7. Assignment of Proceeding
Michael R. Peevey is the assigned Commissioner, and Burton W. Mattson and Anne E. Simon are the assigned ALJs for this proceeding.
1. Even though filed more than one year after D.04-06-014, the petition, as amended, is timely.
2. Parties and the Commission have been continuously developing, considering and modifying STCs since 2003.
3. Existing Commission orders direct that, for utilities, five STCs are modifiable by parties, and nine are not modifiable (or modifiable only in part).
4. STC 1 (CPUC Approval) is an area wherein the Commission cannot, and does not, delegate its authority.
5. Petitioners recommend retaining the first part of STC 2 (definitions) as "may not be modified," no party argues otherwise, and it is in the public interest to have uniform definitions for this item.
6. Stakeholders and the Commission are currently considering in R.06-02-012 whether or not a market for trading RECs is reasonable and, if so, a set of policies that would be optimal.
7. The concept of eligibility in STC 6 is important and must be included in RPS contracts.
8. It is obvious that all contracts for RPS-eligible generation must ensure that RPS buyers and sellers are buying and selling the same thing (STC 6 regarding eligibility).
9. It is reasonable to require that each contract contain a term clearly stating the applicable governing law (STC 17 regarding applicable law).
10. The solution to addressing changes in law is not to eliminate or make modifiable STC 17 (Applicable Law).
11. The RPS Program is implemented by electrical corporations and retail sellers doing business in California, is overseen by California government, and is for the benefit of California citizens and ratepayers.
12. Each of the ten modifiable STCs, where applicable, is an important term.
13. Greater flexibility with regard to five currently non-modifiable STCs (by converting them to modifiable STCs) will improve parties' ability to complete deals, and strict uniformity for these five terms is unnecessary.
14. The procedural vehicle of a petition for modification of otherwise non-modifiable STCs is preferred over the use of a standing item in the Scoping Memo of an open RPS implementation proceeding.
15. The changes adopted here result from changes in law and experience over time with the RPS Program.
1. The petition for modification, as amended, should be granted in part and denied in part, as set forth in this decision.
2. Modifications to modifiable STC agreed to between the buyer and seller must continue to be consistent with applicable law and government regulations (e.g., confidentiality).
3. No modification should be made to D.04-06-014, and none is needed with regard to D.06-10-019.
4. This order should be effective today to provide necessary changes, clarification and guidance, and to assist electrical corporations, retail sellers and the state continue to work toward achieving RPS program targets, without delay.
ORDER
IT IS ORDERED that:
1. The February 1, 2007 petition for modification of Decision 04-06-014 jointly filed by Pacific Gas and Electric Company and Southern California Edison Company, as amended on June 15, 2007, is granted as provided in this order, and denied in all other respects. In particular:
a. Of the total 14 standard terms and conditions (STCs), the number of non-modifiable STCs is reduced from nine to four. The four non-modifiable STCs are: STC 1 (CPUC Approval), STC 2 (RECs and Green Attributes), STC 6 (Eligibility), and STC 17 (Applicable Law). The contract language for these four STCs is modified in part, as shown in Attachment A.
b. The remaining five non-modifiable STCs are converted to modifiable STCs, and the remaining five modifiable STCs are retained as modifiable STCs. Further:
1. Each of the ten modifiable STCs must be included in each contract, to the extent applicable (e.g., a term for Supplement Energy Payments (SEPs) need not be included if seller is not seeking SEPs).
2. Modifications to modifiable STCs agreed to between buyer and seller must continue to be consistent with law and government regulations (e.g., buyer and seller negotiated changes to confidentiality must still be consistent with law and Commission decisions).
c. The process for review of subsequent changes to STCs is consistent with existing Commission rules and orders, and is clarified as follows:
1. A petition for modification is preferred for proposals of universal changes to non-modifiable STCs, but other procedural approaches are not prohibited.
2. Updates and changes to the initial language of modifiable STCs may be proposed in the model contracts as part of the periodic review of Renewables Portfolio Standard Procurement Plans. Electrical corporations shall use reasonable efforts to propose uniform and consistent language in their model contracts over time and among electrical corporations.
2. This order shall also be served on the service list for Rulemaking 06-02-012.
This order is effective today.
Dated November 16, 2007, at San Francisco, California.
MICHAEL R. PEEVEY
President
DIAN M. GRUENEICH
JOHN A. BOHN
RACHELLE B. CHONG
TIMOTHY ALAN SIMON
Commissioners
ATTACHMENT A
ADOPTED LANGUAGE
FOR STANDARD TERMS AND CONDITIONS
Contracts between electrical corporations and projects selling electricity subject to the Renewables Portfolio Standard (RPS) shall contain non-modifiable language in four standard terms and conditions, as follows.
1. STC 1: CPUC Approval
"CPUC Approval" means a final and non-appealable order of the CPUC, without conditions or modifications unacceptable to the Parties, or either of them, which contains the following terms:
(a) approves this Agreement in its entirety, including payments to be made by the Buyer, subject to CPUC review of the Buyer's administration of the Agreement; and
(b) finds that any procurement pursuant to this Agreement is procurement from an eligible renewable energy resource for purposes of determining Buyer's compliance with any obligation that it may have to procure eligible renewable energy resources pursuant to the California Renewables Portfolio Standard (Public Utilities Code Section 399.11 et seq.), Decision 03-06-071, or other applicable law.
CPUC Approval will be deemed to have occurred on the date that a CPUC decision containing such findings becomes final and non-appealable.
2. STC 2: RECs and Green Attributes
[Note: The first part of STC 2 remains as is. (See D.07-02-011, as modified by D.07-05-057.)]
The second part of STC 2 is revised as follows:
3.2. Green Attributes. Seller hereby provides and conveys all Green Attributes associated with all electricity generation from the Project to Buyer as part of the Product being delivered. Seller represents and warrants that Seller holds the rights to all Green Attributes from the Project, and Seller agrees to convey and hereby conveys all such Green Attributes to Buyer as included in the delivery of the Product from the Project.
3. STC 6: Eligibility
Seller, and, if applicable, its successors, represents and warrants that throughout the Delivery Term of this Agreement that: (i) the Project qualifies and is certified by the CEC as an Eligible Renewable Energy Resource ("ERR") as such term is defined in Public Utilities Code Section 399.12 or Section 399.16; and (ii) the Project's output delivered to Buyer qualifies under the requirements of the California Renewables Portfolio Standard. To the extent a change in law occurs after execution of this Agreement that causes this representation and warranty to be materially false or misleading, it shall not be an Event of Default if Seller has used commercially reasonable efforts to comply with such change in law.
4. STC 17: Applicable Law
Governing Law. This agreement and the rights and duties of the parties hereunder shall be governed by and construed, enforced and performed in accordance with the laws of the state of California, without regard to principles of conflicts of law. To the extent enforceable at such time, each party waives its respective right to any jury trial with respect to any litigation arising under or in connection with this agreement.
(END OF ATTACHMENT A)
