3. Procedural Background
The role of RECs in the RPS program has been a topic of consideration since the inception of the program. In this section, we summarize the procedural history of this consideration, focusing on the steps taken in this proceeding. In the section on History of the REC, below, we review the substantive issues and their current status.
The RPS program was initiated by Senate Bill (SB) 1078 (Sher), Stats. 2002, ch. 516.4 In D.02-10-062, a comprehensive decision about utility procurement issued in R.01-10-024, we also addressed the preparations for RPS implementation. We asked for comments on how to implement the RPS program, including whether the Commission should consider inter-utility trading of RECs.
These comments were addressed in D.03-06-071, the order beginning implementation of the RPS program. The Commission concluded that, in view of the imminent statutory deadline for commencing the RPS program, consideration of REC trading should be deferred. The decision left open the possibility that a REC trading system might be implemented in the future, but noted that the creation of such a system would raise a number of significant issues.
The issue of tradable RECs has been revisited, but not resolved, on several occasions. In R.04-04-026, the predecessor to this proceeding, the Assigned Commissioner's Ruling and Scoping Memo sought comments on allowing the use of tradable RECs for RPS compliance. In D.05-11-025, the Commission indicated its interest in further exploring of the use of tradable RECs.
In R.06-02-012, the Order Instituting Rulemaking for this proceeding, the Commission identified issues related to tradable RECs as an important component of this proceeding. The Scoping Memo and Ruling of Assigned Commissioner (April 28, 2006) set out a number of issues related to tradable RECs, and assigned them to the second portion of this proceeding.
A staff white paper, "Renewable Energy Certificates and the California Renewables Portfolio Standard Program" (REC white paper), was published April 20, 2006.5 Comments on the REC white paper were filed in late May 2006; reply comments were filed on June 14, 2006.6
Among other things, the REC white paper set out definitions of terms that have been used throughout the subsequent consideration of the use of RECs for RPS compliance. We adopted the definitions of "unbundled" RECs and "tradable" RECs in D.06-10-019. We repeat them here for clarity:
Under an unbundled REC regime, claim over the renewable attributes of energy produced by eligible renewable technologies can be transferred from the renewable generator to one [load-serving entity] LSE while the energy is delivered to another. However, once this transfer occurs, claim over the attributes cannot be resold. In contrast, under a tradable REC regime, although the concept of selling the energy and claim over the attributes to different parties remains intact, RECs may be transferred from the renewable generator to any third party, not just obligated LSEs. In addition, these attributes can be resold subsequent to the initial sale.7
In D.06-10-019, the Commission decided not to authorize the use of unbundled RECs for RPS compliance at that time. We stated that we would consider the use of unbundled and/or tradable RECs later in this proceeding.8
The Amended Scoping Memo and Ruling of Assigned Commissioner (December 29, 2006) (Amended Scoping Memo) revised the tasks for this proceeding, in light of prior work and the enactment of SB 107 (Simitian), Stats. 2006, ch. 464. The Amended Scoping Memo identified three areas related to tradable RECs:
● Exploring the use of tradable RECs for RPS compliance by all RPS-obligated load-serving entities (LSEs), including determining what attributes should be included in a REC;
● Determining the appropriate treatment of RECs associated with energy generated by renewable customer-side distributed generation, after examination of two important issues-measurement of renewable output from customer-side distributed generation, and analysis of the impact of ratepayer subsidies of renewable distributed generation-in R.06-03-004; and
● Determining the status of RECs associated with renewable energy generated by qualifying facilities (QFs) under contract with California utilities.
The Second Amended Scoping Memo and Ruling of Assigned Commissioner (February 25, 2008) (Second Amended Memo) noted several developments related to the use of TRECs for RPS compliance since the issuance of the Amended Memo. These changes resolved some of the previously identified issues, added new tasks, and moved other issues forward.
In D.07-01-018, issued in R.06-03-004, we determined that RECs associated with customer-side renewable distributed generation belong to the system owner, irrespective of participation in net-energy metering, the California Solar Initiative, or the Self Generation Incentive Program.
SB 107 resolved the status of RECs for renewable energy generated by QFs by prohibiting the creation of RECs associated with energy from QFs under contracts executed after January 1, 2005; it also allowed the creation of RECs from energy under any contract prior to January 1, 2005 only if the contract explicitly addressed the ownership of RECs.9 SB 107 also added the requirement that, in order for us to authorize the use of TRECs for RPS compliance, this Commission and the CEC must each make a determination that the CEC's RPS tracking system (including WREGIS) is ready to support the use of unbundled and/or tradable RECs for RPS compliance.10 A draft joint agency staff report on the tracking system was issued March 7, 2008.11 The CEC held a workshop on the draft report on March 17, 2008.
Energy Division staff held a comprehensive workshop on TRECs and RPS compliance on September 5-7, 2007.12 Parties filed and served pre-workshop comments on August 17, 2007.13 Post-workshop comments were filed on November 13, 2007.14 Post-workshop reply comments were filed on December 5, 2007.15
At the prehearing conference held December 10, 2007, some parties suggested that parties interested in the subject might try to develop a consensus recommendation on the definition and attributes of a TREC. Information about informal discussions among the parties was circulated to the service list in this proceeding, R.06-05-027, R.06-03-004, and R.06-04-009. The discussions did not result in the filing of any recommendations on this topic.
On May 9, 2008, the Center for Resource Solutions (CRS) filed a Motion for Leave to File Additional Comments related to REC definition and attributes.16 This motion was granted by an ALJ's ruling on June 6, 2008.17 The ruling allowed reply comments to be filed not later than June 11, 2008.18
4 RPS legislation is codified at Pub. Util. Code §§ 399.11-399.20.
5 The REC white paper may be found at http://www.cpuc.ca.gov/word_pdf/REPORT/55606.doc.
6 Comments were filed by Central California Power; Sustainable Conservation; Powerex Corp.; California Solar Energy Industries Association (CalSEIA), Clean Power Markets, Inc., PV NOW, Vote Solar Initiative (jointly); PG&E; Mountain Utilities; Division of Ratepayer Advocates (DRA); Southern California Edison Company (SCE); San Diego Gas & Electric Company (SDG&E), Pilot Power Group, Inc.; Alliance for Retail Energy Markets (AReM) and Western Power Trading Forum (WPTF) (jointly, collectively, AReM); Aglet Consumer Alliance (Aglet); Green Power Institute (GPI); Center for Energy Efficiency and Renewable Technologies (CEERT); Independent Energy Producers Association (IEP); Union of Concerned Scientists (UCS); The Utility Reform Network (TURN); and California Large Energy Consumers Association and California Manufacturers and Technology Association (jointly).
Reply comments were filed by Central California Power, CEERT, GPI, Aglet, Pilot Power, AReM, SDG&E, SCE, Mountain Utilities, UCS, TURN, PG&E, Powerex, and IEP.
7 REC white paper, p. 1, n. 1.
8 Unless clarity requires a different usage, we will refer to unbundled and tradable RECs together as "tradable RECs." Following the usage of Energy Division and the parties, tradable RECs may also be called TRECs. We will refer to transactions using unbundled and/or tradable RECs as "TREC transactions" or "REC-only transactions."
9 Sections 399.16(a)(6), (5).
10 Section 399.16(a)(1).
11 The draft report may be found at http://www.energy.ca.gov/2008publications/CEC-300-2008-001/CEC-300-2008-001-SD.PDF.
12 The workshop notice and the assigned Administrative Law judge's (ALJ) rulings seeking comments were circulated to the service lists in this proceeding, R.06-05-027 (RPS administration), R.06-03-004 (distributed generation and California Solar Initiative), and R.06-04-009 (GHG policy).
13 Pre-workshop comments were filed by Central California Power; Powerex, Solar Alliance; PacifiCorp; CEERT; Sustainable Conservation; AReM and WPTF (jointly); CalpinePowerAmerica-CA, LLC; Coral Power, LLC; SDG&E; Aglet; IEP; PG&E; UCS; SCE; GPI; PPM Energy, Inc.; CPV Renewable Energy Company, LLC; and Sempra Energy Solutions.
14 Post-workshop comments were filed by PG&E; GPI; Powerex; SDG&E; Golden State Water Company; IEP; Pilot Power; Central California Power; EcoSecurities; DRA; CEERT; Calpine Corporation and CalpinePowerAmerica-CA, LLC (jointly, collectively, Calpine); and AReM and WPTF (jointly); Mountain Utilities; SCE; TURN; PacifiCorp; California Farm Bureau Federation and Sustainable Conservation (jointly); Solar Alliance and CalSEIA (jointly).
15 Post-workshop reply comments were filed by Central California Power; PacifiCorp; Aglet; UCS; California Farm Bureau Federation, Inland Empire Utilities Agency, Sustainable Conservation (jointly); Recurrent Energy, Inc., Solar Alliance, CalSEIA (jointly); Calpine; TURN; IEP; AReM; SCE; Mountain Utilities; CEERT; SDG&E; DRA; GPI; and PG&E.
16 The CRS comments were joined by the Sacramento Municipal Utility District (SMUD). SMUD's Motion for Party Status, dated August 4, 2008, was granted by the ALJ's Ruling Granting Motion of Sacramento Municipal Utility District for Party Status (August 12, 2008).
17 Parties were notified informally by e-mail on May 28, 2008.
18 Reply comments were filed on June 11, 2008 by AReM and WPTF (jointly); DRA; GPI; IEP; SCE, PG&E, PacifiCorp, Sierra Pacific, and SDG&E (jointly; collectively, IOUs); Solar Alliance and CalSEIA (jointly; collectively, Solar Alliance); TURN; and UCS.
