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CEC-300-2006-007ED2SD

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CEC-300-2006-007ED2SD

     CALIFORNIA

    ENERGY

    COMMISSION

     DRAFT

    RENEWABLES

    PORTFOLIO GUIDEBOOK

    STANDARD STAFF

    ELIGIBILITY

    SECOND EDITION

    DECEMBER 2006

    CEC-300-2006-007ED2SD

    Arnold Schwarzenegger, Governor

    CALIFORNIA ENERGY

    COMMISSION

    Jackalyne Pfannenstiel Chairman

James D. Boyd

    Vice Chair

Commissioners:

    Arthur H. Rosenfeld John L. Geesman

    Jeffrey D. Byron

B.B. Blevins

    Executive Director

Heather Raitt

    Technical Director RENEWABLE ENERGY OFFICE

Drake Johnson

    Office Manager

    RENEWABLE ENERGY OFFICE

Valerie Hall

    Deputy Director

    EFFICIENCY, RENEWABLES, AND

    DEMAND ANALYSIS DIVISION

This guidebook was formally adopted by the Energy Commission on April 21,

    2004, pursuant to Public Utilities Code Section (PUC) 383.5, Subdivision (h), and

    subsequently revised pursuant to this authority and Public Resources Code

    Section 25747, Subdivision (a), on May 19, 2004, August 11, 2004, May 21, 2005,

    and April 26, 2006.

    The requirements in this guidebook are based on applicable law, the Renewables Portfolio Standard Decision on Phase 1 Implementation Issues (publication number 500-03-023F), the Renewables Portfolio Standard Decision on Phase 2

    Implementation Issues (publication number 500-03-049F), staff analysis, advice

    from the Energy Commission’s technical support contractor, and public input.

TABLE OF CONTENTS

    [note: changes to table of contents are not shown in underline and strikeout]

    I. Introduction ............................................................................................................ 1 A. Related Reports ...................................................................................................... 2 B. Outstanding Issues .................................................................................................. 2 C. Guidebook Organization ......................................................................................... 5 II. Eligibility Requirements ........................................................................................ 7 A. Renewable Portfolio Standard (RPS) Targets ......................................................... 7 B. Eligibility for the RPS .............................................................................................. 8

    1. Biodiesel ............................................................................................................ 12

    2. Biomass ............................................................................................................. 12

    3. Small Hydroelectric ............................................................................................ 13

    4. Conduit Hydroelectric ......................................................................................... 14

    5. Municipal Solid Waste ........................................................................................ 18

    6. Solar Energy and Distributed Generation ........................................................... 19

    7. Hybrid Systems .................................................................................................. 21 C. Eligibility for Supplemental Energy Payments ....................................................... 23 D. Eligibility of Out-of-State Facilities ......................................................................... 24 E. Delivery Requirements .......................................................................................... 25 F. Eligibility of Tradable Renewable Energy Credits .................................................. 27 III. Certification Process ........................................................................................... 29 A. Applying for Certification and Pre-Certification ...................................................... 29 B. Renewing Certification and Pre-Certification ......................................................... 32 C. Amending Certification and Pre-Certification ........................................................ 32 D. Supplemental Information ..................................................................................... 33

    1. Supplemental Instructions for Biomass Facilities ............................................... 33

    2. Supplemental Instructions for Small Hydroelectric and Conduit Hydroelectric

    Facilities ................................................................................................................. 33

    3. Supplemental Instructions for Municipal Solid Waste Conversion Facilities ....... 36

    4. Supplemental Instructions for Out-of-State Facilities ......................................... 37

    5. Supplemental Instructions for Repowered Facilities ........................................... 40 IV. Generation Tracking System............................................................................... 44 A. Reports to the Energy Commission ....................................................................... 44 B. Accounting for Out-of-State, Incremental Generation ............................................ 46 C. Energy Commission RPS Verification Report ....................................................... 46

    1. Verification of Delivery ....................................................................................... 46

    2. Verification Methodology using the Interim Tracking System ............................. 47 D. Accounting for Tradable Renewable Energy Credits .......................................... 47 V. Publicly Owned Utilities ...................................................................................... 49 Appendix A - Forms ...................................................................................................... 1 Appendix B - Acronyms ................................................................................................ 1 Appendix C - Summary of RPS Reporting Requirements ......................................... 1

I. Introduction

The California Energy Commission (Energy Commission) developed this Guidebook to

    implement and administer its responsibilities under California’s Renewables Portfolio 234Standard (RPS) pursuant to Senate Bill 1038, Senate Bill 1078, Senate Bill 1250, and 5Senate Bill 107. These laws require retail sellers of electricity to increase the amount of renewable energy they procure each year by at least 1 percent until 20 percent of their

    retail sales are served with renewable energy by December 31, 2010. Under these laws,

    the Energy Commission is required to certify eligible renewable energy resources that

    may be used by retail sellers of electricity to satisfy their RPS procurement

    requirements, develop an accounting system to verify a retail seller’s compliance with the RPS, and award supplemental energy payments (SEPs) to cover the above market

    cost of procuring eligible renewable energy resources.

    This Guidebook describes the requirements and process for certifying eligible renewable energy resources for the RPS and SEPs. This Guidebook also describes

    how the Energy Commission will track and verify compliance with the RPS using an

    interim generation tracking process.

    This Guidebook establishes efficient and effective processes to encourage participation in California’s RPS and assure program credibility to benefit stakeholders, regulators, and consumers. Although this Guidebook addresses the Energy Commission’s role in

    implementing the RPS, the Energy Commission recognizes that the California Public

    Utilities Commission (CPUC) also has a key RPS implementation role.

The enabling legislation established specific roles for the Energy Commission and the

    CPUC and directs the two agencies to work together to implement the RPS. Although

    the law assigns lead roles for specific implementation efforts to each agency, the roles

    of the two agencies are interrelated. The Energy Commission is responsible for

    certifying eligible renewable resources and tracking the procurement of such resources

    to ensure compliance with the RPS. The CPUC is responsible for establishing targets

    for the amount of eligible renewable energy resources that retail sellers of electricity

    must procure to comply with the RPS and verifies compliance with the requirements.

    Retail sellers include investor-owned utilities (IOUs), Electric Service Providers (ESPs),

    and Community Choice Aggregators (CCAs).

     2 SB 1038; Chapter 515, Statutes of 2002. The pertinent provisions of SB 1038 were formerly codified in

    Public Utilities Code Sections 383.5 and 445, but are now codified in Public Resources Code Sections

    25740 through 25751 as a result of Senate Bill 183 (Chapter 666, Statutes of 2003). 3 SB 1078; Chapter 516, Statutes of 2002. The pertinent provisions of SB 1078 are codified in Public

    Utilities Code Section 399.11 through 399.15. This law was subsequently amended to add Sections

    399.16 and 399.17 pursuant to Senate Bill 67 (Chapter 731, Statutes of 2003) and Assembly Bill 200

    (Chapter 5, Statutes of 2005), respectively. 4 SB 1250; Chapter 512, Statutes of 2006. SB 1250 amends pertinent provisions in Public Resources

    Code Sections 25740 through 25751. 5 SB 107; Chapter 464, Statutes of 2006. SB 107 amends pertinent provisions in Public Resources Code

    Sections 25740 through 25751 and Public Utilities Code Sections 399.11 through 399.16.

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In February 2003, the CPUC issued a ruling formalizing collaboration on RPS issues,

     and in March 2003 the Energy Commission adopted a reciprocal agreement. The

    Energy Commission subsequently developed this Guidebook collaboratively with the

    CPUC.

While this Guidebook reflects current requirements, the Energy Commission recognizes

    that it may need to periodically revise program guidelines to reflect market and

    regulatory developments as well as incorporate the lessons learned from experience

    implementing the RPS.

A. Related Reports

This Guidebook is one of several guidebooks the Energy Commission has adopted to

    implement and administer the various program elements of its Renewable Energy

    Program. The Energy Commission’s Overall Program Guidebook for the Renewable Energy Program (Overall Program Guidebook) describes how the Renewable Energy Program will be administered and includes information and requirements that apply

    overall to the Renewable Energy Program and the program elements. To qualify for

    certification as a renewable energy resource eligible for RPS and SEPs, an applicant

    must satisfy the requirements specified in this Renewables Portfolio Standard Eligibility Guidebook and the Overall Program Guidebook.

To receive SEPs, applicants must also satisfy the requirements specified in the Energy

    Commission’s New Renewable Facilities Program Guidebook. Parties interested in

    receiving SEPs may refer to the New Renewable Facilities Program Guidebook for

    information on how to apply for and receive SEPs. Please note that the Energy

    Commission also provides production incentive payments to eligible existing renewable

    resources that are not eligible for SEPs but may be eligible for the RPS. For more

    information, refer to the Existing Renewable Facilities Program Guidebook. For general

    information on the process of creating, appealing, and implementing RPS guidelines,

    please refer to the Overall Program Guidebook. Program guidebooks are available online at the Energy Commission’s Web site at .

B. Outstanding Issues

There are several ongoing issues that could affect these guidelines. The Energy

    Commission will continue to address these issues collaboratively with the CPUC:

? Renewable Energy Credits/Certificates (RECs) trading:

    RECs represent renewable and environmental attributes associated with energy

    production. Public Utilities Code Section 399.12, Subdivision (g)(1), defines a REC

    for California RPS purposes to mean a certificate of proof, issued through the

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    accounting system established by the Energy Commission pursuant to Public Utilities Code Section 399.13, that one unit of electricity was generated and delivered by an eligible renewable energy resource.

    Section 399.12, Subdivision (g)(2), specifies that a REC includes all renewable and environmental attributes associated with the production of electricity from the eligible renewable energy resource, except for an emissions reduction credit issued pursuant to Section 40709 of the Health and Safety Code and any credits or payments associated with the reduction of solid waste and treatment benefits created by the utilization of biomass or biogas fuels.

    In addition, Section 399.12, Subdivision (g)(3), specifies that no electricity generated by an eligible renewable energy resource attributable to the use of nonrenewable fuels, beyond a de minimus quantity as determined by the Energy Commission, shall result in the creation of a REC.

    RECs and energy procured together as a ―bundled‖ commodity are eligible for the California RPS. RECs sold separately from energy are termed ―tradable‖ or

    ―unbundled‖ in this Guidebook and are not currently eligible towards California RPS procurement requirements.

    The law as amended by Senate Bill 107, however, authorizes the use of tradable RECs associated with energy produced from RPS-eligible resources to qualify towards RPS procurement requirements once certain conditions have been met. Tradable RECs may be allowed for RPS compliance after the CPUC and Energy Commission conclude that the Western Renewable Energy Generation Information System (WREGIS) is operational, capable of independently verifying delivery of renewable energy to a retail seller, and can assure that RECs are not double counted by any seller within the Western Electricity Coordinating Council.

    Also, the CPUC may limit the amount of tradable RECs that a retail seller may procure to satisfy its RPS-requirements. The CPUC is addressing RECs and other RPS-implementation issues in its Rulemaking 06-05-027 and Rulemaking 06-02-012, and subsequent RPS Rulemakings.

    A preliminary discussion of eligibility requirements and tracking requirements for tradable RECs is provided in this Guidebook in anticipation of their possible use for purposes of California RPS compliance.

    ? Determining how customer-side renewable distributed generation resources fit into the RPS:

    The law includes solar energy as an eligible resource for the RPS. The CPUC Rulemaking 06-03-004 has been addressing if and how output from renewable DG may be counted towards utility RPS obligations. The CPUC issued a draft decision on December 6, 2006 that would allow DG system owners to retain 100 percent of

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    the RECs associated with the DG energy produced. Similarly, the Energy Commission does not require participants of its New Solar Homes Program to relinquish their claims of renewable energy credits, or to transfer ownership of any such credits to the Energy Commission or any other entity, as a condition of receiving New Solar Homes Program funding. This Guidebook describes these

    issues in the section on eligibility requirements.

    ? Defining fuel specific issues:

    The Energy Commission anticipates that new issues may arise that will need to be addressed as implementation continues. The Energy Commission recognizes that some parties may be interested in using hydrogen fuel to generate electricity but recommends deferring the development of implementation guidelines for such facilities. The Energy Commission recommends, however, that only eligible RPS fuel stock may be used to produce hydrogen for use at an RPS-eligible facility.

    ? Hybrid technologies:

    For new and repowered facilities not certified as Qualifying Small Power Production Facilities (QFs) under the federal Public Utilities Regulatory Policies Act that operate on co-fired fuels or a mix of fuels that includes fossil fuel, the Energy Commission will allow the renewable portion of the electricity production to qualify for the RPS once an appropriate tracking system for such electricity production is developed. A tracking system for biogas injected into a gas transmission pipeline is proposed in the December 2006 draft version of this guidebook. The Energy Commission anticipates that the WREGIS will account for generation from gas injected into the pipeline transmission system and for other hybrid technologies. Once WREGIS is operational, RECs will only be issued for electricity production from renewable fuels, with the exception that RECs may include electricity produced from a de minimus

    amount of fossil fuel.

    Once WREGIS is operational, the Energy Commission may issue RECs for QFs only in specific circumstances as described in the ―hybrid technology‖ section of this

    guidebook. For a QF not eligible for RECs, the Energy Commission maintains the following allowance: Facilities that were operational before 2002 or that were or will be developed and awarded power purchase contracts as result of an Interim RPS solicitation approved by the CPUC pursuant to Decision 02-08-071 and Decision 02-10-062 may use up to 25 percent fossil fuel annually (on a total energy input basis) and count all the electricity generated as renewable. If a facility is a Qualifying Small Power Production Facility not eligible for RECs, then all of the electricity production can qualify for the RPS.

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C. Guidebook Organization

This Guidebook is organized as follows:

1. Introduction

    2. Eligibility Requirements

    3. Certification Process

    4. Generation Tracking System

    5. Publicly Owned Utilities

    Appendix A. Forms

    Appendix B. List of Acronyms

    Appendix C. Summary Table of Reporting Requirements

Section 2 covers eligibility requirements for generators interested in producing electricity

    that can be procured by retail sellers to comply with the RPS. For the purposes of this

    Guidebook, ―retail sellers‖ refers to California’s three largest IOUs (Pacific Gas &

    Electric Company (PG&E), Southern California Edison Company (SCE), and San Diego

    Gas & Electric Company (SDG&E),to PacifiCorp and Sierra Pacific Power (electrical

    corporations with 60,000 or fewer customer accounts in California that also serve retail

    end-use customers outside California pursuant to Public Utilities Code 399.17), and to

    ESPs and CCAs..

Section 2 also addresses eligibility requirements for generators interested in producing

    electricity that can be procured to comply with the RPS and that is eligible to receive

    SEPs.

Section 3 discusses the Energy Commission’s certification process, including the

    following:

    ? Pre-certification application process for developers of renewable facilities that are

    not online but who are seeking a preliminary determination that their facility will be

    eligible for the RPS or SEPs.

    ? Certification application process for generators with renewable facilities that are

    online who are interested in serving energy to meet an RPS obligation or to serve

    energy that is eligible for SEPs.

    ? Application process to renew certification and pre-certification status at least every

    two years.

? Process to amend certification or pre-certification.

Section 4 discusses the data submission requirements for a generation tracking system

    that will be used to verify retail sellers’ compliance with the RPS and to verify that

    generation is counted only once in California or any other state.

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Section 5 addresses participation of local publicly owned electric utilities in the RPS.

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