Utility Scale Request for Offer (RFO)

Overview

The RPS solicitation process is the primary procurement mechanism for the California RPS program. The Investor-Owned Utilities’ (IOUs’) utility-scale solicitations or requests for offers (RFOs) are competitive processes conducted by the IOUs and overseen by the Commission and an Independent Evaluator. IOUs may also procure renewable energy through all-source solicitations and bilateral contracts.

For the purpose of meeting California RPS requirements, offers may be from any eligible renewable energy resource located anywhere within the Western Electricity Coordinating Council (WECC) that is 0.5 megawatts (MW) or greater.

 

RPS Solicitations / Requests for Offers

Below is an outline of the RPS procurement process:

  1. Following Commission approval of its RPS procurement plan and solicitation protocol, an IOU can initiate its RPS solicitation. The entire solicitation is overseen by the Commission and the Independent Evaluator.
  2. Interested respondents file notices to bid according to the IOU’s solicitation schedule.
  3. Respondents submit their offers to the utility according to the IOU’s solicitation schedule.
  4. The IOU evaluates all of the offers for conformance with solicitation requirements and uses its "least-cost, best-fit" evaluation process to rank offers by value to develop a "shortlist" of offers.
  5. The IOU reviews its proposed shortlist and solicitation results with its Procurement Review Group.
  6. The IOU requests Commission approval of its final shortlist via an advice letter filing that includes a report on the solicitation as well as a report from the Independent Evaluator regarding the fairness and reasonableness of the utility’s solicitation process and results.
  7. The IOU and shortlisted bidders negotiate contract terms, which may result in executed contracts if terms are mutually agreed upon.
  8. The IOU files an advice letter (or application) requesting approval of a contract with the Commission, which includes a final Independent Evaluator report regarding the proposed contract.
  9. The Commission reviews the submitted RPS contracts for cost reasonableness, consistency with Commission rules, and safety, as well as any protests, responses, or replies to the advice letter.
  10. The CPUC approves, approves with modification, or rejects the RPS contract by issuing a resolution (or a decision if responding to an application) based on the above criteria.

Least-cost Best-fit

At the beginning of each RPS solicitation cycle, each IOU submits its RPS procurement plan and solicitation protocol to the CPUC for approval. Filed with the RPS procurement plan and solicitation protocol is a detailed description of the IOU's least-cost best-fit methodology.

The RPS statute requires utilities to select renewable resources that are least-cost and best-fit. Costs include the cost of the renewable energy generation as well as any indirect costs due integration of the resource and needed transmission investment. In addition, IOUs consider the benefits of the energy and capacity value. “Best fit” criteria address their system needs and RPS portfolio needs. (See D.04-07-029, D.08-12-058, D.11-04-030, D.12-11-016, and D.14-11-042 for more information.)

Pro Forma Agreements

The IOUs submit pro forma agreements as part of their solicitation protocols which are included in their RPS procurement plans. The Commission review of the IOUs’ annual RPS procurement plans includes review of the pro forma agreements. Once an IOU’s authorized to issue its solicitation, the IOU maintains its own solicitation website, which includes solicitation instructions and documents, including their pro forma agreements. These solicitation websites with pro forma agreements can be found at the following links:

Purpose and Use of the Project Viability Calculator

The IOUs are required to consider the viability of renewable projects when evaluating the value, costs, and benefits of offers received through solicitations and bilaterally. Energy Division staff developed the Project Viability Calculator (PVC) with stakeholder participation from utilities, renewable project developers, and ratepayer advocates.

The PVC is a tool for the utilities to evaluate the viability of a renewable energy project, relative to all other projects that bid into the California utilities' RPS solicitations. The Project Viability Calculator uses standardized categories and criteria to quantify a project's strengths and weaknesses in key areas of renewable project development. The PVC is not a tool to determine the exact merit of a particular project or contract, but is used as a screening and ranking tool. (See D.09-06-018 for more information.)

Download the Project Viability Calculator

Independent Evaluators

The Commission requires an Independent Evaluator (IE) for each RPS solicitation. The IE provides third party oversight of the RPS procurement process. At the conclusion of the solicitation, the IE writes a report which is submitted via the IOU to the CPUC providing a critical assessment of the robustness of the solicitation, the effectiveness of the least-cost best-fit methodology, and a determination of whether that methodology was fairly administered. The IE also completes a contract-specific report whenever an offer from a solicitation is submitted as a contract to the Commission. (See D.04-12-048, D.06-05-039, D.07-12-052, D.08-11-008, D.09-06-050, E-4309, D.10-07-042, D.14-02-040, and D.14-11-042 for more information)

Procurement Review Groups

The Commission requires each IOU to establish a "Procurement Review Group" (PRG) whose non-market participants, subject to an appropriate non-disclosure agreement, would have the right to consult with the utility and review the details of the utilities’:

  • Overall procurement strategy;
  • Proposed procurement processes including, but not limited to, RFOs; and
  • Proposed procurement contracts, before those contracts are submitted to the Commission for review.

PRG participants include: California Department of Water Resources (DWR), the Commission's Energy Division, Union of Concerned Scientists (UCS), Division of Ratepayer Advocates (DRA), Coalition of California Utility Employees (CUE), and The Utility Reform Network (TURN).

Although Energy Division is a member of the PRG, it reserves its conclusions for review and recommendation on RPS contracts to the resolution process. The PRG advises utilities, not Energy Division. (See D.02-08-071 for more information.)

Related Programs

Related Divisions