Calif. PUC Maintains 25% TREC Cap, Places Cap on Electric Service Providers

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January 14, 2011

The California PUC adopted final companion decisions yesterday maintaining the 25% cap on the use of tradable renewable energy credits (TRECs) for compliance with the 20% RPS, applying the 25% cap to both the large investor owned utilities and competitive electric service providers, and lifting the stay on the use of TRECs for compliance.

The decision tracks the most recent drafts in proceedings R. 06-02-012 and R. 08-08-009 first reported by Matters earlier this week (1/10).

For both the utilities and electric service providers, the limit on tradable REC usage will expire on December 31, 2013.  Electric service providers must now also file RPS compliance plans with the PUC.

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 may 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 may, 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 will no longer apply if these contracts are extended, or if the deliveries under these contracts are increased.

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