R.08-03-009 / I.08-03-010 Workshop Agenda

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R.08-03-009 / I.08-03-010Workshop Agenda

• Introductions and housekeeping 100pm
• Objectives and scope 110pm
• Background
• Public Utilities Code 399.2.5 115pm
• Renewable Energy Transmission Initiative
  130pm
• Facilitated discussion 145pm
• Break 300pm
• Facilitated discussion (contd)
  315pm
• Summary and next steps 430pm

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Objectives and Scope

• Today Explore whether the output of the RETI
  process can be used to support cost recovery for
  IOUs in planning new transmission projects to
  serve renewable resources
• What is RETI providing?
• What are the implications for CPUC
  responsibilities under Public Utilities Code
  399.2.5?
• Later workshop How to incorporate the output of
  the RETI and LTPP processes in proceedings for
  individual applications for transmission
  Certificates of Public Convenience and Necessity

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Backstop Cost RecoveryStatute and Implementation

• February 26, 2009

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Public Utilities Code 399.2.5

• (a) Transmission facilities shall be deemed to
  be necessaryif the commission finds that the new
  facility is necessary to facilitate achievement
  of the renewable power goals established in
  Article 16
• (b) With respect to a transmission facility
  described in subdivision (a) the Commission
  shall take several actions, including
• (4) Allowing recovery in retail rates of any
  increase in transmission costs incurred by an
  electrical corporation resulting from the
  construction of the transmission facilities that
  are not approved for recovery in transmission
  rates by the Federal Energy Regulatory Commission
  after the commission determines that the costs
  were prudently incurred

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CPUC Implementation

• D.03-07-033 Adopted general framework
• D.06-06-034 Modified D.03-07-033, established
  eligibility criteria
• High-voltage, bulk-transfer transmission
  facilities, whether classified as network or
  gen-tie, that are designed to serve multiple
  RPS-eligible generators where it has been
  established that the amount of added transmission
  capacity will likely be utilized by RPS-eligible
  generation projects within a reasonable period of
  time
• New network transmission facilities needed to
  interconnect an RPS-eligible resource whose
  developer has entered into a Commission-approved
  power purchase agreement

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CPUC Implementation

• D.07-03-012 Established three-pronged test for
  necessary to facilitate achievement of RPS
  goals
• (1) that a project would bring to the grid
  renewable generation that would otherwise remain
  unavailable
• (2) that the area within the line's reach would
  play a critical role in meeting the RPS goals
  and
• (3) that the cost of the line is appropriately
  balanced against the certainty of the line's
  contribution to economically rational RPS
  compliance.
• D.07-03-012 and D.07-03-045 used above test to
  justify the first 3 segments of the Tehachapi
  upgrades and guarantee backstop cost recovery for
  segment 3

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CPUC Implementation

• E-3969 (2006) Commission approved recovery
  costs of environmental studies identified by
  Tehachapi Collaborative Study Group no mention
  of 399.2.5
• D.06-06-034 We adopted Resolution E-3969
  because studies had already demonstrated that
  Tehachapi is an especially rich resource area for
  renewable and development of that area is almost
  certainly necessary to meet the 20 RPS goal. We
  are unwilling to open the ratepayers pockets for
  transmission facilities in areas that do not rise
  to this level of certainty, since study and
  permitting costs for facilities in unexplored
  areas will be large.
• E-4052 (2007) Commission declined to discuss
  whether 399.2.5 recovery applied to studies
  performed before a specific project was identified

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Questions to consider

• Should the Commission clarify whether studies
  performed before a project is identified could
  qualify for 399.2.5 cost recovery?
• Can RETI serve as a quick check of the
  three-pronged test for purposes of 399.2.5 cost
  recovery and/or need determination?
• (1) that a project would bring to the grid
  renewable generation that would otherwise remain
  unavailable
• (2) that the area within the line's reach would
  play a critical role in meeting the RPS goals
  and
• (3) that the cost of the line is appropriately
  balanced against the certainty of the line's
  contribution to economically rational RPS
  compliance.

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Californias Renewable EnergyTransmission
Initiativehttp//www.energy.ca.gov/reti/
Overview

• February 26, 2009

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Renewable Energy Transmission Initiative

• Statewide collaborative study effort to identify
  and facilitate the development of the
  transmission needed to access the most
  cost-effective and environmentally-preferable
  renewable resources in CA and neighboring states
• Three-Phased Process
• Phase 1 Identification and ranking of
  Competitive Renewable Energy Zones (CREZs)
• Phase 2 Refinement of analysis for priority
  CREZs and development of statewide conceptual
  transmission plan
• Phase 3 Detailed transmission planning for
  priority CREZs

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RETI Organization / Roles

• Coordinating Committee
• Oversees the overall RETI process
• Ensures development of needed information
• Keeps the process on schedule
• Stakeholder Steering Committee
• Primary working group
• Key stakeholder representatives
• 30 members

• Plenary Stakeholder Group
• Reviews Steering Committee work
• Provides feedback, ground-truthing
• All stakeholders and the public

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Phase 1

• Identify developable renewable resources in
  California and neighboring areas engineering
  review and consideration of environmentally
  sensitive areas
• Rank CREZs according to cost-competitiveness
• Rate CREZs according to environmental concerns
• Final Phase 1 Report completed in December 2008

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Phase 1B Report - Results

• Black Veatch, in consultation with Phase 1B
  working group
• gt 2,100 individual pre-identified and proxy
  generation projects
• gt 80,000 MW within 29 CREZs in California 6
  CREZs were split at breaks in their supply
  curves, resulting in total of 37 distinct, ranked
  areas
• 40,000 MW outside of CA with potential to deliver
  energy to CA.
• Environmental Working Group
• CREZs identified by Black Veatch are rated
  according to environmental concerns associated
  with the projected generation

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CREZ and non-CREZ resources identified throughout
the study area
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Phase 2

• Refine and verify priority CREZs
• Develop conceptual transmission plans for the
  highest ranking CREZs group co-led by CAISO and
  LADWP
• Draft report end of March 2009
• Final report end of April 2009

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Phase 3

• Existing transmission planning organizations
  collaboratively design plans of service that
  result in applications to construct new
  transmission infrastructure to meet RPS goals
• 8 month-long process may be iterative
• Explore joint projects as appropriate
• Final result Statewide Plan

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Discussion

• February 26, 2009

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Discussion

• Does current status present a barrier to planning
  for a 33 by 2020 RPS target and applying 399.2.5
  provision to transmission projects needed for
  33, but perhaps not 20?
• Does the Commission need to clarify whether
  early-stage project study costs not jus those
  associated with identified projects are
  eligible for 3992.5 cost recovery?
• What is RETI producing in terms of high priority
  CREZs or transmission projects that might
  facilitate CPUC decisions on backstop cost
  recovery or need determination?

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Discussion

• To what exactly might the CPUC defer from RETIs
  Phase 1, 2 and 3 results, and for what purposes
  (recovery of pre-siting costs, CPCN determination
  of need, recovery of construction costs)?
• If pre-siting study costs are eligible, could and
  should authority to record and recover studies of
  RETI projects be granted an expedited advice
  letter process, i.e Tier 1 or Tier 2?
• Is SCEs proposal that cost recovery should be
  granted for obtaining rights-of-way for
  RETI-identified projects that have not yet been
  granted CPCNs appropriate?

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Summary and Next Steps

• February 26, 2009