VI. Assignment of Proceeding

Michael R. Peevey is the Assigned Commissioner and Charlotte F. TerKeurst is the assigned ALJ in this proceeding.

Findings of Fact

1. For 2005 RPS procurements, it is reasonable to require that PG&E, SCE, and SDG&E use the methodology adopted in D.04-06-013 for their Transmission Ranking Cost Reports and for evaluating and ranking RPS bids, except to the extent modified in this order or in an order in R.04-04-026 regarding the utilities' 2005 RPS procurement plans.

2. It is reasonable to require that the identification of transmission costs for use in the RPS bid ranking process reflect the actual net change in total transmission costs due to a project's interconnection and operation, to the extent practicable.

3. It is reasonable to allow RPS bidders to structure their bids in ways aimed at reducing or eliminating the need for transmission upgrades, including proposals to use Remedial Action Schemes or other operational solutions. The viability of such proposals may be determined only after completion of detailed studies.

4. It is reasonable to require that the utilities specify and explain the carrying costs, in addition to capital costs, of transmission upgrades identified in their Transmission Ranking Cost Reports.

5. It is reasonable to require that costs of transmission upgrades that would be used by more than one RPS project be allocated to individual RPS projects on a pro rata basis, based on the percentage of transfer capacity added by the proposed upgrade that would by used by the RPS project. This pro rata allocation of upgrade costs should be applied only if sufficient renewables potential exists, as identified by the CEC, to fully utilize the transmission facility sometime in the future.

6. It is reasonable for contracts for RPS projects to specify that the utility's financial obligations to purchase project output are contingent upon construction of any transmission upgrades that are identified as needed when the contract is signed.

7. It is reasonable to allow the utilities to share limited information about RPS bids when there are RPS bids to more than one utility for RPS projects within the same cluster in order to properly assess transmission costs.

8. It is reasonable to require PG&E, SCE, and SDG&E to prepare and file their 2005 Transmission Ranking Cost Reports no later than August 22, 2005.

9. It is reasonable to delegate to the Assigned Commissioner in I.00-11-001 the assessment of the adequacy of the 2005 Transmission Ranking Cost Reports required by this order, so that the bid ranking process is not delayed.

10. It is reasonable to use the methodology adopted in D.04-06-013 for the development and consideration of transmission costs in the 2005 RPS procurement, with the modifications adopted in this order.

Conclusions of Law

1. Consistent with the least-cost mandate in § 399.14(a)(2)(B), the identification of transmission costs for use in the RPS bid ranking process should reflect the actual net change in total transmission costs due to a project's interconnection and operation, to the extent practicable.

2. The responsibility to assess the adequacy of the Transmission Ranking Cost Reports should be delegated to the Assigned Commissioner in I.00-11-001.

3. The Methodology for Development and Consideration of Transmission Costs in Initial Renewable Portfolio Standard Procurement appended as Attachment A to D.04-06-013 should be adopted for use in the 2005 RPS procurements, except to the extent modified by this order or by other Commission order.

4. In order to proceed expeditiously with the 2005 RPS procurement, this decision should be effective today.

INTERIM ORDER

IT IS ORDERED that:

1. Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E) shall each use the Methodology for Development and Consideration of Transmission Costs in Initial Renewable Portfolio Standard Procurement appended as Attachment A to Decision (D.) 04-06-013 in its 2005 Renewable Portfolio Standard (RPS) procurement, except to the extent modified by this order or by other Commission order.

2. In their 2005 Transmission Cost Ranking Reports, PG&E, SCE, and SDG&E shall each specify and explain the carrying costs, in addition to capital costs, of transmission upgrades identified in the reports.

3. In ranking RPS bids, PG&E, SCE, and SDG&E shall each allocate costs of transmission upgrades that would be used by more than one RPS project on a pro rata basis, based on the percentage of transfer capacity added by the proposed upgrade that would be used by the RPS project. This pro rata allocation of upgrade costs shall be applied only if sufficient renewables potential exists, as identified by the California Energy Commission, to fully utilize the transmission facility sometime in the future.

4. PG&E, SCE, and SDG&E shall each prepare and file a 2005 Transmission Ranking Cost Report consistent with Ordering Paragraphs 1 and 2 no later than August 22, 2005. Each company's 2005 Transmission Ranking Cost Report shall reflect data regarding potential renewable energy bidders obtained through the requests for information required by the May 27, 2005 ruling of the assigned Administrative Law Judge (ALJ) in addition to previously obtained information regarding potential renewable energy bidders.

5. Parties may file initial comments on the 2005 Transmission Ranking Cost Reports within seven days of the due date for the reports and may file reply comments within seven days thereafter.

6. Parties shall serve paper format copies, in addition to electronic copies, if served as allowed by Rule 2.3.1 of the Commission Rules of Practice and Procedure, of the 2005 Transmission Ranking Cost Reports, initial comments, and reply comments on the Assigned Commissioner and ALJ.

7. The Assigned Commissioner in Investigation 00-11-001 shall assess the adequacy of the 2005 Transmission Ranking Cost Reports on the basis of the filed comments and reply comments, and shall determine whether the reports should be modified or other steps taken before the utilities' results are used in ranking bids for the 2005 RPS procurement.

8. The Executive Director shall serve a copy of this decision on parties to Rulemaking 04-04-026.

This order is effective today.

Dated July 21, 2005, at San Francisco, California.

Comr. Grueneich recused herself from
this agenda item and was not part
of the quorum in its consideration.

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