INTRODUCTION - California

?Decision 20-12-012December 3, 2020Before the Public Utilities Commission of the State of CaliforniaApplication of Pacific Gas and Electric Company for Adoption of Electric Revenue Requirements and Rates Associated with its 2020 Energy Resource Recovery Account (ERRA) and Generation Non-Bypassable Charges Forecast and Greenhouse Gas Forecast Revenue Return and Reconciliation. (U39E).Application 19-06-001ORDER DENYING REHEARING OF DECISION D.20-02-047INTRODUCTIONToday’s Decision disposes of the Application for Rehearing of Decision (D).20-02-047 filed by Pacific Gas and Electric Company (PG&E).In D.20-02-047 (Decision), the Commission adopted PG&E’s 2020: (1) electric procurement forecast for ratesetting purposes; (2) Energy Resource Recovery Account (ERRA) application revenue requirement; (3) forecast electric sales; (4) net forecast Greenhouse Gas (GHG) allowance revenue return; and (5) GHG forecast for administrative and outreach expenses. (Decision at p. 2.) PG&E timely filed an Application for Rehearing of the Commission’s Decision on March 30, 2020. In its Rehearing Application, PG&E says it supports the Decision and believes that it is well-reasoned, based on the extensive record in this proceeding, and largely consistent with California statutory law and Commission precedent. (Rhrg. App. at p. 1.) PG&E states that it concurs specifically with the methodology adopted in the Decision for determining the amount of Unsold Renewable Portfolio Standard (RPS) energy. (Rhrg. App. at p. 1.) PG&E also accepts the deduction of $92.9 million from the Portfolio Allocation Balancing Account and does not seek to reverse the decision or use a different amount at this time. (Decision at pp. 1-2.) However, PG&E asks that the Decision be clarified in two respects. First, PG&E argues that the Commission should revise Conclusion of Law Number 4 to clarify that there are only annual RPS compliance targets, not annual compliance requirements. (Rhrg. App. at pp. 2, 5-6, emphasis added.) Second, PG&E argues that the Commission should “correct” the sales volumes calculations in the Decision so that they are aligned with the methodology in the Decision. (Rhrg. App. at pp. 2, 6-8.) East Bay Community Energy, Marin Clean Energy, Peninsula Clean Energy, Pioneer Community Energy, San Jose Clean Energy, Silicon Valley Clean Energy and Sonoma Clean Power filed a joint response opposing PG&E’s requested clarifications.DISCUSSIONPG&E’s Rehearing Application fails to meet the statutory requirements for an application for rehearing. The purpose of an application for rehearing is to alert the Commission to a legal error, so that the Commission may correct it expeditiously, (Cal. Code of Regs., tit. 20, § 16.1(c); see, e.g., Application of Pacific Gas and Electric Company to Revise its Electric Marginal Costs, Revenue Allocation and Rate Design [D.20-09-014] (2020) 2020 Cal. PUC Lexis 880). Applications for rehearing must set forth specifically the grounds on which the applicant considers the order or decision of the Commission to be unlawful or erroneous and must make specific references to the record or law. (Pub. Util. Code § 1732; Cal. Code of Regs., tit. 20, § 16.1(c).) PG&E’s Rehearing Application fails to state the law it believes was violated by the Commission nor the specific portion of the record that violated the law.Furthermore, PG&E’s Rehearing Application merely repeats the arguments and issues already raised and considered by the Commission. An application for rehearing may not be used as a vehicle for re-litigation of policy positions or to reweigh evidence. (See, e.g., Order Instituting Rulemaking to Consider Authorization of a Nonbypassable Charge to Support California's Wildfire Fund [D.20-02-070], (2020) Cal. PUC Lexis 524 *1, **4-5.). The fact that the Commission did not weigh the evidence in PG&E’s favor does not constitute legal error. ([D.20-02-070], supra, Cal. PUC Lexis 524 *1, **4-5.) Accordingly, PG&E fails to demonstrate legal error. RPS Program Targets, Obligations, and RequirementsPG&E argues that the Commission should revise Conclusion of Law Number 4 to clarify that there are only annual RPS compliance “targets,” not annual compliance “requirements.” (Rhrg. App. at p.5.) Conclusion of Law 4 states:D.19-10-001 requires PG&E to value all renewable energy credits used to meet its 2019 RPS compliance obligation at the RPS Adder. D.11-12-020 establishes an RPS requirement for PG&E in 2019 equal to 31% of PG&E’s retail sales. (D.20-02-047 at p. 34 [Conclusion of Law Number 4].) PG&E contends that this conclusion wrongly refers to the 2019 compliance target as both a “compliance obligation” and an “RPS requirement.” PG&E argues that this language is inconsistent with D.11-12-020 because the RPS compliance requirement is based on a full multi-year compliance period. Accordingly, PG&E requests that Conclusion of Law Number 4 be revised as follows:D.19-10-001 requires PG&E to value all renewable energy credits used to meet its 2019 RPS compliance target at the RPS Adder. D.11-12-020 establishes an appropriate minimum RPS quantity to be considered retained for purposes of the PABA true-up in 2019 equal to 31% of PG&E’s retail sales.(Rhrg. App. at pp. 5-6.)RPS program targets, obligations and requirements are governed by Public Utilities Code Section 399.11 et seq. Generally, the statutes provide:In order to attain a target of generating 20 percent of total retail sales of electricity in California from eligible renewable energy resources by December 31, 2013, 33 percent by December 31, 2020, 50 percent by December 31, 2026, and 60 percent by December 31, 2030, it is the intent of the Legislature that the commission and the Energy Commission implement the California Renewables Portfolio Standard Program described in this article.(Pub. Util. Code, § 399.11, subd. (a).)Section 399.15 establishes specific multi-year compliance periods between 2011 and 2030 and provides that each retail seller shall procure a minimum quantity of eligible renewable energy resources for each of the compliance periods. (Pub. Util. Code, § 399.15, subd. (b)(1).) The Commission may require retail sellers to procure eligible renewable resources in excess of the quantities specified under the statute. (Pub. Util. Code, § 399.15, subd. (b)(3).) But retail sellers are obligated to procure no less than the quantities specified for each compliance period. (Pub. Util. Code, § 399.15, subd. (b)(2)(C).) The Commission elaborated on these statutory provisions in Order Instituting Rulemaking to Continue Implementation and Administration of California Renewables Portfolio Standard Program [D.11-12-020] (2011). Based on the relevant statutes, D.11-12-020 found that for each compliance period a retail seller must procure sufficient renewable energy resources eligible under the California Renewables Portfolio Standard to demonstrate “reasonable progress” in meeting the established procurement target for retail sales. For the period from January 1, 2017 to December 31, 2020, that would be 33 percent. The Decision also stated that a retail seller must procure “no less than” the quantities associated with the intervening years in the compliance period. Again, for January 1, 2017 to December 31, 2020, that would be 27 percent in 2017, 29 percent in 2018, 31 percent in 2019, and 33 percent in 2020. (D.11-12-020 p. 24 [Ordering Paragraph Number 3].)It is unnecessary to modify Conclusion of Law Number 4 because review shows that nothing in the challenged Decision or Conclusion of Law Number 4 runs counter to the relevant statutes or D.11-12-020. The Decision specifically noted D.11-12-020 and stated it did not intend to create new policy concerning the renewables compliance amounts for the third compliance period beginning January 1, 2017 and ending December 31, 2020. Thus, the Decision merely stated that PG&E should procure “no less than,” i.e., a minimum of 31 percent of retail sales by 2019. (D.20-02-047 p. 13.) PG&E fails to show how this conclusion is either unlawful or incorrect. Thus, we reject PG&E’s request.Unsold RPS and the Portfolio Allocation Balancing Account (PABA) AdjustmentThe issue of unsold RPS energy and renewable energy credits (RECs) is relevant for the purpose of determining the appropriate PABA true-up. Generally, the Decision found that actual retained RPS is based on the volume of RPS used for compliance. (D.20-02-047 at p. 13.) The Decision also found that banked RPS should not be used to increase REC generation for a given year beyond PG&E’s compliance and sales commitments. (D.20-02-047 at p. 15.) However, finding that the current PABA framework does not allow for a determination of whether retired RECs in PABA were unsold or retained for compliance. The Decision deferred development of a proper tacking mechanism to the PCIA proceeding. (D.20-02-047 at pp. 15-16.)For purposes of this Decision, the Commission found that the 20 percent starting bank RECs used in PG&E Advice Letter 5554-E should not be counted as unsold RPS. (D.20-02-047 at p. 16.) In addition, PG&E was directed to deduct $92.9 million from the PABA balance according to the proper sub-account allocation and added to the ERRA balance. (D.20-02-047 at p. 16.)As noted above, PG&E does not contest this adjustment and states that it accepts that it cannot claim any RPS as unsold if it represents any “banked” RPS volumes. However, PG&E contends the Commission used incorrect sales volumes for purposes of the adjustment. PG&E claims that the Decision incorrectly relied on a 5,650 GWh number in arriving at the $92.9 million adjustment, while PG&E only accounted for 4,213 GWh as unsold RPS. PG&E contends the latter amount would only have resulted in a $69.3 million adjustment. (D.20-02-047 at pp. 2-3, 5-8.)In its Rehearing Application PG&E provides the following table:Table 1: Volumes and Values in D.20-02-047Volume2019 RPS AdderValue at RPS AdderNotes11,252 GWh----Annual RPS compliance “target” per D.11-12-0205,650 GWh$16.44$92.9 millionDifference between annual RPS compliance target and retained RECs in PG&E’s November Update (Joint CCA calculation)4,609 GWh$16.44$75.8 million20% of starting REC “bank” per AL 5554-E4,213 GWh$16.44$69.3 millionVolume of REC bank counted as Unsold RPS in PG&E’s November Update(Rehearing App. at p. 4)In D.19-10-001 the Commission set up a methodology for the valuation of Sold, Retained and Unsold RPS for 2019. (Decision Refining the Method to Develop and True Up Market Price Benchmarks [D.19-10-001] (2019) at pp. 54-56, Attachment B, at p. 2 (slip op.).) In D.20-02-047, the Commission applied that methodology to require a $92.9 million deduction to PABA. (D.20-02-047 at pp.15-16.) This deduction is based on three conclusions: (1) D.19-10-001 requires PG&E to value all renewable energy credits used to meet its 2019 compliance obligation at the RPS Adder (D.20-02-047 at p. 34 [Conclusion of Law Number 4].); (2) PG&E should not use banked RECs to increase its REC generation for a given year beyond its compliance and sales commitments (D.20-02-047 at p. 15); and (3) the 20% of starting bank RECs included in PG&E AL 5554-E should not be counted as unsold RPS. (D.20-02-047 at p. 16.) In its Rehearing Application PG&E seems to suggest that D.20-02-047 is limited solely to the third point, i.e., PG&E’s use of banked RECs to increase Unsold RPS by 4,213 GWh, which, when multiplied by 2019 RPS Adder would equal $69.3 million. In making this argument, PG&E fails to account for the other relevant values. Conclusion of Law Number 4 established that Retained RPS is equal to the 2019 compliance obligation times the RPS Adder. Following that calculation, i.e., multiplying 11,252 GWh times the 2019 RPS Adder, $16.44, results in a total value for Retained RPS of $185 million. However, PG&E included only $92.1 million in the value for Retained RPS due to improperly inflating the quantity of Unsold RPS, which it deducted from Retained RPS in the PABA. (November Update, dated November 15, 2019, Exh. PG&E 6 (Public) and Exh. PG&E 6-C (Confidential); Revised November Update, dated December 19, 2019, Exh. PG&E-6R (Public) and Exh. PG&E-6R-C (Confidential).) Adjusting the PABA to include the full $185 million for Retained RPS requires an additional credit of $92.9 million.The second conclusion, stating that PG&E should not use banked RECs to increase its REC generation for a given year beyond its compliance and sales commitments, is equally as important because including 4,609 GWh of “banked RECs” in the calculation of Unsold RPS from Advice Letter 5554-E is precisely what the Commission concluded was prohibited in D.20-02-047. This is because PG&E increased its REC generation for the year (21,115 GWh + 4,609 GWh = 25,724 GWh) “beyond its compliance and sales commitments” (11,797GWh + 9,714 GWh = 21,511 GWh) to suggest there was more 2019 RPS generation that was unsold and not needed for compliance than there was. (November Update, dated November 15, 2019, Exh. PG&E 6 (Public) and Exh. PG&E 6-C (Confidential); Revised November Update, dated December 19, 2019, Exh. PG&E-6R (Public) and Exh. PG&E-6R-C (Confidential).) To correct for this issue, the Decision correctly valued not only the 4,213 GWh of Unsold RPS at the RPS Adder but also the entire 4,609 GWh from the additional 20% of starting bank RECs PG&E included in its solicitation. PG&E’s Rehearing Application improperly disregards these first two conclusions to focus solely on the 4,213 GWh of Unsold RPS.Even if PG&E could establish that the Decision relied on the wrong sales volume numbers, it is fundamentally unclear from PG&E’s Rehearing Application how the Decision erred if PG&E accepts the Decision’s general methodology and ultimate result. Moreover, PG&E fails to identify any actual legal requirement or standard that the Decision violated. Accordingly, PG&E has not established that the Decision erred and we reject PG&E’s requests for clarification.CONCLUSIONWe have carefully reviewed each and every allegation in PG&E’s Rehearing Application. We find that the evidence in the record supports our conclusion that there is no merit to PG&E’s allegations of legal error in D.20-02-047. Accordingly, we deny rehearing of D.20-02-047.THEREFORE, IT IS ORDERED that:Rehearing of D.20-02-047 is hereby denied.The proceeding, Application (A.) 19-06-001, is closed.This order is effective today.Dated December 3, 2020, at San Francisco, California.MARYBEL BATJER PresidentLIANE M. RANDOLPHMARTHA GUZMAN ACEVESCLIFFORD RECHTSCHAFFENGENEVIEVE SHIROMA Commissioners ................
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