II. Review Progress of Procurement Rulemaking
The Commission has made substantial advancements on addressing many of the key procurement policy issues facing the State of California. While there is still significant work to be done to get to a fully functioning and stable electricity market, the Commission has made significant progress to date on establishing a regulatory framework for procurement by the Investor-Owned Utilities (IOUs), and in particular on the goals set forth in this proceeding.
The Commission initiated this rulemaking in April 2004, as the successor to R.01-10-024, to serve as a forum to consider procurement policies in a coordinated and integrated manner across numerous proceedings at the Commission. R.04-04-003 was intended to be the policymaking forum to consider six issues areas, and a review of the progress made in the six issues areas is listed below.1
1. Review and Adopt Long-Term Procurement Plans. The LTPPs of the three large IOUs were reviewed in 2004, and the Commission adopted D.04-12-048 to approve the plans. The Commission will establish a successor rulemaking to consider the next biennial cycle of long-term procurement planning issues.2
2. Establish Resource Adequacy Requirements. Resource adequacy (RA) requirements were established in Phases 1 and 2 of the RA portion of this proceeding, and the Commission adopted D.04-10-035 and D.05-10-042 to establish the requirements for one-year ahead for all load-serving entities. The Commission will establish a new rulemaking to consider future RA matters, including implementation issues related to existing requirements, as well as extension of RA mandates to local areas and multi-year requirements.
3. Review Development of Procurement Incentives for Each Utility. The Commission issued a staff proposal for an incentive procurement framework with the issuance of this rulemaking, and subsequently solicited comments from interested parties on the staff proposal and other incentive frameworks. In March 2005, the Commission hosted a procurement incentives workshop to further discuss threshold policy and implementation issues, and received opening and reply comments on the workshop report in April and May. The Commission is currently considering the record but has not yet adopted a decision in this area. There may be a decision issued in the near future in this rulemaking, or the procurement incentives issue may transfer to the long-term procurement planning successor rulemaking, or to another procedural forum, as appropriate.
4. Review Treatment of Confidentiality Information. Senate Bill (SB) 1488 directed the Commission to initiate a proceeding to examine its practices under Section 454.5 and 583 of the Public Utilities Code and the California Public Records Act. To implement SB 1488, the Commission issued rulemaking R.05-06-040. The first phase of this proceeding is examining the Commission's confidentiality practices in the context of electricity procurement activity. The Phase I hearings were held the week of November 28, 2005. The Commission is expected to issue a Phase I decision in spring 2006 to establish guidelines to address the concerns regarding meaningful public participation and transparency in the procurement proceeding.
5. Review of Long-Term Policy for Expiring Qualified Facilities Contracts. This issue is currently under consideration in tandem with the Avoided Costs rulemaking R.04-04-025, and hearings are now scheduled in the combined proceedings for January 2006.
6. Review of Management Audits. The Commission's staff has not yet concluded the management audits referenced in R.04-04-003. If not concluded by the close of this proceeding, this issue will transfer to a long-term procurement planning successor rulemaking.
In light of our significant progress on the issues central to this rulemaking, this rulemaking will be closed in early 2006.
1 See R.04-04-003, pp. 3-6, available at: http://www.cpuc.ca.gov/PUBLISHED/FINAL_DECISION/35505.htm
2 The Commission established that long-term procurement planning would occur on a biennial basis in D.04-01-050, an approach adopted to ensure appropriate coordination with the California Energy Commission's Integrated Energy Policy Report proceeding. (See D.04-01-050, p. 175.)
