedural forum. We see two clear advantages to this approach.

First, it will be less confusing for all interested parties to follow and participate in avoided cost issues if they are addressed in a single rulemaking proceeding. As it now stands, avoided cost-related issues are being addressed (or scheduled to be addressed) in several existing dockets, including R.99-11-022, R.01-08-028, and R.04-03-017. Even with careful notice procedures and coordination among the assigned ALJs and Commissioners, it will be difficult to ensure that the public knows clearly where and when avoided costing methods, assumptions, forecasts, and updating procedures will be considered by the Commission.

Second, consolidating these issues into a single rulemaking will ensure a consistent record as the Commission considers how best to calculate and update avoided costs for the various resource-related applications. As we recognized in R.04-03-017, cohesive and rational policy making for resource procurement requires that we develop a common methodology for assessing avoided costs across the full range of supply- and demand-side technologies. QF pricing is part of this mix, and should not be addressed in isolation. Although there may be legitimate reasons for differences in avoided cost calculations, depending upon the application, we believe that addressing methodological issues, input assumptions, and updating procedures in a single forum is the best way to consider those differences as we develop avoided costs for use in our proceedings.

Therefore, we see great advantage to consolidating avoided cost issues into a single rulemaking. Moreover, the timing is ripe: We are in the very early stages of updating avoided costs in the various resource-related proceedings, which means that physical consolidation of the record and schedules can be easily accomplished.

In sum, the purpose of this rulemaking is to serve as the forum for developing the common methods, input assumptions, and updating procedures for avoided cost calculations used in Commission proceedings, including but not limited to R.02-06-001 (Demand Response), R.04-03-017 (Distributed Generation), R.01-08-028 (Energy Efficiency), ongoing Annual Earnings Assessment Proceedings, and all other proceedings where avoided cost calculations or forecasts are to be applied. This rulemaking also serves as the forum for updating QF avoided cost pricing, per the Commission's direction in D.03-12-062.