Tag Archives: SCE

CCAs reach RPS targets with long-term PPAs

Joint CCA Notice of Ex Parte 10.24.16_CCS-RPS

As I listen to the opening of the joint California Customer Choice En Banc held by the CPUC and CEC, I hear Commissioners and speakers claiming that community choice aggregators (CCAs) are taking advantage of the current market and shirking their responsibilities for developing a responsible, resilient resource portfolio.

The CPUC’s view has two problems. The first is an unreasonable expectation that CCAs can start immediately as a full-grown organization with a complete procurement organization, and more importantly, a rock solid credit history. The second is how the CPUC has ignored the fact that the CCAs have already surpassed the state’s RPS targets  in most cases and that they have significant shares of long-term power purchase agreements (PPAs).

State law in fact penalizes excess procurement of RPS-eligible power by requiring that 65% of that specific portfolio be locked into long-term PPAs, regardless of the prudency of that policy. PG&E has already demonstrated that they have been unable to prudently manage its long-term portfolio, incurring a 3.3 cents per kilowatt-hour risk hedge premium on its RPS portfolio. (Admittedly, that provision could be interpreted to be 65% of the RPS target, e.g., 21.5% of a portfolio that has met the 33% RPS target, but that is not clear from the statute.)

 

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Why the CPUC has it wrong on the PCIA

Nick Chaset is the CEO of East Bay Community Energy which is a community choice aggregator (CCA) that serves Alameda County. He also was Commission President Michael Picker’s chief advisor until last year when he left for EBCE. He explains in this article how two proposed decisions that the CPUC is considering are fundamentally wrong and will shift cost onto CCA customers. (I testified on behalf of CalCCA in this proceeding. I’ll have more on this before the Commission’s scheduled vote October 11.)

Figure 1 – CPUC’s Proposed Resource Adequacy Value vs. True Market Values

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Figure 2 – GHG Premium Value Missing from CPUC Proposed Decision

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Figure 3 – Falling Utility Rates as Customers Depart Filed in Their ERRA Rate Applications

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Another bad legislative idea: Pushing RPS purchase

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The California Legislature is considering a bill (AB 893) that would require the state’s regulated utilities (including CCAs as well as investor-owned) to buy at least 4,250 megawatts of renewables before federal tax credits expire in 2022.

Unfortunately, this will not create the cost savings that seem so obvious. This argument was made by the renewable energy plant owners in the Diablo Canyon Power Plant retirement case (A.16-08-006) and rejected by the CPUC in its decision. While the tax credits lower current costs, these are more than offset by waiting for technology costs to fall even further, as shown by the solar power forecast above. Combined with the time value of money (discounting), the value of waiting far outweighs prematurely buying renewables.

The legislature already passed a bill (SB 1090) that requires the CPUC to ensure that GHG emissions will not rise when Diablo Canyon retires in 2024 and 2025 when approving integrated resource plans. (Whether the governor signs this overly directive law is another question.) And SB 100 requires reaching 100% carbon free by 2045. A study just released by the Energy Institute at Haas indicates that renewables to date have depressed energy market prices, discouraging further investment. And the CAISO is “managing oversupply” created by the current renewable generation.

And there’s a further problem–with a large number of customers moving from the IOUs to CCAs across all three utilities, the question is “who should be responsible for buying this power?” The CCAs will have their own preferences (often locally and community-scale) that will conflict with any choices made by the IOUs. The CCAs are already saddled with poor procurement and portfolio management decisions by the IOUs through exit fees. (PG&E has an embedded risk premium of $33 per megawatt-hour in its RPS portfolio costs.) Why would we want the IOUs to continue to mismanage our power resources?