7. Framework for the D.06-07-029 NBC
For each new generation resource subject to the CAM adopted by D.06-07-029, there is also an associated annual revenue requirement or cost that must be recovered from ratepayers to make the IOUs whole for their investments. In this case, that cost is the total annual resource cost less the revenues that would be obtained through an energy auction. The remaining net cost is an approximation of the capacity value of the resource and equals the cost of the associated RA credits. The RA credits have value in that they can be used to satisfy certain Commission RA requirements.73 74 Bundled customers will be indifferent to the choice of a customer to use alternative energy supplier, if the IOU charges the customer an NBC associated with that customer's share of the annual net resource cost and assigns the associated RA credit to the customer. This is accomplished in D.06-07-029 as follows in the adopted proposal:
15. The IOU should charge the benefiting customers the net cost of capacity, determined as a net of the total cost of the contract minus the energy revenues associated with dispatch of the total contract. All RA counting benefits and net costs are spread to the LSEs whose customers are allocated costs based on share of 12-month coincident peak, adjusted on a monthly basis to facilitate load migration. The contract costs paid and RA benefits received by DA (or CCA and muni load) and bundled customers should be based on a share basis equal to the credit share received. (D.06-07-029, p. 31.)
As described above, customers who choose DA or CCA will be assessed a NBC for the net cost of capacity, and the LSE to which they migrate will receive the related RA credits.
MDL, with the exception of large municipalizations, and CGDL have been excluded from having to pay the D.06-07-029 NBC, as discussed in Section 4.1 of this decision. However, in the future, if any costs and RA credits are allocated to large municipalization customers, the adopted proposal in D.06-07-029 and the adopted implementation details in D.07-09-044 are not clear as to what these departing customers are supposed to do with their allocated RA credits. Per the guidance provided in D.07-12-052, the IOUs are not to be procuring system reliability resources on behalf of POUs, and CGDL customers are not LSEs. There is no direct use of RA credits for these departing customers. It appears they would be directly billed for the costs through a NBC and given the associated RA credits, possibly to resell to an LSE who has use for such credits. We will modify this outcome slightly as described below, to lessen the individual departing customer's burden of reselling the credits.
Bundled customer indifference can be achieved by placing a value on the RA credit and having the IOU net that amount out of the NBC and letting the IOU maintain that RA credit for its use. The departing customer would be responsible for any uneconomic costs which in this case are represented by the total annual PPA cost, less energy auction revenues, less the value of the RA credit. We will apply this procedure to any large municipalization customers to which the D.06-07-029 net cost NBC may apply.75 By this decision, these DL customers will not receive the RA credit associated with their departing load and will not be responsible for the market value of the RA credit. However, they will still be responsible for any uneconomic costs, and bundled customers will remain indifferent to their departure.
73 As PG&E states, "CAC/EPUC is correct that distributed generation is not a load-serving entity and is not required to meet the Commission's RA requirements. However, the RA credits allocated to departing distributed generation customers are valuable. Because Load-Serving Entities (LSEs) need to satisfy annual and monthly RA requirements, these departing customers may be able to sell or transfer these credits to LSEs that have an RA deficiency." (Exhibit 18, pp. 14-15.)
74 A value of the RA credit could be determined by analyzing the ongoing market transactions for such products.
75 To the extent that new WAPA departing load and split wheeling departing load customers are subject to the D.06-07-029 NBC and have no use for RA credits, this procedure should also apply.
