6. Assignment of Proceeding

Michael R. Peevey is the assigned Commissioner and David M. Gamson is the assigned ALJ in this proceeding.

1. A process for local true-up of RA capacity was adopted in D.10-03-022 for 2010 only.

2. Energy Division and CEC staff developed a "Local True-up Method White Paper" and a revised version of this White Paper.

3. Parties agreed to clarifications to the Revised White Paper section entitled "Showing a local resource and procedures for resource outages" at the October 26, 2010 PHC/Workshop.

4. Transfer payments create several potential disputes and reporting/verification requirements both for LSEs and agency staff.

5. Continued aggregation of local areas for incremental Local RA procurement will provide a means to minimize market power.

6. The current process allowing for LSEs to update their load forecasts is sufficient to address substantial questions of reallocation of local RA.

1. The Revised White Paper entitled "Local True-up Method White Paper" and dated September 28, 2010 is reasonable and should be adopted, with certain modifications and clarifications.

2. The Revised White Paper entitled "Local True-up Method White Paper" and dated September 28, 2010 should be placed into the record of this proceeding.

3. Transfer payments should not be adopted. Instead, aggregation of local areas should continue in effect to help mitigate local RA market power concerns.

4. Clarifications to the Revised White Paper section entitled "Showing a local resource and procedures for resource outages" should be made, as agreed to by parties at the October 26, 2010 PHC/Workshop and as set forth in Appendix A.

5. There is no need at this time to adopt a dispute resolution process for the local RA reallocation process.

6. The same RA penalty structure adopted in D.10-06-036 should apply to local true-ups and their associated revised load forecasts. The citation program adopted in Resolution E-4195 should also apply to all aspects of the local true-up process.

ORDER

IT IS ORDERED that:

1. The Local True-up Method in Appendix A is adopted.

2. The assigned Commissioner and/or the assigned Administrative Law Judge may revise the schedule in Appendix A as necessary for the reasonable and efficient conduct of this proceeding.

3. Rulemaking 09-10-032 shall remain open.

This order is effective today.

Date December 16, 2010, at San Francisco, California.

Appendix A

Local Resource Adequacy Reallocation Process

R.09-10-032

Table of Contents

Adopted Local RA Reallocation process for 2011 and onward

The California Public Utilities Commission (CPUC) adopts this Local Resource Adequacy (RA) Reallocation method as the Local true-up mechanism for 2011 and onwards.

The decision adopting this Appendix includes a sample calendar of due dates for 2011, clarifications on the RA compliance template, discussion of rules regarding the listing of resources for Local RA, clarification of load forecasting procedures, and clarification of how new electric service providers (ESPs) that do not currently serve load are to comply with RA obligations and begin to participate in the filing process.

1. Timeline and due dates:

The Local RA Reallocation Process follows the general RA Filing schedule included in the annual RA Filing Guide. Events added to accommodate the Local RA Reallocation Process are highlighted below and color coded. Energy Division will explain the Local RA Reallocation Process in the annual RA Guide and provide directions to local serving entities (LSEs) in the RA compliance templates.

Local RA Reallocation timeline consistent with Reliability-Must-Run (RMR)-cost allocation mechanism (CAM) allocations The Local RA reallocation process includes two adjustment cycles, one occurring during the first quarter of the year to apply for filings in the second quarter in the year, and one occurring in the second quarter of the year to apply for filings in the third and fourth quarters of the year. LSEs file adjusted load migration forecasts, receive Local RA reallocations, and have 45 days to procure incremental Local RA in order to meet reallocated Local RA obligations. The schedule for each annual schedule will be incorporated into the annual RA Filing Guide issued by Energy Division, consistent with the schedule below.

RA filing month

Load Forecast month

Due Date

January

February

Nov 30, 2010

February

March

Dec 31, 2010

March

April (with first Local RA August revised forecast)

January 31, 2011

April

May

February 28, 2011

May (first cycle)

June(with second Local RA August revised forecast)

April 1, 2011

June (first cycle)

July

May 2, 2011

July (second cycle)

August

June 1, 2011

August (second cycle)

September

June 30, 2011

September (second cycle)

October

August 1, 2011

October (second cycle)

November

August 31, 2011

November (second cycle)

December

September 30, 2011

December (second cycle)

January

October 31, 2011

LSEs will file load forecasts for each month from January to August compliance months and submit those forecasts with the April Load forecast adjustments. LSEs will have approximately five days to make any corrections to their load forecasts. California Energy Commission (CEC) and Energy Division staff shall reallocate Local RA obligations for May and June and send to LSEs by mid February with May CAM/RMR reallocations. The Local RA obligations reallocated by staff shall be used be used for May and June Month Ahead RA filings. They must be inserted into the LSE Allocations tab of the RA Compliance Template. The month-ahead summary tab will calculate any needed or extra local capacity for the month-ahead RAR. This gives all LSEs at least 45 days to buy or sell any local capacity for May which must be committed as RA for the May compliance filing month.

The second Local RA migration cycle requires LSEs to submit another load forecast to the CEC along with the July load forecast adjustments. This will include forecasts for the months of July and August. LSEs will have approximately five days to make any corrections to their load forecasts. Staff will use those forecasts to reallocate Local RA obligations for July through December. This gives all LSEs at least 45 days to buy or sell any local capacity for July which must be committed as RA in a RA filing for July compliance month. That same Local RA obligation shall apply through the remaining months of the compliance year. There is no third reallocation cycle.

2. Showing a local resource and procedures for resource outages

There are important differences between the adopted Local RA Reallocation process and both the proposal entered into Rulemaking (R.) 09-10-032 and the mechanism adopted in Decision (D.) 10-03-022. Parties are encouraged to read this section carefully.

The adopted Local RA Reallocation process requires LSEs to procure and commit via RA Filings capacity sufficient to meet their Local RA obligations. Energy Division will reallocate Local RA obligations, and LSEs will be required to procure and commit via RA Filings sufficient Local RA capacity in each Local Area to meet their Local RA obligations. There is no provision of a transfer payment mechanism, and all LSEs are to satisfy their Local RA obligations by procuring sufficient RA capacity and committing it to the California Independent System Operator (CAISO) via RA Filings. The aggregation approach adopted for the incremental Local RA procurement during 2010 is retained, from D.10-03-022 (footnote 2 on page 2 of Appendix 3). LSEs may aggregate their Local RA adjustments between Local Areas in the same investor-owned utility (IOU) service area.

To report a contract with a unit located within a Local Area on the Local Template, LSEs select the correct Scheduling ID from a drop down list in Column C of the Reporting Template, and upon selection, the Local Area designation is filled in automatically. 

During the compliance year, LSEs are to make RA compliance filings demonstrating compliance with the Local RA obligations as adjusted by the Local RA migration filings.  To accomplish this, use a new column entered into the Physical Resource worksheet to allow LSEs to demonstrate monthly Local RA compliance on the same template as System RA compliance.  Since only unit specific Physical Resources count towards meeting the LSE's Local RA obligation, there are no corresponding columns created on other resource tabs. 

The Physical Resource tab will have a new column called "Local RA MW" (Column N) where the LSE is to enter the amount in megawatts (MW) that is meant to satisfy Local RA obligations from that unit.  This amount in Column N is to be the RA MW amount the LSE is using to meet their Local RA obligation for that month (August net qualifying capacity (NQC) value not derated by scheduled outages),, which means that this value may be different from the System RA MW for that month for two reasons.  First, the values will be different in the event that the resource's system RA value is affected by scheduled outage for that month, and thus listed at lower MW than the Local RA MW amounts unaffected by outages.  Second, this value will be different from the System RA MW for the appropriate month in the event that the resource has a monthly NQC, which differs by month.  In that event, the LSE would list the correct applicable month's NQC in as a System MW in an appropriate bucket, but list the August NQC value in the Local RA MW column. 

3. Template details

The Local RA reallocation process requires the use of the two existing templates, the load migration forecast template and the System RA compliance template. Modifications made to these templates will be explained in the instruction tab of these templates.

In addition to the regular RA program schedule, all LSEs planning to serve load will have to submit monthly forecasts through at least August each month during the compliance year. Some LSEs already include a revised forecast for months past the compliance month, but the Local RA reallocation process requires all LSEs to do so.

Additionally, LSEs will procure to meet reallocated Local RA obligations and demonstrate the added Local RA capacity in their Month Ahead System RA Filings each month of the compliance year. To do this, LSEs must insert reallocated Local RA allocations into the System Month Ahead RA Filing in Table five of the LSE Allocations Tab. To implement the provision that allows for aggregation of incremental Local RA procurement after the Year Ahead RA Filing, LSEs will receive incremental adjustments to their Local RA obligations (either a positive or a negative number) for each Local Area. LSEs may enter the allocation in any Local Area in the same Transmission Access Charge (TAC) Area. For example, if an LSE receives a two MW incremental Local RA adjustment in Los Angeles (LA) Basin, the LSE could procure a two MW resource in Big Creek Ventura and enter it instead. The LSE could also enter one MW in both LA Basin and Big Creek Ventura. The template will draw the allocations entered by LSEs into the Summary Tab and calculate any needed or extra local capacity for the Month Ahead-RA showing. LSEs will submit revised August forecasts and receive adjusted Local RA allocations two times each compliance year. The incremental local allocation shall be used according to the schedule detailed in the annual RA Guide.

4. Load forecasts for Local RA Reallocation and dispute resolution

LSEs submit load forecasts each month of the RA compliance year in accordance with the process laid out in each year's RA Guide. The timelines discussed above will now include dates for submission of Local RA forecasts that will be used for Local RA reallocation. In each and every month, LSEs will develop and submit load forecasts for the customers included in any given month from the current month until August, or in the event that the month is past August, all months since August of each year. This gives a picture of the overall load shape for the LSE given the customers the LSE is serving at any individual month compared to the forecasts for those same customers as of the peak month of the year. Twice each year, CEC and Energy Division staff will take a snapshot as of the dates specified in the RA compliance schedule and use that information to reallocate Local RA obligations. The information provided by LSEs in other months, including forecasts out to August, will allow staff to verify trends and reported migration in every month of the RA compliance year, although only twice in the year will LSEs receive adjusted Local RA allocations.

LSEs are to continue using the "best estimate" approach, which requires LSEs to make a forecast of anticipated customer retention as well as new customers coming to the LSE. As the "best estimate" approach requires LSEs to forecast load migration in advance of final Direct Access Service Request (DASR)/Community Choice Aggregator Service Request (CCASR) approval, the CEC will expect LSEs to be as accurate and complete as possible and may adjust or correct load migration filings before reallocating Local RA obligations.

LSEs are to forecast customer migration including all customers they serve. This means that small residential customers would be included in the load forecasts such as is currently done in the monthly forecasts, as opposed to the current True-up Approach which excludes residential customers. Since LSEs are performing forecasts, and not listing individual customers, LSEs are able to perform integrated forecasts for their entire estimated peak load. Upon notification from the CEC or upon location of an error in the load forecast submitted to the CEC by the LSE, the LSE will have five days after submission of the load forecast to correct the error.3

Based on LSE's updated forecasts for the current month until or since the peak forecast month (August), the CEC will compute LSE specific adjusted proportionate shares of TAC area peak for use in reallocating the Local RA obligations. Energy Division will send LSEs updated Local RA obligations within 15 days of receipt of load forecasts, which are to be used in future RA compliance filings just like year ahead Local RA obligations. LSEs will then insert those allocations into the LSE allocations tab of the RA compliance filing.

LSEs may request allocations inserted into the template, or LSEs can insert the allocations themselves.

CEC and Energy Division staff will verify load forecasts against data submitted by IOUs pursuant to a monthly DASR/CCASR data request. These data requests will verify the amount of load moving from one ESP to another as measured by actual customer usage at time of peak.

5. RA compliance process for new LSEs currently without load

Month Ahead RA obligations:

Registered ESPs and community choice aggregators (CCAs) that plan on serving load within 60 days of becoming a registered ESP or approved CCA must file a load forecast with the CEC immediately upon registration and a Month Ahead (30 day-ahead) RA compliance filing associated with the load they plan on serving according to the schedule below for the month in which they plan to serve load. Upon notification of registration, Energy Division will contact new LSEs and inform them of RA requirements, as well as post materials on the DA and CCA sections of the CPUC website linking to RA compliance materials.

Registered ESPs or approved CCAs that do not plan on serving load within 60 days of becoming registered or approved are encouraged to contact the CEC and the CPUC to familiarize themselves with the RA Program and its requirements. Sixty days before the start of the month in which the LSE is projected to serve load, the LSE must file a load forecast with the CEC and procure to meet that load with an RA Filing filed 30 days before the start of the compliance month. The LSE will then begin to participate in the Local RA Reallocation process at the next available Local RA Reallocation cycle.

LSEs that begin serving load that do not file a 60 day ahead forecast or a Month-ahead RA showing will be subject to the same RA penalties that other LSEs are subject to for late filings and deficient RA showings. During the course of ESP registration or CCA approval, it is also required of LSEs to become respondents to the RA proceeding. The current RA proceeding is R.09-10-032, and LSEs are to ensure that they are on the service list for this proceeding.4

Year Ahead RA obligations

All LSEs (including those that do not currently serve load) are required to submit Year Ahead load forecasts and receive Year Ahead RA obligations for purposes of complying with the Year Ahead RA obligations. Failure to do so will constitute a violation of the RA program. This forecast will be binding and create a year ahead RA Filing obligation. If the LSE is not projected to serve any load during the following compliance year, the LSE will receive no RA obligation from the CPUC and will not be required to file Year Ahead RA Filings.

If an LSE is not registered or approved at the time of the year ahead load forecasts the LSE is required to file a year ahead load forecast within 60 days of being registered or approved as LSEs. If the LSE is not projected to serve any load during the following compliance year, the LSE will receive no RA obligation from the CPUC and will not be required to file Year Ahead RA Filings. If the LSE is projected to serve load during the following compliance year but was not registered or approved at the time of the year ahead load forecast process, the LSE will receive System RA obligations (but not Local RA obligations or RMR/CAM/demand response allocations, as those values require adjustments for other LSEs also) from the CPUC and file a year ahead System RA Filing.

6. RA Penalty Structure

The same penalty structure that the RA program uses will apply to local true-ups and their associated revised load forecasts. This penalty structure was adopted in D.10-06-036.

 

Small Procurement Deficiency

System Procurement Deficiency

Local Procurement
Deficiency

Replaced within five business days of the date of notification

$1,500 first incident in calendar year; $3,000 for each incident thereafter in a calendar year

$3.33/kilowatt (kW)-month

$3.33/kW-month

Replaced after five business days from the date of notification or not replaced

LSE pays the applicable System or Local RA penalty for the deficiency.

$6.66/kW-month

$3.33/kW-month

Additionally, the citation program adopted in Resolution E-4195 will also apply to all applicable aspects of the local true-up process. The citation program provides that LSEs may be fined specified amounts for failure to make timely filings in the manner required, and for small procurement deficiencies.

7. Local Waiver and Dispute Resolution

D.05-01-042 adopted an informal dispute resolution process that applies in the event of disputes in load forecasts5. As specified in D.05-10-042 the process is to be informal, beginning with the LSE contacting CEC staff and attempting to work out the dispute without action by the CPUC. If disputes cannot be worked out informally, then the CEC and the LSE are to bring the dispute to the attention of the CPUC, by filing a motion in the current RA proceeding.

No changes are made to the current Local RA waiver procedure. As it is currently a waiver of penalties for failure to satisfy Local RA obligations, the process could apply under the reallocation approach with regards LSEs filing waiver of penalty requests with their monthly RA compliance filings if the monthly RA compliance filings are to demonstrate a deficiency of Local RA procurement. LSEs are to refer to the structure laid out in D.06-06-064.

(END OF APPENDIX A)

3 D.10-06-036 OP 6E, "Load-serving entities may, at the discretion of the California Energy Commission staff, file changes to their load forecasts up to 25 days before the due date of the month-ahead compliance filings."

4 Service list here: http://docs.cpuc.ca.gov/published/service_lists/R0910032_78657.htm.

To be added to the service list, contact process office at processoffice@cpuc.ca.gov.

5 Section 5.2 of D.05-10-042, linked here: http://docs.cpuc.ca.gov/WORD_PDF/FINAL_DECISION/50731.PDF.

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