Edison May Sit Out First RPS Solicitation

The California Public Utilities Commission on June 8 approved long-awaited rules to implement the state?s renewables portfolio standard, paving the way for CPUC president Michael Peevey to keep his promise that the first green power solicitations will start in July. Also approved was a plan to start transmission upgrades to help tap wind generation in the state?s Tehachapi region. To comply with the renewables requirement, Pacific Gas & Electric and San Diego Gas & Electric will participate in the first round of solicitations. Southern California Edison may be off the hook in this round of bidding because the utility maintains it already has 20 percent renewables supplies for 2004. Whether Edison gets a pass will be decided after the utilities file renewables procurement plans on June 24. ?We are obviously very happy that this entire process is moving forward toward summer RPS solicitations,? said Sara Steck Myers, attorney representing the Center for Energy Efficiency and Renewable Technologies. Others in the renewables community expressed disappointment in the commission?s actions. By requiring wind developers to post a credit rating, the decision setting standard contract terms and conditions imposes ?onerous? requirements that will ?unnecessarily drive up bid prices and exclude small wind developers from participating,? predicted Nancy Rader, executive director of the California Wind Energy Association. Rader noted that about 8,000 MW of wind power has been developed in the state without credit-rating requirements. The commission?s contract terms decision clarified specs for utilities? annual renewables procurement targets. The portfolio law (RPS), which passed two years ago, set requisite renewables levels for private utilities of 20 percent by 2017; the Energy Action Plan wants to accelerate the deadline to 2010. For this year, PG&E will need to secure 9.5 billion kWh, compared with Edison?s target of 12.7 billion kWh. SDG&E?s target is 423 million kWh. A key RPS rule approved was a market price referent establishing a benchmark for renewables bids. Utilities are not required to pay more than the benchmark. Bidders for above-benchmark contracts can apply for supplemental energy funding from the California Energy Commission. A ?cash flow simulation? method to calculate the benchmark was adopted, using total annual proxy power plant output to help calculate the numbers. Touching on the controversial matter of confidentiality, the market price referent will be publicly disclosed after the first solicitation is complete but before advice letters requesting contract approval are filed. Commissioner Carl Wood said that the market price referent plan ?skirts legal obligations? because commission staff will be able to approve benchmark numbers before they are determined to be reasonable. Along with commissioner Loretta Lynch, he cast dissenting votes on the price benchmark and standard contract terms decisions. Getting the nod on a unanimous vote were interim guidelines for development of transmission costs in assessing renewables bids. Overall, utilities will need to estimate transmission upgrade costs, on the basis of conceptual studies. The estimates, which are not definitive, will be used to compare bids. A decision to resolve thorny questions about cost allocation for transmission upgrades was postponed. In a fourth renewables move, the commission unanimously approved a plan on transmission needs for the Tehachapi region. This area is ?vital to achieve RPS goals,? said Lynch, invoking CEC estimates of the region?s 4,500 MW of untapped wind generation. Edison was directed to seek financing for the upgrades from the Federal Energy Regulatory Commission, an approach the utility has objected to. Two draft versions of the plan were consolidated to allow Edison to file a certificate of public convenience and necessity for the first round of Tehachapi upgrades. A collaborative study group, including utilities, wind developers, and resource agencies, will develop a plan for further upgrades. Edison needs to file on behalf of the study group a report on the group?s recommendations. The report must be filed within nine months. Wind developer PPM Energy had objected to the California Independent System Operator?s stance that it should be able to review Edison?s projects before they go forward. According to PPM, this review could postpone much-needed capacity until the end of 2006, when federal tax credits for wind development could expire. Finally on the renewables front, regulators approved a contract between PG&E and Buena Vista Energy LLC allowing for repowering of a 38 MW wind facility in the Altamont Pass.

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Edison May Sit Out First RPS Solicitation

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