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Toward a Well-Functioning Western Electricity Market :

Toward a Well-Functioning Western Electricity Market :. California’s RPS Implementation Presentation to Renewable Energy Tracking and Certificates Working Group Rasa Keanini and Cynthia Praul California Energy Commission Staff April 25, 2003. California’s RPS Implementation.

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Toward a Well-Functioning Western Electricity Market :

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  1. Toward a Well-FunctioningWestern Electricity Market : California’s RPS Implementation Presentation to Renewable Energy Tracking and Certificates Working Group Rasa Keanini and Cynthia Praul California Energy Commission Staff April 25, 2003

  2. California’s RPS Implementation I. RPS - Background II. RPS - Implementation III. RPS - Tracking System IV. Renewable Energy Program V. Next Steps

  3. I. RPS Background Legislative Requirements of the RPS Senate Bill 1078 (SB 1078) requires that the following goals are achieved: • Retail electricity sellers must increase the renewable content of their energy deliveries by at least 1 percent of retail sales per year over 2001 baseline (as determined by California Public Utilities Commission (CPUC)). • Annual incremental increase must continue until renewables comprise 20 percent of each utility’s energy portfolio by December 31, 2017.

  4. I. RPS Background (cont.) Language from SB 1078: “The Energy Commission shall do all of the following:… (b) Design and implement an accounting system to verify compliance with the renewables portfolio standard by retail sellers, to ensure that renewable energy output is counted only once for the purpose of meeting the renewables portfolio standard of this state or any other state, and for verifying retail product claims in this state or any other state. In establishing the guidelines governing this system, the Energy Commission shall collect data from electricity market participants that it deems necessary to verify compliance of retail sellers…In seeking data from electrical corporations, the Energy Commission shall request data from the commission[CPUC].”

  5. I. RPS Background (cont.) Energy Commission responsibilities: • Certifying eligible renewable resources, including those generating out-of-state • Establishing criteria to determine “incremental” output from existing geothermal resources for eligibility to meet the annual procurement target • Developing and implementing an accounting system to verify compliance with the RPS • Allocating and awarding Public Goods Charge (PGC) funded supplemental energy payments (within reasonable caps) to cover the above-market costs of renewable energy used to meet RPS obligations

  6. I. RPS Background (cont.) Major Issues: • Establish Resource Eligibility Requirements • Establish Annual Procurement Obligation • Establish Flexible Compliance • Establish RPS Requirements for Other Entities • Establish an Accounting and Verification System • Address Renewable Energy Certificates (RECs)

  7. I. RPS Background (cont.) Major Issues: • Establish Resource Eligibility Requirements – Legislation sets eligibility requirements, however, key outstanding issues include policy and legal questions about whether out-of-state renewables are eligible, the role of distributed generation, and technical questions regarding “incremental” geothermal output. • Establish Annual Procurement Obligation – The CPUC, in consultation with the Energy Commission, must establish procedures to set the baseline, annual procurement targets, and adjustments to the baseline.

  8. I. RPS Background (cont.) Major Issues Continued: • Establish Flexible Compliance – The CPUC must develop flexible compliance mechanisms that are expected to enhance efficiency. These rules will be reflected in the tracking system. • Establish RPS Requirements for Other Entities – The CPUC must establish how the RPS will apply to Electric Service Providers and Community Choice Aggregators.

  9. I. RPS Background (cont.) Major Issues Continued: • Establish an Accounting and Verification System – The main issue is how to ensure that renewable energy is counted once and only once in California or any other state, when the market trades renewable energy across state lines and even national borders. • Address Renewable Energy Certificates (RECs) – While they may be used as a tool to provide an effective means of tracking compliance with RPS, allowing IOUs to trade RECs separately, unbundled from energy, may be a larger issue.

  10. II. RPS Implementation Phase 1 Phase 2 Phase 3 • Energy Commission • Determining the eligibility of out-of-state power. • Defining eligible renewable technologies. • Defining incremental production from existing geothermal facilities. • Energy Commission • Establishing procedures to certify in-state resources. • Setting guidelines for administering supplemental energy payments. • Developing the interim RPS tracking and verification system. • Energy Commission • Developing the RPS tracking and verification system

  11. II. RPS Implementation (Cont.) Tentative Schedule for Phase 1 and Phase 2 Phase 1: Incremental Geothermal, Out-of-State Power, Definitional Issues March 25 Staff Workshop at CEC April 24 CEC Mail Out Committee Preliminary Draft Decision May 5 CEC Committee Hearing on Draft Decision May 16 CEC Mail Out Committee Final Draft Decision May 28 CEC Business Meeting to Consider Adopting Committee Final Draft Decision Phase 2: Process for Certification, Tracking System, SEP Payments May 13 Staff Workshop at CEC June 18 CEC Mail Out Committee Preliminary Draft Report July 1 CEC Committee Hearing on Committee Preliminary Draft Report July 25 CEC Mail Out Committee Final Report Aug 6 CEC Business Meeting to Consider Adopting Committee Final Draft Decision

  12. III. RPS Tracking System Phase 2 • The CPUC and CEC staff will develop an interim tracking and verification system applicable to the IOU interim renewable procurement and previously existing renewable stock for consideration by the CEC. Staff will consider RECs, if applicable, in the tracking and verification process Phase 3 • Development of the tracking and verification system will include consideration of the role of RECs, if applicable. The system will likely be finalized in 2004, as the rules for the system are expected to be developed through a formal rulemaking process pursuant to Administrative Procedures Act (APA).

  13. III. RPS Tracking System Challenges • Funding - No funding established in SB 1078 for tracking system • Data availability - renewable energy transactions take place between states and sometimes nations • Determining system requirements - achieving consensus on what should be tracked – just renewable, all generation

  14. IV. Renewable Energy Program $ 135 Million annually from a public goods charge (PGC) to support Renewable Energy by: • Maximizing the influence of market incentives and minimize administrative requirements • Maintaining the benefits and diversity of the renewables industry • Facilitating a self-sustaining consumer-driven renewables market • Encouraging the market-based development of new and emerging renewable industries

  15. IV. Renewable Energy Program The Renewable Energy Program consists of five accounts. The RPS is intended to complement the Renewable Energy Program. In particular: • New Renewable Resources Account -- funds from this account will be used to fund supplemental energy payments (SEPs). SEPs are used to cover the above-market costs of renewable energy used to meet RPS obligations • Customer Credit Account -- discontinued and funds re-allocated. • Renewable Resources Consumer Education Account -- used as a vehicle to establish a funding source for the tracking system • Existing Renewable Resources Account • Emerging Renewable Resources Account

  16. IV. Renewable Energy ProgramCustomer Credit Report Status and Trends in Renewable Energy Markets • Direct Access Market - suspension of the direct access market - the future of direct access is unclear • California’s RPS - possibly an alternative to customer choice - utilities procure renewable energy • Renewable Energy Certificates - as an accounting mechanism - sold to retail customers

  17. V. Next Steps for the Tracking System • Conduct a workshop on May 13th to solicit input on the tracking system (as well as the other topics in Phase 2). • Receive comments from workshop participants by May 16th • Draft a Committee decision, to be mailed out on June 18th • Develop an interim system that will track and verify IOU interim renewable procurement and existing renewable stock The interim system will be based on current verification systems • Develop a permanent tracking system; likely to be finalized in 2004

  18. IV. Next Steps for RECs • California Public Utilities Commission (CPUC) has deferred discussion of RECs, and will consider RECs, if applicable, in the tracking and verification process. • Energy Commission is considering a workshop to discuss the use of RECs (both tradable and non-tradable) in the tracking and verification system. The date is still to be determined.

  19. For More Information Encourage Western States to participate! Please visit: www.energy.ca.gov/portfolio/ For questions/comments on the tracking system Contact: Rasa Keanini rkeanini@energy.state.ca.us (916) 654-5379

  20. CPUC Information For more information on how to participate in CPUC proceedings Please contact the Process Office at: (415) 703-2021

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