New CPUC Rules Increase Transparency


California PUC

Fortnightly Magazine - May 2022

California's Renewables Portfolio Standard (RPS), as implemented by the California Public Utilities Commission and the California Energy Commission, has been a remarkable success.  First adopted in 2002 (and opposed at the time by utilities who said it would be too costly, infeasible, and make the electricity system unreliable), it has been strengthened and accelerated five times since then.

The law now requires that sixty percent of electricity sold in California by 2030 be renewable, and that one hundred percent must come from zero-carbon resources by 2045.  Renewables currently constitute more than thirty-four percent of the State's electricity, demonstrating that we are well on our way to meeting or exceeding the sixty percent requirement — and we have more than twenty-six thousand megawatts of installed renewable capacity in the State. 

Prices for wind and solar have plummeted over time, with solar eighty percent cheaper and wind fifty percent cheaper than in 2010.  Last year, contract prices for solar in California dropped to 2.8 cents per kilowatt-hour. At the same time, the RPS has led to the creation of a stable and healthy renewable industry, and by some estimates produced more than one hundred thirty thousand jobs.   

California's RPS has been widely emulated.  Thirty states and the District of Columbia currently have some type of renewable energy mandates.  Seven states now have one hundred percent clean electricity mandates as well. 

In 2006, when the RPS program was still fairly new, the CPUC adopted rules that kept confidential the prices of renewable energy contracts until three years after a new facility began operating. This was intended to prevent the small number of renewable companies then selling to utilities from colluding on prices, or otherwise manipulating the market in ways that could result in higher costs for ratepayers.  In practice, this has meant that on average the information was not made public until five to ten years after contract execution.  

Clifford Rechtschaffen: California’s RPS has been widely emulated. Thirty states and the District of Columbia currently have some type of renewable energy mandates.

Keeping this contract information confidential for years is at odds with the CPUC's long-standing policy that the public interest favors the broadest possible access to information, with confidential treatment only when there is a compelling reason.  RPS contracts are paid for by ratepayers and data about the prices paid for these contracts is relevant to those ratepayers and the public.  

Over the past decade, there has been a dramatic growth in the number of renewable companies that are developing projects and competing for contracts to sell renewable energy to California utilities and other electricity providers. Given these market changes, and the CPUC's general policy favoring information disclosure, the CPUC's rules were in need of updating.

Last November, my fellow Commissioners and I revised the rules to provide public access to renewable contract terms eighteen months after the CPUC approves investor-owned-utility contracts (or eighteen months after execution of contracts by other providers whose contracts do not require CPUC approval). 

After eighteen months, the bidding and negotiations in a solicitation will have ended.  In this situation, the public release of contract prices and terms will not present a risk of higher prices or less favorable contract terms in the future.  Rather, the overall competition for contracts is intense and bidders need to compete aggressively and submit their best possible offers.  

These new rules will bring the CPUC more in line with the practices of a number of public utilities and community choice aggregators, as well as utilities in other states, which disclose contract information when the contracts are approved. These new rules will also benefit the public by expanding knowledge about the pricing trends for renewable resources and ensuring that robust competition occurs.