VI. Utility Responses Regarding
Remand Period Energy Prices
In response to the ALJ Ruling on October 21, 2004, SDG&E states that its energy price information serves bundled load, but excludes QF prices and long term contracts. SDG&E adds that after the demise of the PX in January, 2001, DWR energy purchases provided for SDG&E's "net-short" energy needs.48 SDG&E's response is shown below:
SDG&E Pricing Data
Month Average Purchased Energy Price ($/MWh)
December 2000 $281
January 2001 180
February 2001 135
March 2001 93
Edison states that it purchased energy during the Remand Period from the PX, California Independent System Operator (ISO), and the California Department of Water Resources (DWR). Edison's reported prices include both DWR purchases and ISO market purchases. Edison adds that these prices include both energy and capacity as Edison states it is unable to provide an energy only price for PX and ISO purchases. These purchase prices are shown below:
Edison Pricing Data
Month Average Market Price DWR Rate49
December 2000 $242 N/A
January 2001 $243 $97
February 2001 $221 97
March 2001 $240 97
Edison cautions that for various reasons the energy price information provided above is not useful to determining Remand Period energy avoided costs. First, Edison states that the listed prices include energy and capacity, not energy only prices. Second, Edison explains that PX and ISO market prices were determined by FERC to be unreasonable and unjust, and consequently FERC ordered the prices to be recalculated so as not to exceed a MMCP. Edison adds that even use of the MMCP as a proxy for avoided costs would be improper as the MMCP uses the highest heat rate in the market.50 Finally, Edison contends that the shapes of generation curves representing the energy purchased at market prices and QF purchases are different, and therefore not comparable, as QF purchases are relatively "flat" over the time-of-use periods,51 while non-QF purchases are quite peaked. That is, non-QF purchases are more likely to occur during the mid-peak and off-peak periods when compared to super-off peak purchases.
PG&E states that it has not yet paid the Remand Period generation prices, and therefore, the purchase rates should be replaced by MMCP. PG&E also notes that the ISO calculated a market clearing price (MCP) as input to the determination of final prices to be paid, but capped prices at the MMCP. PG&E's prices are as follows:
PG&E Pricing Data
Period Average ISO MCP Average PX MCP Average MMCP
($/MWH) ($/MWH) ($/MWH)
December 2000 $239 $309 $124
January 2001 146 143 153
February 2001 143 - 101
March 2001 118 - 85
PG&E argues that the above prices do not reflect actual average energy purchase prices because: (1) PG&E did not pay amounts invoiced by the PX or ISO during this period; (2) FERC invalidated these prices; (3) the MMCP is a maximum price; and (4) DWR purchased energy after the PX ceased operation. PG&E states that it paid DWR $92/MWH for energy and capacity and is unable to derive an energy only price. PG&E also adds that energy purchases through the PX and ISO are not comparable to QF purchases as QF power is baseload power while PX and ISO purchases tend to be for peaking purposes.
48 SDG&E's pricing data excludes the CDWR purchases but includes QF and long and short-term purchases. SDG&E March pricing includes a small amount of spot energy purchases. 49 Edison states its DWR purchases were at a fixed rate. 50 Lowering the MMCP heat rate would lower the MMCP. 51 Energy is purchased for three periods designated as mid-peak, off-peak, and super-off.
