CPUC Proposed Decision Recommends RPS Portfolio Content Rules

In 2021 the California Public Utilities Commission (CPUC) issued Decision 21-05-003 adopting the Voluntary Allocation and Market Offer (VAMO) process for California Renewable Portfolio Standard (RPS) resources. Following on that decision, the three large California investor-owned utilities (IOUs), Pacific Gas and Electric Company, Southern California Edison Company and San Diego Gas & Electric Company, filed a motion seeking clarification of VAMO procedural and implementation questions.

After taking comments from interested parties, the CPUC has issued a Proposed Decision providing the following determinations and clarification:

1. Voluntary Allocations are not resales for purposes of determining the Portfolio Content Category (PCC) classification of Renewable Energy Credits (RECs) allocated to Power Charge Indifference Adjustment (PCIA) eligible load serving entities (LSEs), including non-IOU LSEs serving departed load. The Proposed Decision finds that it is reasonable to conclude that Voluntary Allocations do not have many of the attributes of a market resale transaction, and so should not be considered resales. All allocation shares (RPS energy and/or RECS) distributed through the Voluntary Allocation mechanism should retain their original PCC classification.

2. Subsequent transfer/sale of the allocated RECs will be considered a resale, and the REC PCC classification will change pursuant to D.11-12-052 and other applicable RPS law and policy. The Proposed Decision reasons that under the Voluntary Allocations, RPS benefits are meant to transfer to the customers for whom the RECs were procured. In contrast, any subsequent transaction would transfer to a new set of customers, and so should be subject to the PCC classification and compliance provisions of D.11-12-052.

3. “PCC 0” status will apply for pre-June 1, 2010 RPS contract RECs to Voluntary Allocations accepted in 2022 for RPS deliveries beginning in 2023 and subsequent Voluntary Allocations, if they occur.

4. The Voluntary Allocation price based on the Market Price Benchmark methodology adopted in D.21-05-030 shall not be modified at this time.

5. The IOUs are not required to submit advice letter filings for Commission approval of executed pro forma Voluntary Allocation contracts. However, the IOUs must obtain CPUC approval of executed modified pro forma Voluntary Allocation contracts via a Tier 1 advice letter filing. The Voluntary Allocation pro forma contract will be used unless the parties mutually agree to a modification.

The Proposed Decision is expected to be on the agenda for the CPUC’s June 23, 2022 Business Meeting. The due date for opening comments on the Proposed Decision is June 9. Reply comments are due June 14. Relatedly, an Administrative Law Judge Ruling issued May 20, 2022 sets forth a modified procedural schedule for the RPS program, including the VAMO process, 2022 RPS Procurement Plans, and the voluntary allocation of RPS attributes adopted under the CPUC’s Modified Cost Allocation Mechanism.

Contact: Andy Brown or Lynn Haug