Calif. Draft Would End Mandate to Use Energy Auction to Allocate Capacity Costs to Choice Customers, Clarify Exclusion of Forecast Direct Access Load from Procurement Plans

A California proposed decision would clarify how utilities are to exclude forecast direct access and community choice aggregation load from their procurement plans for bundled service customers.

The draft order would give guidance to clarify the investor-owned utilities' (IOUs) obligations with regard to forecasting departing load as part of the bundled forecast.

"It is possible that there is a difference between the IOU’s calculation of departing load and other objective measures of departing load, even after our decision in D.12-01-033. We require the IOUs, with information provided by the CEC and from other sources, to estimate reasonable levels of expected DA and CCA departing load over the 10-year term of the bundled plans. For CCAs specifically, the Commission has adopted an Open Season and Binding Notice of Intent (BNI) process to trigger the exclusion of potential CCA load from IOU bundled procurement. Once a CCA has submitted a BNI, its customers are no longer responsible for utility bundled procurement costs incurred after that date," the draft would clarify.

"The IOUs should exclude this forecasted departing load from their future procurement activities, and only procure for the assumed amounts of retained bundled load. Having been excluded from the bundled portfolio planning scenarios, the forecasted departing DA and CCA load would not be subject to non-bypassable charges for any incremental stranded procurement costs incurred by the IOUs for the period after the date of departure assumed in their approved bundled plans," the draft would hold.

The draft order would also terminate the requirement that energy auctions must be used to net capacity costs for facilities subject to the Cost Allocation Mechanism. Instead, the utilities shall use the mechanism adopted in Decision 07-09-044, known as the "Joint Parties’ Proposal," to set the residual capacity costs that would be allocated to benefitting customers.

A utility may still voluntarily decide to conduct an energy auction if it so prefers, the draft states.

The Cost Allocation Mechanism allows the costs and benefits of new generation to be shared by all benefiting customers in an IOU’s service territory, even those not taking supply from the utility.

"[W]e remove the requirement for an energy auction as a tool to net capacity costs for CAM facilities, and instead allow all utilities to utilize the mechanism adopted in the JPP to set the residual capacity costs that would be allocated to benefitting customers unless the utility prefers to conduct an energy auction for a particular resource," the draft states

See the Appendix to Decision 07-09-044 (click here) for discussion of the Joint Parties’ Proposal