On January 13, 2011, the California Public Utilities Commission (“CPUC”) reaffirmed its March 2010 decision allowing utilities to buy tradable renewable energy credits (“TRECs”) separately from the associated energy for use in complying with the California Renewables Portfolio Standard Program (RPS).
Prior to the March 2010 decision, utilities were required to obtain the renewable energy and RECs together in “bundled” contracts. On March 11, 2010, the CPUC issued a decision authorizing providers, subject to certain limitations, to unbundle RECs from the renewable energy. The limitations included a price cap of $50 per TREC. The price cap was scheduled to expire on December 31, 2011. Also set to expire on December 31, 2011, was a cap specifically for Pacific Gas and Electric, Southern California Edison, and San Diego Gas & Electric limiting their ability to use TRECs to meet their annual procurement targets for the RPS program to no more than 25%.
After the March 2010 decision, Pacific Gas and Electric, Southern California Edison, and San Diego Gas & Electric filed a joint petition seeking modification of the price caps, removal of the temporary limit on the use of TRECs for RPS compliance and revision of the criteria used to determine which TREC transactions are subject to the 25% cap. In response to the petitions, the CPUC issued a stay of the March decision on May 6, 2010.
On January 13, 2011, the CPUC reaffirmed the March 2010 authorization of the use of TRECs for RPS compliance and, among other decisions, denied the joint petition of Pacific Gas and Electric, Southern California Edison, and San Diego Gas & Electric. In the reaffirmation, the CPUC kept the 25% cap, but extended the expiration date to December 31, 2013.
A copy of the decision can be found here. For more information or questions regarding the CPUC decision or any related topic, please contact Craig Kline at 212-704-6150 or Roger Mok at 212-704-6264.