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CPUC Public Agenda 3279 Thursday, August 18, 2011, 9:00 a.m. 505 Van Ness Ave, San Francisco

CPUC Public Agenda 3279 Thursday, August 18, 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 3279 Thursday, August 18, 2011, 9:00 a.m. 505 Van Ness Ave, San Francisco

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  1. CPUC Public Agenda 3279Thursday, August 18, 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 9:00 a.m. will only have 1 minute. The following items are NOT subject to Public Comment: Items: 21 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 9:00 a.m. will only have 1 minute. The following items are NOT subject to Public Comment: Items: 21 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: Items: 21 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, 5, 7, 14, 15, 17, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31 & 32 • 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. • Items: 36, 37 & 41 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: 16 has been moved to the Regular Agenda. • Item: Nonehave been withdrawn. • The following items have been held to future Commission Meetings: • Held to 9/8/11: 2, 3, 4, 8, 9, 10, 12, 13, 16, 18, 19, 34, 35, 38, 39, 42, 43 & 44 • Held to 9/22/11: 6, 11 & 33

  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 #34 [10580] Modifications to the Commission's Self-Generation Incentive Program R10-05-004 Order Instituting Rulemaking Regarding Policies, Procedures and Rules for the California Solar Initiative, the Self-Generation Incentive Program and Other Distributed Generation Issues. Quasi-Legislative Comr Peevey/ ALJ Ebke ---------------------------------------------------------------------------------------------------------------- • PROPOSED OUTCOME: • Implements changes to the self-generation incentive program to comply with Senate Bill 412. • ESTIMATED COST: • None-program budget remains unchanged.

  8. Regular Agenda – Energy Resolutions and Written Reports Item #19 [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. Item Number 19: Resolution E-4335SDG&E request for approval of two renewable contracts with classification as “bundled” products Energy Division August 18, 2011

  10. Contracts Summary • Contracts are for Renewable Energy Credits (RECs) only from operating wind farms located in California • Energy from the facilities is currently under contract to California Department of Water Resources (CDWR) pursuant to contracts executed during California’s Energy Crisis • The RECs were not included in the CDWR energy contracts • Energy Division recommends approval of the REC-only contracts.

  11. Classification of Contracts • Resolution approves the contracts as REC-only products 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 • The ultimate classification may be changed by the Commission due to the implementation of new RPS program rules, pursuant to SB 2(1X), regarding portfolio content categories and grandfathering of contracts

  12. Regular Agenda – Energy Resolutions and Written Reports Item #19 [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.

  13. Regular Agenda – Energy Resolutions and Written Reports Item #35 [10563] Implements the Renewable Auction Mechanism for the Three Investor-Owned Utilities Res E-4414, PG&E's Advice Letter (AL) 3809-E, SCE's AL 2557-E, and SDG&E's AL 2232-E filed on February 25, 2011 - Related matters. ----------------------------------------------------------------------------------------------------- • PROPOSED OUTCOME: • Implements the Renewable Auction Mechanism for Pacific Gas and Electric Company, Southern California Edison Company, and San Diego Gas & Electric Company. • Specifically, this resolution adopts implementation details, bidding protocols, and standard power purchase agreements for each investor-owned utility. • ESTIMATED COST: • Actual costs are unknown at this time.

  14. Item Number 35, Resolution E-4414Implementation of the Renewable Auction Mechanism (RAM) Energy Division August 18, 2011

  15. RAM Advice Letters • On December 16, 2010, the Commission approved the Renewable Auction Mechanism for small renewable generators up to 20 MW • RAM establishes an interim 1,000 MW procurement target over two years and requires the IOUs to hold two auctions per year • First auction will take place in the fourth quarter of this year • On February 25, 2011, the IOUs filed advice letters (PG&E 3809-E, SCE 2557-E, and SDG&E 2232-E) to implement the program details as directed in the RAM Decision. Each IOU advice letter contains: • Program rules and other implementation details • Bidding protocols and standard contracts • Based on party comments, Resolution E-4414 adopts the IOU advice letters with modifications

  16. RAM Overview • Key Program Elements Pursuant to the Decision: • Standard Contract - simple, non-negotiable contract that the CPUC pre-approves • Project Viability - seller must meet minimum criteria to participate in the auction • Market-Based Pricing - bids are selected on price, starting with the lowest price bid until the auction capacity cap is reached • Streamlined Procurement – staff can approve executed contracts through a Tier 2 advice letter • Transparency • Interconnection maps show available capacity on electrical system • Annual program forums to solicit program feedback • Utility reporting requirements on the auction response and project development milestones of executed contracts

  17. Program Rules Established in Resolution E-4414 • Existing and new projects can participate in the program • Eligible projects must have reached specific interconnection study milestones • Contract selection must consider total ratepayer costs (contract price + transmission upgrade costs) • Sellers can offer contract lengths of 10, 15, or 20 years

  18. Key Issues Raised by Parties and Resolved in Resolution • Full Capacity Deliverability Status • IOUs sought to require sellers to obtain full capacity deliverability status in order to count the generation towards their resource adequacy requirements. • Resolution requires sellers to apply for full capacity deliverability status, but does not require sellers to obtain full deliverability unless the seller can obtain full deliverability with no additional costs to the seller. • Project Eligibility • Some generators protested draft Resolution’s order to allow existing projects to participate in the auction. • Resolution was not modified. Allowing existing generators to participate in RAM provides a procurement opportunity for expiring projects, including expiring bioenergy projects. • Seller Concentration Limit • Generators protested draft resolution’s order for the IOUs to limit seller concentration to 20 MW per seller per auction. • Revised resolution authorizes PG&E to use a 20 MW limit, which PG&E had requested, and allows the IOUs to determine if they will apply a limit once the bids are received.

  19. Key Issues (continued) • Public Release of Auction Response and Project Development Milestones • SCE and SDG&E stated they would not publicly release data ordered in the RAM Decision and would follow the direction of the Confidentiality Decision (D.06-06-006). • Resolution clarifies that the RAM Decision created specific rules for the RAM program that the IOUs must adhere to. • Standard Contracts • Multiple parties provided substantive comments on the IOUs’ proposed RAM contracts • Resolution directs the IOUs to modify certain terms based on what the CPUC approved in previous contracts. • Other changes IOUs sought to the original RAM Decision • 1 auction per year instead of 2 • Staggered auction instead of simultaneous • SDG&E sought to procure 90% of projects from its service territory instead of from the combined service territories of the IOUs • 36 month online date instead of 18 months • Resolution rejects these changes but allows parties to revisit these issues after the first auction in the Program Forum and in an advice letter seeking program changes.

  20. Regular Agenda – Energy Resolutions and Written Reports Item #35 [10563] Implements the Renewable Auction Mechanism for the Three Investor-Owned Utilities Res E-4414, PG&E's Advice Letter (AL) 3809-E, SCE's AL 2557-E, and SDG&E's AL 2232-E filed on February 25, 2011 - Related matters. ----------------------------------------------------------------------------------------------------- • PROPOSED OUTCOME: • Implements the Renewable Auction Mechanism for Pacific Gas and Electric Company, Southern California Edison Company, and San Diego Gas & Electric Company. • Specifically, this resolution adopts implementation details, bidding protocols, and standard power purchase agreements for each investor-owned utility. • ESTIMATED COST: • Actual costs are unknown at this time.

  21. Regular Agenda – Communications Resolutions and Written Reports Item #16 [10569] California Advanced Services Fund Expense Budget for Fiscal Year 2012-2013 Res T-17335 ------------------------------------------------------------------------------------ • PROPOSED OUTCOME: • Approves the California Advanced Services Fund Budget for Fiscal Year 2012-2013. • ESTIMATED COST: • $40 million.

  22. Item # 16 – Resolution T-17335CASF Budget for FY 2012 - 13 CASF Resolution Summary & Program Background CD seeks approval of the California Advanced Services Fund (CASF) Expense Budget for Fiscal Year 2012-13 (July 1, 2012 through June 30, 2013) amounting to $40 million to cover Broadband Infrastructure grants, Consortia grants, Broadband Infrastructure loans, and costs for administering and managing the CASF. The Commission established the CASF program in December 2007 to encourage the deployment of broadband services in unserved and underserved areas by funding 40% of the costs of broadband infrastructure through grants. Governor Schwarzenegger signed legislation (Chapter 393, 2008) in September 2008 codifying the Commission’s formation of the CASF. In subsequent Commission rulings in 2008 and 2009, the Commission established various CASF program requirements, criteria and timelines. In 2009, the Commission expanded the CASF and the Governor signed legislation (Chapter 24, Stats 2009) allowing entities other than telephone corporations to obtain 10% infrastructure grant funding from the CASF provided CASF funding is pursued in conjunction with the American Recovery and Reinvestment Act.

  23. Status of CASF Projects • The current total of CASF awards to date is $44.98 million for 33 projects covering 10,186 square miles and benefiting 286,572 households o Unserved areas : $ 5.08 million for 16 projects covering 3,254 square miles and benefiting 31,159 households o Underserved areas : $39.90 million for 17 projects covering 6,932 square miles and benefiting 255,413 households • Although the Commission had approved 50 CASF projects to date, the Commission has needed to rescind the funding for 17 previously approved projects because applicants: opted out of the project or are unable to secure funding either through loans, private investments or through the Recovery Act • 14 projects have been completed in 12 counties across the state with actual broadband subscribership reaching 872 out of an estimated target of 2,743 households. • Remaining projects are either under construction or undergoing pre-construction activities

  24. CASF New Program Developments Governor Schwarzenegger signed Senate Bill (SB) 1040 extending CASF indefinitely, expanding it to include three accounts, and authorizing funding for the three accounts over 5 years as follows:  (1) Broadband Infrastructure Grant Account - $100 M ($20 M per year) (2) Rural and Regional Urban Consortia Grant Account - $10 M ($2 M per year) (3) Broadband Infrastructure Revolving Loan Account. - $15 M ($3 M per year) In December 2010, the Commission opened an Order Instituting Rulemaking (R.) 10-12-008) to implement the provisions of SB 1040 and to address possible changes to the program The Commission adopted Decision (D.) 11-06-038 to implement the provisions of SB 1040 relating to the CASF Consortia Grant Account program An Assigned Commissioner’s Ruling (ACR) was issued on August 15, 2011 soliciting comments on draft proposals to implement changes to the CASF Infrastructure Grant program and the BroadbandInfrastructure Revolving Loan Account

  25. CASF FY 2012 – 13 Budget Breakdown

  26. Regular Agenda – Communications Resolutions and Written Reports Item #16 [10569] California Advanced Services Fund Expense Budget for Fiscal Year 2012-2013 Res T-17335 ------------------------------------------------------------------------------------ • PROPOSED OUTCOME: • Approves the California Advanced Services Fund Budget for Fiscal Year 2012-2013. • ESTIMATED COST: • $40 million.

  27. Regular Agenda – Legal Division Matters Item #40 [10582] Comments Before the Federal Energy Regulatory Commission Regarding Promoting Transmission Investment Through Pricing Reform FERC Docket No. RM11-26-000 ----------------------------------------------------------------------------------------------------- The Federal Energy Regulatory Commission (FERC) seeks comment in a notice of inquiry on its incentive regulations and policies under Order No. 679, which FERC enacted five years ago. This order provides for transmission rate incentives for new investments. Staff seeks authority to file comments.

  28. Commissioners’ Reports

  29. Commissioners’ Reports

  30. Management Reports

  31. Regular Agenda – Management Reports and Resolutions Item #45 [10572] Report and Discussion by Consumer Protection and Safety Division on Recent Safety Program Activities -------------------------------------------------------------------------

  32. CPSD Utilities Safety and Reliability Branch Sunil Shori, Utilities Engineer California Public Utilities Commission August 18, 2011 34

  33. Presentation Overview What is One-Call? One-Call Structure in California Basics of the One-Call Process Relating to Excavators, Facility Owners, and Regulators What Can Result When Process is Not Properly Followed? Enforcement of One-Call in Neighboring States The Need for the Enforcement of the One-Call Law in California

  34. What is One Call? One Call refers to the requirement for all excavators, with few exceptions, to contact One-Call Centers and provide them with information related to the intended excavation (work area, date when work will start, scope of work, contact information, etc.). The overall intent is to prevent damage to subsurface facilities, loss of service, and injuries or deaths which can result if facilities are struck.

  35. What is One Call?

  36. One-Call Structure in California There are two One-Call Centers in California: Underground Service Alert (USA North) covers northern California (Oregon Border down to Kern and San Luis Obispo counties) Dig Alert covers Los Angeles, Santa Barbara, Inyo and San Bernardino counties south to the Mexican Border. Each center has its own 800 phone number; however, both centers also receive calls through the 811 number system, which automatically routes calls. Each center is funded by its membership.

  37. One-Call Structure in California California Government Code Section 4216 requires all owners of sub-surface facilities with the exception of California’s Department of Transportation, operators of non-pressurized sewers, drain lines, and storm drains, and owners of facilities located entirely on their property, to be members of all One-Call Centers whose coverage includes their subsurface facilities. The call to the One-Call Center, and the mark-and-locate service performed by the members, is provided at no charge to the excavator.

  38. One-Call Structure in California Approximately 50% of the subsurface facilities in California are jurisdictional to the CPUC (i.e., gas lines, electric facilities, communications, water, etc. Gas lines are frequently struck and present the greatest risk since gas can be flammable/explosive.

  39. Basics of the One-Call Process Relating to Excavators, Facility Owners, and Regulators California Government Code, Section 4216 (GC 4216) requires excavators to provide local One-Call Centers with excavation related information at least two business days before initiating excavating activities. The One-Call Centers provide this information to each of their members who may have facilities in the work area. Once notified, members must provide the excavator with an approximate location of subsurface facilities, or confirm that there are no conflicting facilities in the work area. Each excavator must take steps to protect subsurface facilities while excavating and report any damages.

  40. Basics of the One-Call Process Relating to Excavators, Facility Owners, and Regulators Currently, only local permitting agencies, district attorneys, or California’s Attorney General can take action against violators of GC 4216. Unfortunately, due to other workload and agency priorities, these entities take very little enforcement action against violators of GC 4216. The federal government, through the USDOT -- Pipeline and Hazardous Materials Safety Administration, is threatening to begin enforcement actions in states that have weak One-Call enforcement programs.

  41. What Can Result When Process is Not Properly Followed? Underground excavation damage is the leading cause of gas and subsurface electric incidents. Underground excavation damage results in millions of dollars in property damage to subsurface facilities and poses a major risk to workers and public safety. For the period 2008-2010, 13,874 third-party hits to natural gas facilities resulted in damages approximating $17.7 million.

  42. What Can Result When Process is Not Properly Followed? Puncture Kinder Morgan LS 16 pipeline with through-wall puncture. Photo Courtesy of CalOSHA

  43. What Can Result When Process is Not Properly Followed? On November 9, 2004, an excavator struck a 16-inch diameter liquid products pipeline, in Walnut Creek, CA, Upon puncture of the pipeline, gasoline under high pressure was immediately released into the surrounding area. Several seconds later, the gasoline coming out of the pipeline was ignited by welding equipment. The explosion and fire from the ignition resulted, tragically, in the deaths of five workers and significant injury to four others. A nearby two-story structure, and some other property was burned and damaged. California State Fire Marshal’s Office, which investigated the accident, stated: “…there were several factors that significantly contributed to this accident. These include inadequate line locating, inadequate project safety oversight and communication, and failure to follow the one-call law.”

  44. Enforcement of One-Call in Neighboring States Commissions in California’s neighboring states (Oregon, Nevada, and Arizona) all have effective programs to enforce their one-call laws; States such as Virginia and Missouri have had aggressive one-call law enforcement programs for many years.

  45. Enforcement of One-Call in Neighboring States Proactive enforcement of GC 4216 in California is nonexistent; States neighboring California have proactive One-Call enforcement programs that allow violators of one-call laws to improve their behavior; Experience from “near miss” incidents can help prevent more serious incidents from occurring.

  46. Enforcement of the One-Call Law in California is Necessary to Protect Public Safety Currently, no regulatory agency in California is routinely penalizing excavators who violate the One-Call law, damage gas, electric and communication lines and often see the damage as cost of doing business. Enforcement will decrease safety risk to workers involved in excavations and the public. Enforcement will reduce property damages, increase system reliability, and can result in lower utility rates.

  47. Enforcement of the One-Call Law in California is Necessary to Protect Public Safety California Regional Common Ground Alliance (CARCGA), which represents all stakeholders from the excavation community, has developed a model which could serve as a starting point for the enforcement process in California. The CARCGA model proposes an enforcement process, similar to Oregon’s, that would primarily be complaint driven. The enforcement process would encourage One-Call training for first offences and an escalating penalty structure, thereafter. The model has strong support from CARCGA members.

  48. Regular Agenda – Management Reports and Resolutions Item # 45 [10572] Report and Discussion by Consumer Protection and Safety Division on Recent Safety Program Activities -------------------------------------------------------------------------

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