Volume I. Part I - California Public Utilities Commission

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must submit. In particular, the IOUs’ plans are intended to supersede all previous
short-term and long-term plans and provide a single, comprehensive procurement plan
for the 2007-2016 time period.
3. Recent Policies and Market Changes Impacting PG&E’s
Long-Term Procurement Plans
PG&E’s procurement planning process does not exist in a vacuum. Instead,
there are numerous legislative and regulatory processes, requirements and directives
that affect PG&E’s procurement plans. The following is a brief description of recent
regulatory and legislative actions or decisions that PG&E considered in preparing its
2006 LTPP.
a. Resource Adequacy
In January 2004, the Commission issued a decision adopting a framework for
resource adequacy requirements (“RAR”) for all jurisdictional LSEs. 31 This
framework includes a 15% to 17% Planning Reserve Margin 32 for jurisdictional
entities. In October 2004, the Commission issued its first decision defining and
clarifying the RAR framework. 33 In October 2005, after lengthy workshops, the
Commission issued a further decision outlining the key requirements of a System
RAR program. 34 At approximately the same time, in September 2005, the legislature
passed AB 380 which codified a number of RA requirements for the IOUs, and other
jurisdictional LSEs such as energy service providers and community choice
aggregators. 35 The Commission’s System RAR is designed to ensure that each LSE
procures the capacity resources needed to serve its aggregate monthly system peak
load, including reserves. Most LSEs are required to submit Year-Ahead and Month-
Ahead reports demonstrating that they have satisfied their System RAR. 36
In June 2006, the Commission adopted Local RAR for all LSEs, in addition to
the System RAR it adopted in October 2005. 37 The Local RAR is intended to address
31 D.04-01-050 at 10-51.
32 Based on a 1-in-2 year temperature peak load.
33 D.04-10-035.
34 D.05-10-042, modified by D.06-02-007 and D.06-04-040.
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AB 380 added Public Utilities Code section 380.
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Whether and how RA requirements will apply to small and multi-jurisdictional LSEs may
be discussed as a part of Phase 2 of the Resource Adequacy proceeding.
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D.06-06-064.
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