Volume I. Part I - California Public Utilities Commission

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cap would apply to all LSE resources procured to serve load, no matter what the
source, including imports.
The California legislature and Governor Schwarzenegger recently enacted
two key pieces of legislation that will affect LSE procurement. First, SB 1368 directs
the Commission to establish GHG emission performance standards by February 1,
2007 (in consultation with the CEC and California Air Resources Board), to consider
the reliability and cost impact of these new standards, and to include certain design
elements in the GHG standards. SB 1368 also prohibits the Commission from
approving long-term (i.e., five years or more) commitments for physical power by an
LSE unless the base-loaded generation supplied complies with the GHG performance
standards. Second, AB 32 establishes a comprehensive framework for the reduction
of GHG in California for all industries, including utilities, through GHG emission
limits, reporting requirements and potential market-based compliance mechanisms.
Although the California Air Resources Board has the primary responsibility for
implementing AB 32, the Commission has indicated its intent to implement relevant
portions of SB 1368 and AB 32 in Phases 1 and 2 of R.06-04-009. A Phase 1 draft
decision implementing the performance standard on new long-term, baseload
commitments is expected in early December with a final decision occurring in
January 2007. In preparing the 2006 LTPP, PG&E has taken into consideration the
Commission’s GHG policies and decisions, SB 1368 and the potential impacts of
AB 32.
g. Commission Renewables Procurement Decisions and
Recent Legislation
The Commission initiated the Renewables Portfolio Standard (“RPS”) in
August 2002 by ordering each IOU to procure at least an additional 1% of its actual
energy and capacity needs from renewable generation. 49 The Commission expanded
the RPS program in 2003 and opened a rulemaking in 2004 to continue the
implementation of the RPS program. 50 The Commission issued numerous decisions
in the rulemaking and established a requirement that the utilities procure 20% of their
total energy sales from renewable resources by 2010, and that the utilities increase
renewable procurement by at least 1% of total sales per year until 2010. In
49 D.02-08-071.
50 D.03-06-071; R.04-04-026.
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