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CPUC Avoided Cost Workshop

CPUC Avoided Cost Workshop. Reliability Multiplier. Objectives. To produce a 20-year forecast of avoidable ancillary service costs Why not include an adder for reliability of firm load service? Short-run avoided cost methodology assumes surplus

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CPUC Avoided Cost Workshop

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  1. CPUC Avoided Cost Workshop Reliability Multiplier

  2. Objectives • To produce a 20-year forecast of avoidable ancillary service costs • Why not include an adder for reliability of firm load service? • Short-run avoided cost methodology assumes surplus • Long-run methodology assumes equilibrium condition • Why not include adder for planning reserve requirement? • E3 methodology already results in 15-19% margin (8% planned and unplanned outage rate, 7-10% capacity for ancillary services)

  3. Do efficiency programs reduce A/S costs? • Quantities of A/S supplied to CA-ISO vary by hour of day • In lieu of sophisticated modeling, we can conclude that efficiency programs do result in avoided incremental A/S purchases • May see additional effect through reduced prices

  4. Historical Ancillary Service prices • Price range before and after crisis period: • $5-20 per MWh of A/S supplied to ISO • $0.50 - $2.00 per MWh of load • 1% - 5% of total energy costs

  5. Ancillary Services (A/S) Costs • Average of A/S costs as percent of total energy costs, during non-crisis period (8/99-5/00, 8/01-7/03): 2.84% • Apply 2.84% to shaped hourly energy price • 2004: 2.84% * $45.57/MWh = $1.29/MWh of load • 2005: 2.84% * $46.65/MWh = $1.32/MWh of load • 2013: 2.84% * $60.00/MWh = $1.70/MWh of load

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