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[California Energy Commission Letterhead]

In the Matter of: )      Docket No. 06-IEP-1M
Preparation of the )      NOTICE OF COMMITTEE
2007 Integrated Energy policy Report )      WORKSHOP
(2007 IEPR) )       
_________________________________________ )       

Notice of Joint Committee Workshop on the Use of
Portfolio Analysis in Electric Utility Resource Planning

View Workshop Documents

The California Energy Commission's (Energy Commission) 2007 Integrated Energy Policy Report (IEPR) Committee and Electricity Committee will conduct a workshop to solicit comments on the potential feasibility of applying analytical methods based on Modern Portfolio Theory to long-term electric utility resource planning. The workshop will be held:

1 p.m.

1516 Ninth Street
Hearing Room A, First Floor
Sacramento, California
(Wheelchair Accessible)

Audio from this meeting will be broadcast over the Internet.
For details on listening in, please go to

For details on how to
participate via WebEx please see the
"Participation through WebEx" section.

If you do not have computer access and wish to participate in the meeting by phone,
you can call 1-866-469-3239 (meeting number: 928 833 490).


This workshop will explore the potential for an analytical method based on Modern Portfolio Theory to be incorporated into electric utility resource planning. This workshop follows a staff workshop held on June 4, 2007 which provided an overview of planning activities in California and other selected areas, described long-term resource plans, and discussed Portfolio Analysis and underlying Modern Portfolio Theory. The Committees and Energy Commission staff seek the comments of interested parties with regard to issues related to applying Portfolio Analysis to long-term utility resource planning.

Following the workshop, a staff issue paper will be issued that will form the basis for policy recommendations in the 2007 IEPR.


Electric utility resource long-term planning utilizes risk assessment and scenario analyses, but gas-fired resources may continue to be added at levels that will not necessarily reduce California's risk resulting from over-reliance on natural gas. High levels of natural gas usage could result in long-term price and carbon risk to electric utility ratepayers. Renewable resources may serve to lower overall risk compared to further additions of gas-fired resources, and the value of this risk reduction should be properly considered in the procurement and long-term planning processes. The Commission is concerned that current utility planning methods may not adequately capture the risk or price reduction characteristics of such resource alternatives in their long-term planning processes.

The basis underlying Modern Portfolio Theory is that total portfolio risk should be the primary measure by which individual resources should be judged when considering their additions to a utility portfolio. Thus, a decision maker can assess potential changes to a portfolio's risks and costs brought about by adding assets having their own individual risk and cost profiles. The resultant risks and costs of various combinations of assets can be quantified, such that the most efficient portfolios can be recognized on a curve referred to as the "efficient frontier." That is, for any given level of risk, the least expensive portfolio can be determined. Conversely, for any given level of cost, there is an associated least-risk portfolio. Portfolio analysis allows for considering risk preferences in choosing among portfolios, as well as for examining different tradeoffs among various risks and costs.

Prior to the workshop, a draft consultant report presenting an analysis of business-as-usual and preferred generation portfolios will be published and available on the Energy Commission's website. A draft staff/consultant issue paper, Portfolio Analysis and its Potential Application to Utility Long-Term Planning, will also be posted. In addition, an appendix to this notice will be posted to the website, listing questions for which the Committee is seeking comments.

Written Comments

The IEPR and Electricity Committees are seeking the active participation of interested parties in this workshop and proceeding. The Committees encourage interested parties to present their views either orally at the workshop or through written comments. The Committees will take general comment from the public immediately following presentations.

Written comments must be submitted by 5 p.m. on July 19, 2007. Mailed materials may be sent to:

California Energy Commission
Dockets Office, MS-4
Re: Docket No. 06-IEP-1M
1516 Ninth Street
Sacramento, CA 95814-5512

Include the docket number No. 06-IEP-1M and indicate 2007 IEPR Š Portfolio Analysis in the subject line or first paragraph of your comments. The Energy Commission encourages comments by electronic mail (e-mail). Please include your name or organization in the name of the file. Those submitting comments by e-mail should provide them in either Microsoft Word format or as a Portable Document File (PDF) to docket@energy.state.ca.us.

Workshop participants may also provide an original and 10 copies at the beginning of the workshop. All written materials relating to this workshop will be filed with the Dockets Unit and become part of the public record in this proceeding.

Additional Information

The Energy Commission's Public Adviser provides the public assistance in participating in Energy Commission activities. If you would like information on how to participate in this workshop, please contact the Public Adviser's Office by phone at (916) 654-4489 or toll-free at (800) 822-6228, by FAX at (916) 654-4493, or by e-mail at pao@energy.state.ca.us. If you have a disability and require assistance to participate in this hearing, please contact Lou Quiroz at (916) 654-5146 at least five days in advance.

Please direct all news media inquiries to Claudia Chandler, Assistant Executive Director, at (916) 654-4989, or by email at mediaoffice@energy.state.ca.us. Questions regarding the 2007 IEPR proceeding should be directed to Lorraine White, IEPR program manager, at (916) 654-4075 or by e-mail at lwhite@energy.state.ca.us. For technical questions regarding the subject matter of this workshop, please contact Mike Ringer at (916) 654-4168, or by e-mail at mringer@energy.state.ca.us.

The service list for the 2007 Integrated Energy Policy Report is handled electronically. Notices and documents for these proceedings are posted to the Energy Commission website www.energy.ca.gov/2007_energypolicy/index.html. When new information is posted, an e-mail will be sent to those on the energy policy e-mail list server. Parties interested in receiving these notices may sign up for the list server through the website www.energy.ca.gov/listservers/

Date: June 27, 2007

commissioner signature
Commissioner and Presiding Member
2007 Integrated Energy Policy Report Committee
commissioner signature
Commissioner and Associate Member
2007 Integrated Energy Policy Report Committee
commissioner signature
Commissioner and Presiding Member
Electricity Committee

Date Posted: June 28, 2007

Note: California Energy CommissionÕs formal name is State Energy Resources Conservation and Development Commission.

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