SB 1036 Implementation

Senate Bill (SB) 1036 (Statutes of 2007, Chapter 685, Perata), effective January 1, 2008, modifies elements of the RPS program.  SB 1036 eliminates the responsibility of the California Energy Commission (CEC) to award supplemental energy payments (SEPs) to eligible renewable energy resources to cover above-market costs of renewable energy contracts.  In addition, SB 1036 directs the California Public Utilities Commission (CPUC) to establish, for each electrical corporation, a limitation on the total costs expended above the market price referent (MPR) for the procurement of eligible renewable energy resources procured to satisfy RPS goals.  As a result, rather than generators seeking SEPs from the CEC for the above-market costs of RPS contracts negotiated through competitive solicitations, the IOUs are now required to seek above-market cost recovery from the CPUC for eligible RPS contracts.

The Commission implemented the rate-making aspects of SB 1036 in Resolution E-4160. The Resolution:

1. Directs PG&E, SDGE, and SCE to adjust their respective Public Purpose Program (PPP) rate components collecting PGC as directed by Public Utilities (Pub. Util.) Code § 399.8 and amended by SB 1036;
2. Directs PG&E, SDGE, and SCE to amortize funds transferred from the New Renewable Resources Account, administered by the CEC, in their PPP rate component; and
3. Directs BVES to establish an account to record unencumbered renewable funds transferred from the CEC back to BVES.  Funds recorded in this account shall accrue interest at the three month commercial paper rate, and shall be amortized in rates and returned to customers beginning no later than April 1, 2009. 

The Draft Resolution E-4160 had also addressed the policy issues related to calculating the cost limitation and allocating the funds that were established by SB 1036. However, as a result of a Joint Party Request, these issues were bifurcated from the draft, and a workshop was set to discuss the policy issues. The Energy Division circulated a pre-workshop data request to the RPS service lists in order to attain additional comments and develop an agenda. The workshop was held on May 29, 2008 and the following topics were discussed:

1. Calculating the cost limitation for above-MPR contract costs that each IOU can expend on the procurement of eligible renewable energy resources solicited through competitive solicitations. The funds that may be applied towards the cost limitation will be called the Above-MPR Funds (AMFs);
2.  Establishing a methodology for an AMF Calculator for the calculation of AMFs requests for individual above-MPR contracts and the cumulative tracking of approved AMFs requests; and
3. Setting forth eligibility criteria and reasonableness standards for renewable power purchase agreements (PPAs) with above-MPR costs that may be applied toward the cost limitation. The standards are to ensure that the limited amount of AMFs is used efficiently and in a manner that maximizes ratepayer benefit.

SB 1036 Implementation Documents

Comments on Draft Resolution E-4160

Pre-Workshop Data Request

Party Responses to Pre-Workshop Data Request

Workshop Agenda

Energy Division proposed AMF Calculator

Workshop Documents

            Staff presentation on current contract review standards

            Joint IOU handout on proposed modifications to AMF Calculator methodology

            Joint IOU proposal for revised AMF Calculator