R.09-10-032 & 2010 RA Implementation Workshop

1. R.09-10-032 & 2010 RA Implementation Workshop February 25, 2010

2. Agenda

3. Agenda

4. Objectives • Understand the Phase I proposals, especially revisions and clarifications • Consensus on Phase I issues and revisions • Understand DA PD, its impacts on the RA program, and relation to Phase I issues

5. Agenda

6. EnerNOC’s Position • SCP illogical for direct participation DR • No capacity payment • LI Protocols poor metric for direct participation DR • CAISO (SCP) and CPUC (RA) should agree on DR eligibility

7. EnerNOC Proposal • Applies to all supply side DR • Not DR to deducted from load forecast • Simple performance test relative to baseline

8. PDR Update • Expected to begin May, 2010 • Active issue in R.07-01-041

9. Agenda

10. Proposal in Direct Access Proposed Decision Appendix 3Local True-up for 2010

11. Calculating the Customer Local Obligation

12. October 2010 April 2010 August 31, 2010 May 31, 2010 August 2, 2010 June 30, 2010 July 15, 2010

13. Other elements of the proposal • Next phase in DA reopening will begin January 1, 2011 • Failure to satisfy the CLO through a timely default transfer payment will result in a deficiency in the Local RA obligation to the obligated LSE • Capacity transferred still obligated to RA Must Offer Obligation (MOO)

14. Draft 2010 LPR

15. Semi-Annual Local RA Capacity True-up for 2011 Compliance YearProposal by TURN &Sempra

16. Calculating the Customer Local Obligation

17. August 31, 2010 May 2011 September 2010 February 2011

18. Other elements of the proposal • Nothing less than 5 MW of migration needs to be reported • Aggregation of SP-26 and NP-26 • $40 per kW per year waiver trigger will remain in effect • IOU’s could use monthly or quarterly RFO process to sell their excess local RA • Only one local true-up showing

19. 2011 Semi-Annual Local RA Capacity Reallocation to Account for Load Migration

20. Summer Reallocation May 2011 April 2011 June 2011

21. Post - Summer Reallocation September 2011 August 2011 October 2011

22. Other Elements • Local Areas would be aggregated into SP-26 and NP-26 zones • LSEs with no load migration would not have to make a local true-up showing • LSEs will only have 30 days to procure additional local capacity (if needed)

24. TURN/Sempra Slides

25. What is the Local RA Obligation of a Migrating Customer? 1. Calculate Local-to-Peak Ratio (LPR) for Each IOU Service Territory: LPR = Total Service Territory Local Capacity Requirement (LCR) in MW for Year X + 1 minus forecasted Local DR MW, CAM MW and Condition 2 RMR MW, divided by the CEC forecast of Service Territory Coincident Peak Demand (CPD) in MW for Year X+1. Published by Energy Division in Fall of Year X for each IOU service area. Customer Local Obligation (LCR) Equals LPR times Customer Coincident Peak Load in MW (adjusted for losses??)at Time of Service Territory Peak in Year X. Data Sources: -LCR comes from CPUC June Decision Setting Next Year’s Local Requirements. -Local DR, CAM and C2 RMR MW forecasts from Energy Division or CAISO. -Service Territory CPD forecast from CEC. -Customer CPD at Time of Service Area Peak from LSE’s Billing Records

26. Steps for Managing 2010-2011 Local RA Obligations Per Direct Access PD, Energy Division/CEC will calculate and publish the 2010 LPR for each service territory and post it to the CPUC website in April 2010. On May 31, 2010, LSEs file their monthly load forecasts for August 2010, including the CLO for load that is migrating into or out of their portfolios. CEC/Energy Division to review & approve. On June 30, 2010, LSEs submit their month-ahead System RA compliance filings for August and also demonstrate Local RA procurement or default transfer payments for increased Local RA obligations due to migration. Per Direct Access PD, LSEs Will Submit Revised Load Forecasts for 2011 to CEC by July 15, 2010. This revised forecast should account both for customer migration up to that date, and for expected customer migration during the 2nd Phase of DA re-opening that commences in January of 2011. CEC Reviews Forecasts, Makes Adjustments As Necessary, and Provides “Final” 2011 Forecasts to LSEs by [August 13, 2010??]. On August 2, LSEs file their monthly load forecasts for October 2010, including the CLO for load that is migrating into or out of their portfolios. CEC/Energy Division to review & approve. .

27. Steps for Managing 2010-2011 Local RA Obligations (Cont.) 6. On August 31, LSEs submit their month-ahead System RA compliance filings for October and also demonstrate Local RA procurement or default transfer payments for increased Local RA obligations for October through December 2010 due to further migration since prior Local true-up. 7. Energy Division/CEC will calculate and publish the 2011 LPR for each service territory and post it to the CPUC website in September 2010 (??). 8. LSEs Make Year-Ahead RA Compliance Filings in late October of 2010 for 2011. 9. In late January/early February 2011, LSEs submit Local RA true-up adjustments, including the CLO for load migrating into or out of their portfolios. 10. In early March 2011, LSEs receive approval for Local RA migration adjustments. • In early April 2011, LSEs submit month-ahead compliance filings for May 2011, and also demonstrate Local RA procurement for increased Local RA obligations due to migration. Should default transfer payments for increased Local RA obligations due to load migration be allowed to continue at this point???? • Should there be a second Local RA true-up later in 2011???

28. Agenda

29. Resource Adequacy (RA) WorkshopFebruary 25, 2010R.09-10-032Alternative RA Penalty Proposal Submitted by: AReM, PG&E, SCE, SDG&E

30. Background • Staff submitted proposal 01/11/10 to change existing RA penalty structure • Staff explained at Jan workshop that current rules are unclear and provide no incentive for quick compliance • Joint Parties (JPs) developed this alternative in response

31. Objectives • Adds hard deadlines to RA penalty rules • Provides incentive to respond quickly to any administrative error or identified deficiency • Provides some discretion to Staff to change timelines or penalties if facts warrant

32. Grace Period for Local RA Filing • D.06-06-064 provides ten-day grace period for failing to file Local RA on time • Load-serving entities (LSEs) that fail to file Local RA on time are subject to full deficiency penalty • LSEs that fail to file System RA on time are subject to $1,000 fee • Staff proposed eliminating grace period • JPs recommend retaining grace period

33. Cure Period for Clerical Errors • No defined rule • Energy Division practice is to provide LSEs 5 business days (BDs) to correct errors • JPs propose rule allowing 10 BDs to correct errors without incurring penalty for non-compliance

34. Penalty for Small Procurement Deficiency • Small-MW deficiencies defined in Resolution E-4195 • Current rule applies $1,500/incident charge if LSE cures deficiency within time specified by Staff; if not cured, CPUC may apply “alternate penalties” • Staff proposed applying existing penalty of $1,500/incident, if LSE cures deficiency within 5 BDs and $3,000/incident, if LSE cures after 5 BDs

35. Penalty for Small Procurement Deficiency • JPs propose: • For deficiencies cured within time specified by Staff: • $1,500 for first deficiency in year • $3,000 for second and subsequent deficiencies in a year • For deficiencies not cured within time specified by Staff: • Application of applicable System or Local RA penalty for the deficiency, unless LSE requests and is granted a waiver • Staff must provide at least 10 BDs to cure after notifying LSE of deficiency

36. Penalties for System and Local RA Deficiencies • Current penalties for deficiencies are: • System RA = 3 x $40/kW-yr = $120/kW-yr • Local RA = 1 x $40/kW-yr = $40/kW-yr • Staff proposed: • KW-month charges; lower penalty applies if cured within 5 BDs; Local RA would have the higher penalties • If cured within 5 BDs: • System RA = $3.33/kW-month • Local RA = $5.00/kW-month • If cured after 5 BDs: • System RA = $6.66/kW-month • Local RA = $9.99/kW-month

37. Penalties for System and Local RA Deficiencies • JPs propose: • Lower penalty applies if cured within time specified by Staff; Local RA would have the lower penalties, as it does today • If cured within time specified by Staff: • System RA = $5.00/kW-month • Local RA = $1.70/kW-month • If cured after time specified by Staff, continue current penalties : • System RA = $9.99/kW-month • Local RA = $3.33/kW-month • Staff must provide at least 10 BDs to cure after notifying LSE of deficiency

38. Penalties for Deficiencies for Part of a Month • Not addressed in current rules • Staff proposed a minimum monthly charge • JP proposes: • First month in a year -- LSE pays weekly charge for weeks of the deficiency; minimum 1 week charge • Second or more months in a year -- LSE pays minimum monthly charge • Staff must provide at least 10 BDs to cure after notifying LSE of deficiency (during which time lower penalty applies)

39. Request for Waiver for Local RA • Staff made no proposal • Current rules require LSEs to file waiver request at same time as annual RA compliance filing, which creates uncertainty about whether waiver will be granted • Addition of Local RA True-Ups and direct access re-opening add to need for clarity

40. Request for Waiver for Local RA • JPs propose: • LSEs may request waiver up to 10 days before annual or monthly filing • Energy Division must rule on request on or before filing due date • If denied, LSE has 15 days to procure Local RA, during which no penalty applies • If LSE does not procure, the penalty applies • CPUC should also clarify that satisfaction of the waiver requirements in D.06-06-064 (p. 73) is sufficient to grant the request

41. Agenda