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PUC Issues $100,000 Penalty Against Retail Supplier

December 14, 2018

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Copyright 2010-17
Reporting by Paul Ring •

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The California PUC affirmed a citation against Pilot Power Group, Inc. (PPG) for a Resource Adequacy (RA) deficiency, denying an appeal from PPG

On October 31, 2017, PPG filed its YA [Year Ahead] RA compliance statement for 2018. As a result, on January 29, 2018, the Commission’s Energy Division (ED) sent PPG a deficiency and correction notice detailing PPG’s deficiencies in 'North Path 26' (NP26) system RA allocation. ED noted NP26 deficiencies of 13.36 Megawatts (MW) for July 2018, 15.28 MW for August 2018, and 12.24 MW for September 2018. After ED took into consideration PPG’s Carbon Process Management credits counting toward system RA requirements, PPG had system RA deficiencies of 12.28 MW for July 2018, 14.19 MW for August 2018, and 11.15 MW for September 2018, resulting in PPG’s 37.62 MW total system RA deficiency in meeting its YA 2018 RA requirement. ED’s correction notice directed PPG to procure the 37.62 MW by February 5, 2018.

On February 5, 2018, PPG filed a revised YA 2018 RA compliance statement demonstrating that it had partially cured its deficiency by procuring an additional 24 MW. PPG’s deficiency was therefore reduced to 13.62 MW.

On February 9, 2018 PPG filed a further revised YA 2018 RA compliance statement, curing the remaining 13.62 MW deficiency. On that same date, ED sent PPG an approval letter for PPG’s YA 2018 RA.

On April 24, 2018, the PUC's Consumer Protection and Enforcement Division (CPED) issued Citation E-4195-42 (Citation) to Pilot Power Group, Inc. (PPG), charging PPG with violation of resource adequacy (RA) reporting requirements regarding PPG’s failure to present a compliance filing at the time and in the manner required. Specifically, as stated in a PUC resolution summarizing the Citation, PPG failed to meet its Year-Ahead RA obligation for 2018, and it received a deficiency notice from Energy Division. That Citation identified and delineated PPG’s violations. PPG had partially cured its deficiency five business days from the date of notification, and PPG had a fully cured its deficiency four business days after the revised filing date. The Citation was calculated based upon the original filing and the two subsequent filings. A penalty was assessed totaling $100,709.20 in accordance with the schedule of penalties in Resolution E-4195.

On May 23, 2018, PPG filed a Notice of Appeal of the Citation, alleging that it 'did everything reasonably possible' but that 'RA resources were not available for purchase' and that RA resources were 'withheld from the market by certain entities.' PPG also alleged that it had earlier filed a 'Request for a Waiver in connection with the RA obligation' but that the Request had not been ruled upon by the Commission.

In sum, PPG raised the following arguments on appeal:

1. PPG did everything reasonably possible to procure RA resources.

2. RA resources were not available for purchase.

3. RA resources were withheld from the market by certain entities.

4. Imposition of a penalty does not further the intent of the RA program.

5. The Commission should exercise its discretion to eliminate or reduce the penalty because RA resources were procured (only) a few days late.

6. On October 27, 2017, PPG had filed a request for a waiver 'in connection with the RA obligation' which the Commission had not ruled upon.

In denying the appeal, the PUC said in an adopted resolution that, "Regarding PPG’s argument that it was 'impossible' for it to file a system YA 2018 RA, PPG did not provide sufficient credible contemporaneous evidence."

"PPG failed to present third party corroborating documentary evidence, failed to present third party corroborating testimony, and failed to present a cogent analysis as to why in 2018 it found circumstances unique in its experience regarding system RA," the PUC said in the resolution denying the appeal

"PPG did not provide any evidence of any existential or any other sort of consequential negative impact upon its corporate viability due to the imposition of the Citation penalty," the PUC said in the resolution denying the appeal

The PUC in the resolution affirmed the Citation and the Citation’s $100,709.20 penalty amount.

Resolution ALJ-356.

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