ALJ/CFT/hl2 Mailed 7/26/2005

Decision 05-07-040 July 21, 2005

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Investigation into Implementation of Assembly Bill 970 Regarding the Identification of Electric Transmission and Distribution Constraints, Actions to Resolve Those Constraints, and Related Matters Affecting the Reliability of Electric Supply.

Investigation 00-11-001

(Filed November 2, 2000)

INTERIM OPINION REGARDING

TRANSMISSION COSTS IN RPS PROCUREMENT

I. Summary

This decision addresses the development of transmission costs for use in Renewables Portfolio Standard (RPS) procurements to be undertaken in 2005 pursuant to Pub. Util. Code § 399.14.¹ This will be the second procurement under the RPS program.

We require that Pacific Gas and Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego Gas & Electric Company (SDG&E) each prepare and file, no later than August 22, 2005, a 2005 Transmission Ranking Cost Report for use in its upcoming RPS procurement. Except to the extent modified by this order or by other Commission order, the companies should continue to use the methodology adopted in Decision (D.) 04-06-013 for development and consideration of transmission costs during the 2005 RPS procurement. The 2005 Transmission Ranking Cost Reports will be subject to approval by the Assigned Commissioner.

As in 2004, the 2005 Transmission Ranking Cost Reports will identify and provide cost information regarding transmission upgrades needed for potential RPS projects. RPS bidders will be able to use the information regarding expected transmission upgrades in developing their bids in response to the 2005 RPS procurement solicitation. In evaluating the responses, the utilities should use the transmission cost estimates in their 2005 Transmission Ranking Cost Reports and the approved ranking methodology.

We will address the extent to which bidders may propose to deliver energy outside the purchasing utility's service territory in an order in Rulemaking (R.) 04-04-026 regarding the utilities' 2005 RPS procurement plans rather than in this order in Investigation (I.) 00-11-001. For RPS procurements subsequent to 2005, the Commission will address the treatment of transmission costs on an integrated basis with other RPS issues or in other appropriate proceedings.² In addition to this transfer of transmission issues related to RPS procurement, we plan to address the remaining areas of inquiry pending in
I.00-11-001 through separate orders and to close this proceeding in the near future.

¹ All statutory references are to the Public Utilities Code. ² The Commission plans to issue an Order Instituting Investigation (OII) in the near future to address certain transmission issues related to renewables projects. We will provide direction as appropriate regarding where transmission issues related to RPS procurement will be addressed.