4. RPS Program Background
4.1. The RPS Program requires Each Utility to increase the Amount of Renewable Energy in its Portfolio
The California RPS Program was established by Senate Bill (SB) 1078 (Chapter 516, statutes of 2002, effective January 1, 2003) and codified at California Public Utilities Code Section 399.11, et seq.8 The statute requires that a retail seller of electricity such as SCE purchase a certain percentage of electricity generated by Eligible Renewable Energy Resources (ERR). Originally, each utility was required to increase its total procurement of ERRs by at least 1% of annual retail sales per year so that 20% of its retail sales are supplied by ERRs by 2017.
The Energy Action Plan (EAP) called for acceleration of this RPS goal to reach 20 percent by 2010.9 This position was reiterated again in Order Instituting Rulemaking (R.04-04-026) issued on April 28, 2004, which encouraged the utilities to procure cost-effective renewable generation in excess of their RPS annual procurement targets10 (APTs), in order to make progress towards the goal expressed in the EAP.11 This acceleration was codified in 2006 by the enactment of SB 107.12
4.2. R.04-04-026 established Procurement Guidelines for the RPS Program
The Commission has issued a series of decisions that establish the regulatory and transactional parameters of the utility renewables procurement program. On June 19, 2003, the Commission issued its "Order Initiating Implementation of the Senate Bill 1078 Renewable Portfolio Standard Program," D.03-06-071. On June 9, 2004, the Commission adopted in D.04-06-025, its Market Price Referent (MPR) methodology for determining the utility's share of the RPS seller's bid price, as defined in §§ 399.14(a)(2)(A) and 399.15(c). On the same day, the Commission adopted standard terms and conditions for RPS PPAs in D.04-06-014 as required by § 399.14(a)(2)(D). Instructions for evaluating the value of each offer to sell products requested in a RPS solicitation were provided in D.04-07-029. More recently, on December 15, 2005, the Commission adopted D.05-12-042 which refined the MPR methodology for the 2005 RPS Solicitation. Subsequent resolutions adopted MPR values for the 2005, 2006 and 2007 RPS Solicitations.13 In addition, D.06-10-050, as modified by D.07-03-046, further refined the RPS reporting and compliance methodologies.14 In this decision, the Commission established methodologies to calculate an LSE's initial baseline procurement amount, annual procurement target (APT) and incremental procurement amount (IPT).15
8 Subsequent statutory references are to the Public Utilities Code unless otherwise indicated.
9 The EAP was jointly adopted by the Commission, the California Energy Resources Conservation and Development Commission and the California Power Authority. The Commission adopted the EAP on May 8, 2003.
10 A Load Serving Entity's (LSE) APT for a given year is the amount of renewable generation an LSE must procure in order to meet the statutory requirement that it increase its total eligible renewable procurement by at least 1% of retail sales per year.
11 Most recently reaffirmed in D.06-05-039.
12 SB 107, Chapter 464, Statutes of 2006.
13 Respectively, Resolution E-3980, Resolution E-4049 and Resolution E-4110.
14 D.06-10-050, Attachment A, as modified by D.07-03-046.
15 The IPT represents the amount of RPS-eligible procurement that the LSE must purchase, in a given year, over and above the total amount the LSE was required to procure in the prior year. An LSE's IPT equals at least 1% of the previous year's total retail electrical sales, including power sold to utility's customers from its DWR contracts.
