Tradable Renewable Energy Credits

R.06-02-012 2006 RPS Rulemaking – Tradable Renewable Energy Credits. R.08-08-009 2008 RPS Rulemaking Decision 10-03-021 issued Mar 11 Decision 10-05-018 stayed D.10-03-021 Decision 11-01-025 modifies D.10-03-021, lifts D.10-05-018 Proposed Decision Denying Petition for Modification of Decision 06-10-019 ; Final Decision 11-04-004 _________________ Decision 11-04-004 issued April 14, 2011, denied SDG&E's Petition for Modification of D.06-10-019, making no changes to the Proposed Decision, and closing Rulemaking 06-02-012 (again). The decision denies the request of SDG&E to modify D. 06-10-019 in order to allow the use of unbundled renewable energy credits (RECs) for compliance with California's renewables portfolio standard program in certain circumstances. Because the decision already authorizes the use of tradable RECs for RPS compliance in general, the Commission said, the relief requested in SDG&E's petition for modification is not necessary. Parties to Rulemaking proceedings R.06-02-012 and R.08-08-009 were not feeling the love this Valentine's Day, as there was an outpouring of filings in protest of recent Commission actions regarding TRECs. On Feb 14, The Alliance for Retail Energy Markets (“AReM”), the Direct Access Customer Coalition, Walmart Stores, Inc., Commerce Energy, Inc., 3 Phases Renewables, LLC, Shell Energy North America (US), L.P. and the Western Power Trading Forum filed an Application for Rehearing of Decision 11-01-026 "Revising Rules for the Renewable Portfolio Standard Pursuant to Senate Bill 695." Their concern is that this decision, along with D.11-01-025 causes contracts for power with ESPs that were once fully bundled and compliant contracts to become TRECS that have limitations and therefore the Commission has committed retroactive ratemaking, and violated the Contracts Clause of the U.S. Constitution. AReM separately filed an Application for Rehearing of D.11-01-025 expressing similar concerns as in the Joint Parties filing, and includes in its arguments violation of the Commerce Clause of the U.S. Constitution, which prohibits states from taking actions that discriminate against interstate commerce . SCE filed an Application for Rehearing of D.1.02-025 on the grounds that it exceeds the Commission’s jurisdiction by attempting to redefine Renewables Portfolio Standard (“RPS”) delivery and eligibility requirements established by the Energy Commission. The Decision, they say, also violates the Commerce Clause of the United States Constitution by reclassifying out-of-state bundled transactions as REC-only, married with a 25% limitation and price cap. Finally, SCE feels that the Decision conflicts with statutes that require all Commission-jurisdictional load-serving entities to be subject to the same terms and conditions with respect to the RPS program. The Independent Energy Producers Association (IEP) also filed an Application for Rehearing of D.1.02-025, with arguments similar to SCE's. Similarly, Iberdrola Renewables, Inc. filed an Application for Rehearing of D.11-01-025 citing violation of the Commerce Clause as its central argument. The Center for Energy Efficiency and Renewable Technologies (CEERT) also petitioned the Commission for modification of D.11-01-025, saying that it must be modified to resolve internal conflicts in its orders and to provide clarity as to its impact on the RPS program, so that confusion can be avoided in the "New TRECS market." The treatment, definition, and next steps governing TREC transactions in D.11-01-025 are vague and conflicting, and must be modified to avoid arbitrary implementation and confusion, says CEERT's complaint. SDG&E filed comments slamming as erroneous the Proposed Decision Denying Petition for Modification of D. 06-10-019, which would allow, as SDG&E explained in the Petition for Modification, SDG&E to take advantage of a unique opportunity to benefit ratepayers by reuniting unbundled Green Attributes with the associated underlying wind power already being delivered to utility customers under the CDWR contract. The PD would thwart that effort. ALJ Simon filed Jan 25 a Proposed Decision Denying Petition for Modification of Decision 06-10-019 filed by SDG&E on Oct 29, 2009. SDG&E requested that a utility be able to buy renewable energy credits (RECs) unbundled from the associated energy. The ALJ contends that decisions D.10-03-021 as modified by D.11-01-025 grant all the relief SDG&E sought in its petition, therefore the petition should be denied because it is moot. Comments were due Feb 14, and replies were due Feb 21. Decision 11-01-025 was signed by the Commission at its 1/13/2011 Business Meeting. Resolving Petitions for Modifications of D1003021 Authorizing Use of Renewable Energy Credits for Compliance with the CA Renewables Portfolio Standard and Lifting Stay and Moratorium Imposed by D1005018. This decision resolves two petitions for modification of Decision (D.)10-03-021, which authorizes the procurement and use of tradable renewable energy credits (TRECs) for compliance with the California renewables portfolio standard (RPS) program. D.10-03-021 also sets forth the structure and rules for a TREC market and for the integration of TRECs into the RPS flexible compliance system. This decision denies the Joint Petition of Southern California Edison Company, Pacific Gas and Electric Company, and San Diego Gas & Electric Company for Modification of Decision 10-03-021, with the exception of one suggested technical correction to D.10-03-021. This decision also denies the Petition of the Independent Energy Producers Association for Modification of Decision 10-03-021 Authorizing Use of Renewable Energy Credits for RPS Compliance. Based on the Commission's review of D.10-03-021, the petitions for modification, the alternate proposed decision of Commissioner Grueneich (mailed October 25, 2010), and several rounds of comments on this proposed decision and the alternate proposed decision, this decision also makes several clarifying modifications to D.10-03-021, as well as modifications related to the lapse of time between the issuance of D.10-03-021 and the issuance of this decision. This decision modifies D.10-03-021 by: 1. Extending the expiration dates of the temporary limit on the use of TRECs for RPS compliance and the temporary TREC price cap to December 31, 2013. 2. Clarifying the process for Commission review of utilities' contracts for procurement of TRECs that were submitted for review prior to the effective date of this decision. 3. Clarifying the role of the California Energy Commission with regard to several aspects of the RPS program. 4. Clarifying the role of the Western Renewable Energy Generation Information System in the use of TRECs for RPS compliance. D.10-03-021, as modified by this decision, is effective March 11, 2010. Further, because this decision resolves the two petitions for modification of D.10-03-021, the stay of D.10-03-021 imposed in D.10-05-018 is no longer necessary. The stay is therefore lifted. Similarly, the moratorium on Commission approval of certain RPS contracts imposed in D.10-05-018 is no longer relevant, and is ended. Commissioner Dian M. Grueneich filed an Alternate Proposed Decision to the Proposed Decision of Commissioner Michael R. Peevey on Oct 25. The major differences between this Alternate Decision of Commissioner Dian Grueneich and the Proposed Decision of President Peevey are: 1. The Alternate denies the April 12, 2010, Southern California Edison Company (SCE), Pacific Gas and Electric Company (PG&E), and San Diego Gas & Electric Company (SDG&E) Joint Petition for Modification of Decision 10-03-021 (utility petition) and the April 15, 2010 Independent Energy Producers Association’s (IEP) Petition for Modification of Decision 10-03-21 (IEP petition). 2. The alternate modifies D.10-03-021 to eliminate the expiration dates for the tradable renewable energy credit (TREC) usage cap and price cap. 3. The alternate requires that all signed RPS procurement contracts submitted to the Commission for approval between May 6, 2010 and the effective date of this decision be re-filed in compliance with D.10-03-021. 4. The alternate directs SCE, PG&E, and SDG&E to comply with D.10-03-021 (March 11, 2010), in all respects other than those modified by the Alternate Decision. On Oct 18, the "Joint Parties" filed " Motion of the Alliance For Retail Energy Markets, the California State University, the California Large Energy Users And Consumers Association, the California Manufacturers and Technology Association, Commerce Energy, Inc., the Direct Access Customer Coalition, Pilot Power Group, Inc., Shell Energy North America, (US) LP, and Wal-Mart Stores, Inc. Requesting Comment Period for the Revised Proposed Decision of Commissioner Peevey: Decision Modifying Decision 10-03-021 Authorizing Use of Renewable Energy Credits for Compliance with the California Renewables Portfolio Standard and Lifting Stay and Moratorium Imposed by Decision 10-05-018." ALJ Anne E. Simon issued an e-mail Ruling responding to the Motion on Oct 19: "The Motion to Shorten Response Period filed by AReM et al. is granted in part. Any responses to AReM et al.'s Motion Requesting Comment Period for Revised Proposed Decision of President Peevey must be filed and served not later than October 22, 2010. No replies to the responses will be allowed. Please note that this is a ruling only on the request to shorten time for responses to the Motion Requesting Comment Period; no ruling on the Motion Requesting Comment Period has been made." PG&E and TURN filed responses; no replies were allowed. The formal Order was filed Oct 27. In that Order ALJ Simon ruled that supplemental comments on the PD would be allowed with some restrictions, and would be due Nov 5, and supplemental replies would be due Nov 12. A Proposed Decision had been pending since March 2009. This PD authorizes the procurement and use of tradable renewable energy credits (TRECs) for compliance with the California renewables portfolio standard (RPS) program. It also delineates the structure and rules for a TREC market and for the integration of TRECs into the RPS flexible compliance system. The Commission adopted final Decision 10-03-021 on March 11. See article March 20, 2010 issue. The Decision: distinguishes between bundled (energy plus renewable energy credits (RECs)) transactions and TREC (or REC-only) transactions used for RPS compliance requires that TRECs must be tracked in the Western Renewable Energy Generation Information System (WREGIS) and retired in WREGIS for RPS compliance provides a temporary limit on the use of TRECs to meet RPS procurement obligations. Under this limit, the three large California utilities may use TRECs to meet no more than 25 percent of their annual RPS procurement obligations. imposes a transitional price cap of $50/REC in REC-only contracts used for RPS compliance directs Energy Division staff to collect information about the TREC market and the use of TRECs for RPS compliance, and to provide a report with recommendations to the Commission within 16 months of the date of this decision regarding whether the usage limit and price cap should be retained, adjusted, or allowed to sunset. sets forth two standard terms and conditions (STCs) related to RECs and one additional STC governing Commission approval of utilities’ REC-only contracts that must be used in all RPS contracts that have not been approved by the Commission prior to this decision. authorizes Energy Division staff to develop methods to review and evaluate REC‑only transactions and to make any necessary revisions to the RPS compliance documents and reporting protocols. ALJ Mattson issued a Ruling on March 19 th in the R.08-08-009 RPS docket requiring utilities to amend their RPS procurement plans to conform with the decision and file them by April 7. He also set in motion a round of comments (April 19) and replies (April 26) on the amended procurement plans. To implement this Decision, a workshop was scheduled for April 23, 2010. Parties discussed: 1) A methodology for comparing REC-only contracts to the price cap if the transaction includes both energy and RECs; 2) Standards for reviewing and evaluating bundled RPS contracts that utilize dynamic transfer; and 3) how to classify transactions that include firm transmission arrangements as either bundled or REC-only contracts. On April 12, SCE and SDG&E filed a Joint Motion for Stay, and a Petition for Modification of Decision 10-03-021, and on April 15 in conjunction with PG&E filed a Joint Application for Rehearing, asking that the PUC modify the decision to define a REC-only transaction as one in which the LSE purchases only TRECs, and not energy, and to eliminate the 25% TREC usage limit. They also filed a motion to expedite the other motions. Over the 15 th and 16 th of April, applications for rehearing were also filed by the Independent Energy Producers’ Association, TransAlta, the Center for Energy Efficiency and Renewable Energy, NaturEner USA, Commissioner Peevey issued a Ruling on these matters on April 14, setting a new expedited schedule to consider the motions. Decision 10-05-018 of May 6 stays D.10-03-021, pending resolution of the Joint Petition of Southern California Edison Company, Pacific Gas and Electric Company, and San Diego Gas & Electric Company for Modification of Decision 10-03-021 (filed April 12, 2010) and the Petition of the Independent Energy Producers Association for Modification of Decision 10-03-021 Authorizing Use of Renewable Energy Credits for RPS Compliance (filed April 15, 2010). The stay is instituted on the Commission's own motion and goes into effect on the effective date of this decision. Additionally, pending resolution of the Petitions for Modification, this decision places a temporary moratorium on approval of any RPS contracts signed after the date of this decision that would be defined under D.10-03-021 as REC-only transactions. On Aug 25 Commr Peevey issued a Proposed Decision (PD) to lift the stay, resolve the Petitions for Modification, and modify D.10-03-021 by: 1. Increasing the extent to which the large investor-owned utilities may rely on REC-only transactions, as defined in D.10-03-021, by modifying the temporary TREC usage cap to allow up to 40% of their RPS annual procurement targets to be met using TREC-only transactions. 2. Modifying the provisions in D.10-03-021 relating to the characterization of contracts approved prior to the effective date of the TRECs decision as REC-only, so that all contracts that were approved by the Commission before the effective date of D.10-03-021 will be characterized as bundled contracts for RPS compliance purposes and will not count toward the temporary REC usage cap adopted in D.10-03-021 and as modified by the PD. On September and Oct 4, 33 sets of comments and/or reply comments were filed.

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Tradable Renewable Energy Credits

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