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CPUC Public Agenda 3283 Thursday, October 20, 2011, 9:00 a.m. 505 Van Ness Ave, San Francisco

CPUC Public Agenda 3283 Thursday, October 20, 2011, 9:00 a.m. 505 Van Ness Ave, San Francisco. Commissioners: Michael R. Peevey Timothy Alan Simon Michel Peter Florio Catherine J.K. Sandoval Mark J. Ferron www.cpuc.ca.gov. Public Comment.

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CPUC Public Agenda 3283 Thursday, October 20, 2011, 9:00 a.m. 505 Van Ness Ave, San Francisco

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  1. CPUC Public Agenda 3283Thursday, October 20, 2011, 9:00 a.m.505 Van Ness Ave, San Francisco Commissioners: Michael R. Peevey Timothy Alan Simon Michel Peter Florio Catherine J.K. Sandoval Mark J. Ferron www.cpuc.ca.gov

  2. Public Comment Per Resolution ALJ-252, any member of the public who wishes to address the CPUC about matters before the Commission must either sign up at the Commission's webpage section "Public Comment Sign-Up" or with the Public Advisor before the meeting begins. Public speakers must visit the Public Advisors table before the start of the meeting on the day of the Commission Meeting to ask our staff to mark their presence. Once called, each speaker has up to 3 minutes at the discretion of the Commission President, depending on the number of speakers. A sign will be posted when 1 minute remains. A bell will ring when time has expired. Those who sign up after 10:00 a.m. will only have 1 minute. The following items are NOT subject to Public Comment: Item: 28 & 29 All items on the Closed Session Agenda

  3. Public Comment Per Resolution ALJ-252, any member of the public who wishes to address the CPUC about matters before the Commission must either sign up at the Commission's webpage section "Public Comment Sign-Up" or with the Public Advisor before the meeting begins. Public speakers must visit the Public Advisors table before the start of the meeting on the day of the Commission Meeting to ask our staff to mark their presence. Once called, each speaker has up to 2 minutes to address the Commission. A sign will be posted when 1 minute remains. A bell will ring when time has expired. Those who sign up after 10:00 a.m. will only have 1 minute. The following items are NOT subject to Public Comment: Item: 28 & 29 All items on the Closed Session Agenda

  4. Public Comment Per Resolution ALJ-252, any member of the public who wishes to address the CPUC about matters before the Commission must either sign up at the Commission's webpage section "Public Comment Sign-Up" or with the Public Advisor before the meeting begins. Public speakers must visit the Public Advisors table before the start of the meeting on the day of the Commission Meeting to ask our staff to mark their presence. Once called, each speaker has up to 1 minute to address the Commission. A bell will ring when time has expired. The following items are NOT subject to Public Comment: Item: 28 & 29 All items on the Closed Session Agenda

  5. Agenda Changes • Items shown on the Consent Agenda will be taken up and voted on as a group in one of the first items of business of each CPUC meeting. • Items on Today’s Consent Agenda are: 1, 6, 9, 10, 11, 14, 15, 16, 18, 19, 22, 23, 24, 25, 26, 27, 29, 30, 31, 32, 33 & 34 • Any Commissioner, with consent of the other Commissioners, may request an item from the Regular Agenda be moved to the Consent Agenda prior to the meeting. • Item: 43 from the Regular Agenda has been added to the Consent Agenda. • Any Commissioner may request an item be removed from the Consent Agenda for discussion on the Regular Agenda prior to the meeting. • Item: None have been moved to the Regular Agenda. • Item: 28 & 44have been withdrawn. • The following items have been held to future Commission Meetings: • Held to 11/10/11: 2, 3, 4, 5, 7, 8, 12, 13, 17, 20, 21, 35, 38, 38a, 38b, 40, 41 • & 42

  6. Regular Agenda • Each item on the Regular Agenda (and its alternate if any) will be introduced by the assigned Commissioner or CPUC staff and discussed before it is moved for a vote. • For each agenda item, a summary of the proposed action is included on the agenda; the CPUC’s decision may, however, differ from that proposed. • The complete text of every Proposed Decision or Draft Resolution is available for download on the CPUC’s website: www.cpuc.ca.gov. • Late changes to agenda items are available on the Escutia Table.

  7. Regular Agenda – Energy Orders Item #36 [10747] New Order Instituting Rulemaking R__________ Order Instituting Rulemaking to Oversee the Resource Adequacy Program, Consider Program Refinements, and Establish Annual Local Procurement Obligations. ------------------------------------------------------------------------------------ • PROPOSED OUTCOME: • Initiates a rulemaking to establish local capacity requirements for 2013 and 2014, and further refine the Commission’s Resource Adequacy program. • ESTIMATED COST: • None.

  8. Regular Agenda – Energy Resolutions and Written Reports Item #37 [10579] San Diego Gas & Electric Company's Two Renewable Energy Credit Purchase and Sale Agreements With Cabazon Wind Partners LLC and Whitewater Hill Wind Partners LLC Res E-4335, Advice Letter 2118-E filed on October 28, 2009, Advice Letter 2118-E-A filed on June 2, 2011, and Advice Letter AL 2118-E-B filed on June 10, 2011 - Related matters ---------------------------------------------------------------------------------------------------------------- • PROPOSED OUTCOME: • Approves with modification cost recovery for San Diego Gas & Electric Company's (SDG&E) renewable energy credit purchase and sale agreements with Cabazon Wind Partners LLC and Whitewater Hill Wind Partners LLC. • The Commission makes no determination in this resolution regarding the purchase and sale agreements classification for the purposes of their contribution towards SDG&E’s Renewables Portfolio Standard compliance obligations. • ESTIMATED COST: • Costs of these purchase and sale agreements are confidential at this time.

  9. Regular Agenda – Energy Resolutions and Written Reports ALTERNATE TO ITEM 10579 Item #37a [10651] -------------------------------------------------------------------------------- • PROPOSED OUTCOME: • Approves cost recovery for San Diego Gas & Electric Company’s (SDG&E) renewable energy credit purchase and sale agreements with Cabazon Wind Partners LLC and Whitewater Hill Wind Partners LLC. • The Commission makes the following determination in this resolution regarding these specific purchase and sale agreements classification for the purposes of their contribution towards SDG&E’s Renewable Portfolio Standard compliance obligations: to the extent that the renewable energy credits are reunited with the generation from which they derive, they will be treated as “bundled” procurement for RPS compliance purposes. • ESTIMATED COST: • Costs of these purchase and sale agreements are confidential at this time.

  10. Resolution E-4335 & Alternate Resolution E-4335(Agenda Item 37 and 37a) San Diego Gas & Electric Company (SDG&E) requests approval of two renewable energy credit contracts with Cabazon Wind Partners LLC and Whitewater Hill Wind Partners LLC and classification of the transactions as bundled products Presented by Judith Iklé, Program Manager Energy Division

  11. Contracts Summary • Renewable Energy Credits (RECs) are from operating wind farms located in California. • Energy from the facilities is currently under contract to California Department of Water Resources (DWR) pursuant to contracts executed during the summer of 2001. • The RECs were not included in the DWR energy contracts.

  12. Resolution E-4335 Resolution E-4335 approves the contracts. Contracts are approved as REC-only contracts based on current Commission rules. Pursuant to current rules the contracts are for REC-only products because the contracts do not include the procurement of energy.

  13. A Proposed Decision Implementing SB 2 (1X) Has Been Issued A proposed decision was issued on October 7, 2011. The proposed decision orders: “The general rules about the use of unbundled renewable energy credits for compliance with the California renewables portfolio standard should not be applied in the unique and limited circumstance of the contracts signed by Department of Water Resources during the energy crisis with Cabazon Wind Partners LLC and Whitewater Hill Wind Partners LLC and assigned to San Diego Gas & Electric Company, which may be allowed to acquire the unbundled renewable energy credits separately from the energy but receive credit for compliance with the California renewables portfolio standard as though they had been purchased together.”

  14. Alternate Resolution E-4335 Alternate Resolution approves the contracts. Alternate Resolution approves as bundled products based on an exemption to current Commission rules. Exemption based on the exceptional circumstances that the underlying RPS-eligible wind energy PPAs were executed by DWR as the result of the Energy Crisis and DWR did not contract for the purchase of the RECs associated with the energy. Exemption is limited to the Cabazon and Whitewater Hill contracts.

  15. Cabazon Wind Farm Whitewater Hill Wind Farm

  16. Location of Wind Facilities 16

  17. Regular Agenda – Energy Resolutions and Written Reports Item #37 [10579] San Diego Gas & Electric Company's Two Renewable Energy Credit Purchase and Sale Agreements With Cabazon Wind Partners LLC and Whitewater Hill Wind Partners LLC Res E-4335, Advice Letter 2118-E filed on October 28, 2009, Advice Letter 2118-E-A filed on June 2, 2011, and Advice Letter AL 2118-E-B filed on June 10, 2011 - Related matters ---------------------------------------------------------------------------------------------------------------- • PROPOSED OUTCOME: • Approves with modification cost recovery for San Diego Gas & Electric Company's (SDG&E) renewable energy credit purchase and sale agreements with Cabazon Wind Partners LLC and Whitewater Hill Wind Partners LLC. • The Commission makes no determination in this resolution regarding the purchase and sale agreements classification for the purposes of their contribution towards SDG&E’s Renewables Portfolio Standard compliance obligations. • ESTIMATED COST: • Costs of these purchase and sale agreements are confidential at this time.

  18. Regular Agenda – Energy Resolutions and Written Reports ALTERNATE TO ITEM 10579 Item #37a [10651] -------------------------------------------------------------------------------- • PROPOSED OUTCOME: • Approves cost recovery for San Diego Gas & Electric Company’s (SDG&E) renewable energy credit purchase and sale agreements with Cabazon Wind Partners LLC and Whitewater Hill Wind Partners LLC. • The Commission makes the following determination in this resolution regarding these specific purchase and sale agreements classification for the purposes of their contribution towards SDG&E’s Renewable Portfolio Standard compliance obligations: to the extent that the renewable energy credits are reunited with the generation from which they derive, they will be treated as “bundled” procurement for RPS compliance purposes. • ESTIMATED COST: • Costs of these purchase and sale agreements are confidential at this time.

  19. Regular Agenda – Energy Resolutions and Written Reports Item #39 [10716] Pacific Gas and Electric Company’s Renewable Energy Power Purchase Agreement with North Star Solar, LLC Res E-4436, Advice Letter 3759-E filed on November 12, 2010 and supplemental Advice Letter 3759-E-A filed on July 27, 2011 - Related matters ------------------------------------------------------------------------------------------- • PROPOSED OUTCOME: • Denies cost recovery for the long-term renewable energy power purchase agreement between Pacific Gas and Electric Company and North Star Solar, LLC. • ESTIMATED COST: • Actual costs are confidential at this time.

  20. Regular Agenda – Energy Orders Item #39a [10717] ALTERNATE TO ITEM 10716 ------------------------------------------------------------------------ • PROPOSED OUTCOME: • Approves cost recovery for the long-term renewable energy power purchase agreement between Pacific Gas and Electric Company and North Star Solar, LLC. • ESTIMATED COST: • Actual costs are confidential at this time.

  21. Resolution E-4436 & Alternate Resolution E-4436(Agenda Item 39 and 39a) Pacific Gas and Electric Company (PG&E) requests approval of a renewable energy contract with North Star Solar, LLC Presented by Judith Iklé, Program Manager Energy Division

  22. Contract Summary • Amended Power Purchase Agreement (PPA), filed on July 27, 2011 in a supplemental advice letter, reflects a price reduction of over 20% from original PPA filed on November 10, 2010. • Independent Evaluator recommends approval of the amended PPA with “reservation” – price is still high, value and viability are still low compared to similar contracts offered to PG&E and executed by PG&E. • Resolution (Item 39) rejects the PPA on the basis of price, value and viability. • Alternate Resolution (Item 39a) approves the PPA on the basis of negotiating in “Good Faith”

  23. Resolution (Reject PPA)Item 39 Amended PPA was compared to contracts available to PG&E or executed by PG&E during the time the Amended North Star PPA was negotiated and executed. Amended PPA is higher in price, lower in value, and lower in viability than (1) executed bilaterals, and (2) comparable shortlisted projects from PG&E’s 2011 RPS Solicitation. “Value” is defined as the Net Market Value which equals the PPA Price + Network Upgrade Costs - the Energy Value and Capacity Value associated with the North Star Project.

  24. Alternate Resolution (Approve PPA)Item 39a • The amended PPA was negotiated in “Good Faith” • 50% Joint Venture partner in North Star is the module supplier for the Project. Supplier may not be cost competitive with other available suppliers in the marketplace. • Amended PPA takes into consideration the potential cost disadvantage of the module supplier (i.e. 50% JV Partner).

  25. Key Concerns • Was the North Star PPA fairly compared to similar Projects that were being offered and executed at the time the Amended PPA was negotiated and executed? • Does the project viability score for the North Star Project capture all of the significant milestones achieved to date?

  26. Amended PPA Evaluation Timeline May 18 Oct. 18 July 27 Sept. 6 July 11 Sept. 13 North Star Amended PPA Re-negotiation Timeline

  27. Project Location

  28. Regular Agenda – Energy Resolutions and Written Reports Item #39 [10716] Pacific Gas and Electric Company’s Renewable Energy Power Purchase Agreement with North Star Solar, LLC Res E-4436, Advice Letter 3759-E filed on November 12, 2010 and supplemental Advice Letter 3759-E-A filed on July 27, 2011 - Related matters ------------------------------------------------------------------------------------------- • PROPOSED OUTCOME: • Denies cost recovery for the long-term renewable energy power purchase agreement between Pacific Gas and Electric Company and North Star Solar, LLC. • ESTIMATED COST: • Actual costs are confidential at this time.

  29. Regular Agenda – Energy Orders Item #39a [10717] ALTERNATE TO ITEM 10716 ------------------------------------------------------------------------ • PROPOSED OUTCOME: • Approves cost recovery for the long-term renewable energy power purchase agreement between Pacific Gas and Electric Company and North Star Solar, LLC. • ESTIMATED COST: • Actual costs are confidential at this time.

  30. Regular Agenda – Communication Resolutions and Reports Item #40 [10643] Rural Telecommunications Infrastructure Grant Program Application for the Godfrey Ranch Line Extension Project Res T-17316 ------------------------------------------------------------------------------------ • PROPOSED OUTCOME: • Requests a California High Cost Fund-A funding for the construction of the Godfrey Ranch Line Extension Project by the Siskiyou Telephone Company. • ESTIMATED COST: • $1,444,100.

  31. Commissioners’ Reports

  32. Management Reports

  33. Regular Agenda – Legislative and Other Matters Item #45 [10761] Office of Governmental Affairs Legislative Wrap Up -------------------------------------------------------------------------

  34. CALIFORNIA PUBLIC UTILITIES COMMISSION 2011 Legislative Wrap-up Edward Randolph Director, Office of Governmental Affairs October 20, 2011

  35. -- PRESENTATION OUTLINE -- • LEGISLATIVE OVERVIEW • RPS & PGC BILLS • OTHER ENERGY BILLS • PIPELINE SAFETY BILLS • TELECOMMUNICATIONS BILLS • MISCELLANEOUS BILLS • BUDGET • INFORMATIONAL HEARINGS • TASKS

  36. -- LEGISLATIVE OVERVIEW --

  37. 2011 Legislative Wrap-upPORTFOLIO AT A GLANCE • 117 total bills monitored • 71 two-year bills (shelved temporarily) • Positions taken on 14 • 11 held on suspense (deemed too expensive) • Positions taken on 2 • 35 sent to the Governor (passed Legislature) • Positions taken on 18 • Positions taken on 34 bills total

  38. 2011 Legislative Wrap-upPOSITION CHANGES • 9 initial ‘Support’ positions • No position changes • 11 initial ‘Support if Amended’ positions • 11 position changes: 11 ‘Support’ • 4 initial ‘Oppose’ positions • No position changes • 10 initial ‘Oppose Unless Amended’ positions • 4 position changes: 3 ‘Neutral’, 1 ‘Support’

  39. 2011 Legislative Wrap-upBILL OUTCOMES • 21 final ‘Support’ positions • 6 defeated/delayed, 15 passed, 15 signed • 3 final ‘Neutral’ positions • 0 defeated/delayed, 3 passed, 3 signed • 10 final ‘Oppose’ positions • 10 defeated/delayed, 0 passed, 0 signed

  40. -- RPS & PGC BILLS --

  41. 2011 Legislative Wrap-upRPS SBX1 2 (Simitian) – 33% RPS Mandate • Codifies a 33% by 2020 RPS mandate • Identical to SB 722 (Simitian) from 2010 • Passed without amendments • CPUC POSITION: SUPPORT • Governor Action:Signed SB 23 (Simitian) – RPS Clean-up • Would clarify key terms and provisions terms • Would give the CPUC reporting flexibility and discretion • Would extend numerous deadlines • Was non-controversial and unopposed but failed on final day of session • CPUC POSITION: SUPPORT (Initial: SUPPORT IF AMENDED) • This bill passed the Assembly (52-17) but was never transmitted to the Senate

  42. 2011 Legislative Wrap-upPGC AB 724 (Bradford) – PGC Reauthorization • Would reauthorize PGC collections through January 1, 2020, and create new policy guidance on renewables and energy efficiency • Was a 2/3 vote bill • CPUC POSITION: NONE • This bill failed (19-17) in the Senate SB 870 (Padilla) – PIER Funding • Would establish the California Energy Innovation Program for the purpose of funding energy-related RD&D • Was contingent upon PGC reauthorization • CPUC POSITION: NONE • This bill passed the Assembly (50-18) but was held in the Senate

  43. -- OTHER ENERGY BILLS --

  44. 2011 Legislative Wrap-upENERGY EFFICIENCY (1 of 2) AB 904 (Skinner) – Energy Efficiency • TURN-sponsored bill that would require CPUC to focus on “real”, absolute reductions in energy consumption, to examine 3rd-party administration, and evaluate financing mechanisms • CPUC POSITION: NONE • Author decided not to move bill AB 1124 (Skinner) – Low-Income Energy Efficiency • Would authorize low-income multifamily buildings to receive subsidized HVAC and water heating systems up to $2,700/unit • Would lower eligibility criteria, required energy audit • Sponsored by California Housing Partnership Corporation • CPUC POSITION: OPPOSE UNLESS AMENDED • Author decided not to move bill this year but intends to in 2012

  45. 2011 Legislative Wrap-upENERGY EFFICIENCY (2 of 2) SB 343 (de Leon) – Energy Efficiency Financing • Would require the CPUC to determine energy efficiency financing measures and funding sources for the residential, commercial, and public building sectors consistent with the EE Strategic Plan • CPUC POSITION: NONE • This bill was held in the Assembly SB 454 (Pavley) – Appliance and Rebate Standards • Authorizes the California Energy Commission to impose civil penalties to enforce its appliance standards • Requires IOUs to provide rebates or incentives only if the recipient certifies that applicable permitting requirements were followed and that any contractors hold appropriate license • CPUC POSITION: SUPPORT • Governor Action:Signed

  46. 2011 Legislative Wrap-upSELF-GENERATION INCENTIVE PROGRAM AB 1150 (Perez, V.) – SGIP Extension • Extends SGIP collections through 2014 • CPUC POSITION: SUPPORT (Initial: OPPOSE UNLESS AMENDED) • Governor Action:Signed AB 864 (Huffman) – Expansion of SGIP Incentives • Would authorize an increase in project size to 10 MW (from 5 MW) and increase in incentives up to 5 MW (from 3 MW) • CPUC POSITION: OPPOSE • Author decided not to move bill

  47. 2011 Legislative Wrap-upNET ENERGY METERING SB 489 (Wolk) – NEM Eligibility Expansion • Expands NEM eligibility to include all RPS-eligible technologies • CPUC POSITION: SUPPORT • Governor Action:Signed SB 370 (Blakeslee) – Agriculture NEM • Would allow agricultural customers with solar or wind systems to offset load from multiple meters on the same property or adjacent properties • CPUC POSITION: OPPOSE UNLESS AMENDED • This bill was held in the Senate

  48. 2011 Legislative Wrap-upELECTRIC VEHICLES AB 631 (Ma) – EV Charging Stations • Codifies the CPUC's Phase 1 PEV Decision that electric vehicle charging services are not public utilities pursuant to current law • Was amended to highlight the CPUC's continuing authority to address potential impacts of electric vehicle charging services through public utilities' rate-setting process or other legislatively-authorized means • CPUC POSITION: SUPPORT (Initial: SUPPORT IF AMENDED) • Governor Action:Signed SB 859 (Padilla) – EV Customer Privacy • Allows confidential home address information in Department of Motor Vehicles records to be disclosed to an IOU • Information is only to be used for the purpose of identifying where an electric vehicle is registered • CPUC POSITION: NONE • Governor Action:Signed

  49. 2011 Legislative Wrap-upSOLAR SITING AB 982 (Skinner) – School Lands • Facilitates land exchanges between State Lands Commission and Secretary of the Interior for purposes of creating contiguous parcels suitable for renewable energy development • CPUC POSITION: SUPPORT • Governor Action:Signed SB 618 (Wolk) – Solar-use Easements • Authorizes the conversion of a Williamson Act contract into a PV solar-use easement for a term no less than 20 years • CPUC POSITION: SUPPORT • Governor Action:Signed

  50. 2011 Legislative Wrap-upTRANSMISSION AB 1214 (Skinner) – Transmission Planning • Would require the CPUC and ISO, by March 31, 2012, to determine which new or upgraded transmission facilities in ISO’s transmission plan would be “necessary or useful” to achieve 33% RPS for IOUs and POUs. Also required timeframes for obtaining all government approvals for construction and analysis of any permit barriers • Essentially would codify existing MOU (May 2010) between CPUC and ISO to streamline transmission planning and permitting efforts • Was opposed by TURN • CPUC POSITION: OPPOSE • Author decided not to move bill

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