CPUC adopts Renewables Portfolio Standard Program penalities and requirements for waivers from program requirements

On June 6, 2018, the CPUC issued Decision 18-05-026 Implementing Senate Bill 350 Provision on Penalties and Waivers in the Renewables Portfolio Standard Program and Denying Petition for Modification of Decision 17-06-026. D.18-05-026 maintains existing renewables portfolio standard (“RPS”) penalties and will continue to impose a $50 per megawatt hour (“MWh”) (or renewable energy credit (“REC”)) penalty for a shortfall in meeting RPS procurement obligations. Penalties will continue to be imposed on the larger of the Procurement Quantity Requirement (“PQR”) shortfall or a Portfolio Balance Requirement (“PBR”) shortfall. PQR and PBR shortfalls will both be penalized at $50/REC. D.18-05-026 declines to implement penalty escalation factors for the length or severity of noncompliance and also does not alter RPS penalty caps. RPS penalties will continue to be capped at $25 million each year for the large investor-owned utilities and either $25 million or 50% of a retail seller’s PQR for the compliance period multiplied by $50/REC.

D.18-05-026 maintains the existing process to request a waiver of enforcement of an RPS penalty, for the most part, while providing for specific changes based on SB 350. For example, retail sellers seeking a waiver based on unanticipated curtailment of eligible renewable resources must “demonstrate that there was an unanticipated curtailment of renewable energy resources and the waiver would not result in an increase in greenhouse gas emissions.” (D.18-05-026, p. 17.) Any such waiver requests must include: (i) a description of the curtailment event; (ii) the reason for the curtailment event; (iii) the reason why the curtailment event was unanticipated; (iv) whether there was any replacement energy needed, and if so, a description of the replacement energy; and (v) whether there was any increased greenhouse gas emissions within the geographic boundaries applied in California’s Cap-and-Trade Program.

Additionally, waivers may now be sought for unanticipated increases in retail sales due to transportation electrification. D.18-05-026 now requires retail sellers to quantitatively account for transportation electrification in their RPS procurement plans by: (i) explicitly referencing forecasted transportation electrification in their RPS procurement plans; (ii) providing a detailed description of the data and method used to support their forecast; and (iii) explaining how they considered the CEC’s Integrated Energy Policy Report transportation electricity demand forecast in creating their own forecast.

Finally, D.18-05-026 denies Shell Energy North America (US), L.P.’s (“Shell”) petition to modify D.17-06-026. The petition sought to expand procurement that could qualify towards a retail seller’s long-term (10 or more years) contracting requirement. Specifically, Shell sought to include customers’ long-term contracts as well as short-term contracts repackaged from long-term contracts as contracts qualifying towards a retail seller’s long-term contracting requirement. D.18-05-026 rejected the petition and Shell’s arguments to expand criteria for long-term contracts.

For more information please contact Jed Gibson at jjg(at)eslawfirm.com or (916) 447-2166.