4. Preliminary Scoping Memo
In this Preliminary Scoping Memo we describe the issues to be considered in this proceeding. The final determination of specific topics to be addressed and their placement in the various phases will be left to the assigned Commissioner's discretion in the Scoping Memo to be issued following the PHC. The preliminary timetable is set forth below, in Section 6 of this order.
Three Phases to PRM OIR
o Phase 1 will study and adopt a reliability modeling methodology by evaluating and adopting the proper sources of data such as generator and transmission outages and load forecasts: In conjunction with the CAISO PRRS stakeholder process, the Commission will evaluate a probabilistic methodology for the establishment of capacity and planning reserve levels for purposes of LTPP and RA procurement. The Commission will evaluate and recommend sources for the data that is used for a probabilistic model, such as generator and transmission outages, as well as develop a set of candidate scenarios of future resource buildout to be modeled for purposes of reliability metrics. Determination of these factual questions will likely require hearings and/or workshops and workshop reports in the late summer of 2008. The target date for the Phase I decision is December 2008.
o Phase II would use the adopted methodology, data, and scenarios to set the proper PRM for the RA program 2010 and 2011 compliance years: The Commission, in conjunction with the CAISO PRRS process, will determine a range of reliability levels for California, and spell out the required capacity and reserves needed within the three IOU service territories required to maintain that range of reliability levels. The Commission will evaluate and adopt the reliability level for the 2010 and 2011 RA compliance years, and evaluate the reliability metrics of candidate scenarios of the 2010 LTPP. The Commission will periodically reassess this reliability level as a regular feature of future LTPP and RA cycles. The target date for the Phase II decision is June 2009.
o Optional Phase III would, to the extent possible, integrate the PRM modeling methodology into the CAISO's LCR analysis as well as develop the economic analysis to balance customer preferences of cost and reliability to set an economically optimal capacity and reserve level: Once the probabilistic methodology for determining capacity and reserve requirements has been developed, the methodology will be applied on a local level to further evaluate the reliability impacts of capacity obligations in transmission-constrained Local Areas. The Commission will also explore economic analyses to determine the "appropriate" reserve levels for customers of LSEs under Commission jurisdiction based on customer risk tolerance and cost modeling. This would close the OIR. The target date for the Phase III decision is June 2010.
o Post OIR periodic formal reassessment: This OIR is meant to provide tools by which the Commission can develop planning and procurement requirements in the RA and LTPP proceedings, so those proceedings would be a vehicle for periodic reassessment and rerunning of the model developed in this OIR as part of the normal functioning of those proceedings. Our staff recommends the Commission make this a periodic assessment that is to become part of the LTPP proceeding, RA proceeding, or the CEC's IEPR process to facilitate forward planning of resource additions and retirements, as well as RA requirements multiple years in the future. This should provide the market with clear expectations of system needs in time for construction to occur to meet that need. We note that this would necessitate the development of in-house personnel to carry out this modeling.
We have outlined the phasing and overall timetable for this proceeding. Following is a more detailed listing of the issues that we anticipate will be addressed in Phase 1.
· How will the Commission interact with the CAISO's PRRS? How will the IOUs interact with the PRRS? Will the Commission undertake a study separately or with IOU support, or if the Commission decides to cooperate with the CAISO in the PRRS, how can the Commission ensure that the appropriate analysis is performed so that the Commission can establish the proper capacity and reserve obligations?
· How is the decision about an appropriate PRM to be made (i.e., how is the Commission to evaluate one PRM option over another)? For example:
o Reliability Metrics: How is reliability to be defined: outage frequency, duration, size or some combination of metrics? Possible integration and optimization across several metrics?
o Data Sources: The Commission needs information regarding what data inputs used by the model such as generator and transmission outage are generally accepted and common to the industry, reliable, and comparable to data sets used for other purposes. Ideally stakeholders should be given the opportunity to publicly vet the data to ensure robustness.
o Base Case Scenario: What "future world(s)" is the assumed frame of reference for analyzing reliability? What will provide the business-as-usual policy or base case (expected) policy scenario?
o Change Case Resource Build out Scenarios What "future world(s)" is the assumed frame of reference for deciding the appropriate reliability level, i.e., should a single scenario dominate the decision or should an assessment of multiple scenarios drive it?
o Study Timeframe: Over what timeframe(s) should the analysis be done (1-yr., 5-yr., 10-yr., 20-yr.)?
· Interaction with other Commission proceedings: How does the planning reserve analysis interface with the LTPP (CPUC), IEPR (CEC), and the CAISO reliability studies? For example:
o Definition of Policy Preferred Scenarios: A required input of a reliability study is a defined resource portfolio (plan), which can then be stochastically modeled to produce reliability results. When/where/how does the portfolio definition occur: PRM proceeding itself, LTPP proceeding, IEPR proceeding, individual resource proceedings?
o Optimization studies: Should the Commission conduct the optimization studies that define resource portfolios, and prescribe policy preferred scenarios as the assumed basis for reliability studies? Alternatively, should LSEs do so using standardized tools and techniques (to be adopted, potentially, in the 2008 LTPP proceeding)?
· Periodic reassessment in a formal Commission proceeding: Is there the intention of doing a periodic reevaluation of the reliability level in some regular timeframe (perhaps with the IEPR process, or with the LTPP process)?
· Long-Term RA and Capacity market alternatives: Will the capacity and reserve levels adopted here depend to any extent on the type of market structure the Commission adopts in Track 2 of R.05-12-013? How does the projected type of procurement envisioned in either Recommendation 1 or Recommendation 2 of the January 18th staff report affect reliability into the future?
· Variability in PRM: Should a single PRM be set for all IOU service territories or should there be territory-specific or even load pocket-specific PRMs?
o Is there a different reliability level for each IOU service territory?
o Is there a different reliability level for short term obligations or for long-term obligations? For off peak seasons or on peak seasons?
o Is the reliability level affected by type of LSE or size of LSE? Is there any basis for the determination of LSE-specific PRMs?
· Interaction with other LSEs and balancing authorities: Is there an interaction between a Commission-determined PRM and reserve requirements that apply to non Commission-jurisdictional entities or other balancing authorities outside the CAISO? If there is such an interaction, how does, or should, it impact the Commission's PRM determination?
