5. Interagency Coordination
5.1. Introduction
In addition to this Commission, the CAISO and the CEC will each play a role in the implementation and ongoing operation of the RAR program based upon its expertise and jurisdiction. For example, D.04-10-035 explicitly calls for the CEC to review LSE load forecasts. Earlier in this decision we determined that our staff should work with the CAISO to define CAISO-administered generator performance obligations. The workshops included discussions of the CAISO's role in compliance and enforcement in addition to its roles in conducting deliverability and local procurement analyses. Also, the workshop report indicates that the RAR program is a foundational component of the CAISO's forthcoming market design.
As the Phase 2 workshop report also notes, these agencies must work in concert to meet the RAR program's policy objectives. We note, however, that Assembly Bill (AB) 380 (Stats. 2005, Ch. 367) makes clear that this Commission is responsible for the establishment, implementation, and enforcement of the RAR program. Following the organization of the workshop report, Section 5 focuses on approaches to how the involved agencies will implement and operate certain aspects of the RAR program.
5.2. Load Forecasts
D.04-10-035 provided that LSEs will submit preliminary load forecasts and supporting documentation for review by the CEC. The CEC will assess these for plausibility and consistency, in the aggregate, with load forecasts prepared by the CEC. The LSEs' forecasts are also to be adjusted by the CEC for programmatic impacts (such as energy efficiency and demand response) and coincidence, as it is generally recognized that individual LSEs may not have the data necessary to make such adjustments. The CEC will calculate an adjusted load forecast for each LSE to serve as the basis for the LSE's qualifying capacity obligation and the compliance filing due each September 30 for the subsequent year. The Commission requested that the CEC bring to its attention any discrepancies in the LSEs' preliminary forecasts prior to the LSE's compliance filings.
In connection with the CEC's review of the preliminary load forecast submittals, the Phase 2 workshop report posed a series of questions for comment that we take up here. Before doing so, it will be helpful to articulate our overall understanding of how this Commission and the CEC will administer the load forecast component of the RAR program, at least for the initial implementation stages of RAR.
The RAR program is being established pursuant to our jurisdiction over LSEs. While the CEC also has jurisdiction to review LSE load data and does so separately from the RAR program, the extent of its authority to enforce our RAR requirements was not fully explored in workshops. Therefore, as the RAR program commences, it is appropriate for this Commission to retain control over the load forecast review, assessment, and adjustment process even as we utilize the expertise and resources of the CEC to carry out this aspect of the program.
To the extent consistent with AB 380, it may turn out to be more efficient if the CEC formally administers the load forecast component of the RAR program pursuant to the RAR policies of this Commission. Assuming that it has the authority to enforce the requirements, the CEC could receive, analyze, and adjust the LSEs' preliminary forecasts, and then report the results to the LSE. The LSE would then submit its RAR compliance filing to the CPUC using the CEC-approved forecast. This approach warrants further study.
Until further notice, LSEs' preliminary load data should be submitted to this Commission's Energy Division, which will promptly transmit the data to the CEC for review and analysis.12 As suggested by AReM, the LSE's submittal should include contact information for responsible personnel. The CEC will report the results of its review and any adjustments it has calculated to the Commission's Energy Division as well as the LSEs and the CAISO. The LSE will then use that adjusted forecast as the basis for its procurement obligation.
The confidentiality rules adopted by this Commission will govern this process. LSEs should work directly with the designated CEC staff to respond to any CEC data requests, and failure of an LSE to respond would constitute violation of an order of this Commission. Any disputes between the CEC and an LSE should, in the first instance, be addressed informally by the principals and, where appropriate, our staff.13 If a dispute cannot be resolved this way it should then be referred to this Commission. We will direct our staff to explore detailed procedures for responding to such referrals and make appropriate recommendations for our consideration. Until further notice, such disputes should be referred to the Commission by a motion in R.04-04-003 or successor proceeding that addresses RAR.
In comments on these issues a number of parties expressed the view that LSEs should not be held accountable for the accuracy of their load forecasts. We generally agree that this should be the case, as forecasts of demand by their very nature may entail considerable variability. At this time, we do not have information regarding the extent of such variability that would allow us to set reasonable accuracy standards. In order that we may explore such standards in the future, we ask the CAISO to provide actual load data to the CEC to enable the CEC to evaluate load forecast accuracy on an LSE-specific basis.
We add this caveat: if it were demonstrated that an LSE knowingly used false or unreasonable assumptions to skew the forecast in its favor, it would be reasonable to hold the LSE accountable for such actions. Moreover, regardless of the assumptions or methods used, if any LSE's load forecasts consistently or systematically understate actual demand, that will be reason for investigation and possible sanction.
The workshop report noted that some LSEs believe that if they are to be subject to sanctions for their forecast errors, then the forecasts should be formally adopted by either the CEC or this Commission. Since we are not holding LSEs accountable for the accuracy of their forecasts, but only for knowingly making false or unreasonable assumptions or failure to engage in the process, we do not see a need for routine formal adoption of the CEC-adjusted LSE forecasts by either agency. In fact, once the CEC staff and the LSE have agreed on a forecast for that LSE, there may not be additional value in subjecting that determination to a formal review process. Moreover, the limited time available between the initial submission of the LSE's preliminary load forecast and the submission of the LSE's actual compliance filing may not be sufficient to allow for a meaningful, formal review and adoption process. We note, however, that if an LSE disputes an adjustment calculated by the CEC and the dispute culminates in a Commission decision, that LSE's forecast would be formally adopted.
IEP believes that the RAR program would benefit from a common forecasting methodology endorsed and developed by both the CAISO and CEC. IEP further believes that a formal memorandum of understanding between CAISO and CEC to accomplish this would eliminate ambiguity as to what the true long- and short-term forecasts are. While not critical to implementation of the RAR program at this time, we find this suggestion intriguing and urge the agencies and stakeholders to study it.
5.3. CAISO Enforcement
The workshop report invited comment on the CAISO's enforcement role regarding the RAR program. The few parties that addressed this question, including the CAISO, agreed that this Commission should enforce the requirements that are applicable to LSEs. We concur. As the workshop report also notes, the CAISO may be the most appropriate entity to review the performance of resources nominated by LSEs since it is uniquely aware of the physical attributes of California generators, their use through the Day Ahead scheduling process, and any downstream unit commitment and dispatch instructions that were issued even if not scheduled by the LSE.
In Section 4.1, we directed our staff to work with the CAISO to address generator obligations that would complement the obligations we are placing on LSEs. This process will clearly need to address the CAISO's enforcement role.
5.4. Resource Listing and Testing
The workshop report discussed the possibility of the CAISO maintaining a centralized listing of the qualifying capacity of resources that could be relied upon for RAR showings. The report noted that the Staff/CAISO proposal (discussed in Section 4.1) suggested that testing could eventually be a part of a resource-specific qualifying capacity determination. The report invited the CAISO to comment on whether it is prepared to undertake these activities.
In response, the CAISO acknowledged that it is likely the appropriate entity to administer a program of performance standards for resources, but it also believes that implementation of a testing program should await further development. For the time being, the CAISO recommends using the reported values to set the qualifying capacity of a specific resource. We appreciate the CAISO's acknowledgement of a future role, and we adopt its proposal to use reported values for the present.
The CAISO also notes that it now has much of the suppliers' data regarding qualifying capacity based on "counting" determinations made in D.04-10-035. This data was provided in connection with the CAISO's baseline deliverability analysis. However, because it still does not have the data for certain resources, the CAISO proposes that we specify that a unit cannot be considered a qualifying resource for purposes of the RAR program unless it has submitted its qualified capacity value and supporting documentation to the CAISO. Those resources that made prior submissions to the CAISO would be deemed to have satisfied this requirement. This strikes us as a reasonable and effective means of extending RAR obligations to resources, and we therefore adopt it.
12 This is the approach ordered by the ALJ in his June 24, 2005 ruling directing LSEs to submit load data to the Commission. As a practical matter, LSEs can and should simultaneously provide the data directly to the CEC, but it should be understood that the submission is formally being provided to the Commission's Energy Division.
13 This would include compliance issues such as failure to timely respond to CEC data requests as well as disputes about input assumptions, CEC adjustments, etc.
