Latest Calif. Drafts Would Maintain 25% REC Cap, Apply Cap to Electric Service Providers

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January 10, 2011

Companion revised proposed decisions from the California PUC would not alter the current 25% cap on the use on tradable RECs for RPS compliance (R. 06-02-012), and would still apply the same usage limit to the investor owned utilities and competitive electric service providers (R. 08-08-009).

The latest revised draft in R. 06-02-012 does excise nearly all discussion of electric service providers, but that merely defers any findings with respect to electric service providers to R. 08-08-009, where the draft would affirm that electric service providers are subject to the same limit on tradable REC usage that is applied to the large utilities, which would be 25%.

The draft in R. 08-08-009 does hold that the 25% limit shall not be applied to deliveries to an electric service provider from contracts that transfer both renewable energy credits and energy to the buyer but that do not meet the Commission's criteria for considering a procurement transaction a bundled transaction, if the contracts were signed by the electric service provider prior to the effective date of the decision, and if such deliveries would cause that electric service provider to exceed the annual 25% limit on the use of tradable RECs.

In this circumstance, the electric service provider could not use any tradable renewable energy credits associated with any additional contracts that were signed by the electric service provider on or after the effective date of the decision for compliance in that year that would exceed the 25% annual limit.  The electric service provider could, however, bank any excess RECs for compliance in future years, in accordance with the flexible compliance rules for the renewables portfolio standard.

Additionally, the allowance for these pre-decision contracts would no longer apply if these contracts are extended, or if the deliveries under these contracts are increased.

For both the utilities and electric service providers, the limit on tradable REC usage would expire on December 31, 2013.

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