2014-2024 Long-Term Procurement Planning
Phase 2: Bundled Procurement Plans  

Background  

As part of its 2014 Long-Term Procurement Planning (LTPP) Rulemaking, the CPUC determined that two issues, the utilities' procurement plans and changes to procurement rules, would be examined in a second phase of the 2014 LTPP. On May 6, 2014 the CPUC issued a Scoping Memo and Ruling for Phase 2 directing the utilities to use the Trajectory Scenario and Assumptions from the CPUC’s February 27, 2014 Ruling in their individual procurement plans to ensure that the utilities’ plans can be more easily compared to one another. 

Phase 2 will also consist of a review of the utilities’ procurement plans for their bundled customers (i.e., those customers who receive electricity service from the primary utility serving a given local area), including:  

  • Minimum and maximum limits on utility forward purchasing of energy, capacity, fuel and hedges 
  • Products that the utilities can purchase 
  • Rules that, if followed, would exempt utilities from reasonableness review 
  • An integrated plan to comply with state policies, including the loading order. 

On October 3, 2014, the utilities submitted their individual draft Procurement Plans, presenting proposed updates and modifications to their existing plans.
The utilities requested authority to:
 

  • Edison  
    •  Enter into transactions with Eligible Renewable Resources for terms of less than five years. 
    • Update its ratable rates and position limits. 
    • Change its Customer Risk Tolerance (CRT) calculation methodology. 
    • Add Resource Adequacy Sales to the list of non-standard product. 
    • Use brokered transactions for greenhouse gas (GHG) compliance products. 
    • Streamline certain processes.  

 

  • PG&E 
    • Add electric energy, natural gas, and GHG compliance instrument procurement limits. 
    • Address scheduling and bidding practices in the California Independent System Operator (CAISO) markets. 
    • Change its electric portfolio hedging plan to reduce complexity, clarify compliance obligations, and address additional price exposure. 
    • Change its nuclear fuel procurement plan given the substantial changes in the worldwide nuclear fuel market.  

 

  • SDG&E did not have any changes or modifications to its current plan. 

 

CPUC Proposed Decision

On September 22, 2015, the CPUC issued its Proposed Decision, which:   

  • Declines to adopt Edison’s proposal to change the Consumer Risk Tolerance (CRT).  
  • Declines to adopt ORA’s proposal for an independent review of the utilities’ hedging plans.  
  • Adopts ORA’s proposal to develop a process for the utilities to report non-compliant transactions.  
  • Adopts PG&E’s load departure assumptions for Community Choice Aggregators (CCA), included in PG&E’s Alternative Trajectory Scenario Case -  but declines to adopt its distributed generation assumption. 
  • Requests that Edison also modify its Trajectory Scenario Case to account for departing load from the Lancaster CCA. 
  • Rejects ORA’s proposal to incorporate Demand Response with an economic trigger into Least-Cost Dispatch. 

 

ORA Position

ORA reviewed the utilities’ Procurement Plans to ensure compliance with CPUC decisions, procurement mandates, and to verify whether the proposed modifications were in the best interest of ratepayers.
ORA recommended that the CPUC should:
 
 

  • Develop utility reporting requirements for non-compliant transactions in order to establish a clear process for notifying the CPUC of any such transactions.  
  • Establish an independent expert review of the utilities’ hedging plans to enhance regulatory oversight and provide guidance to the utilities.  
  • Consider that Demand Response be incorporated into Least Cost Dispatch.  
  • Require PG&E to use the CPUC’s mandated Trajectory Scenario for its 10-year load forecast instead the proposed Alternative Scenario because the assumptions used in PG&E’s Alternative Scenario are too speculative at this time to warrant an endorsement of this scenario the 2014 LTPP.   
  • Reject Edison’s proposal to modify the Consumer Risk Tolerance (CRT) because Edison’s rationale for lowering the CRT does not establish any clear benefits for ratepayers.  
  • Reject Edison’s hedging proposal for failure to comply with the Public Utilities Code which requires a utilities’ procurement plan to include “the electric corporation’s risk management policy, strategy and practices…” as the proposal does not provide sufficient information for the CPUC to assess its reasonableness. 
  • Defer consideration of Edison’s proposal to streamline approval of short-term Renewable Portfolio Standard contracts until after the adoption of the pending  Proposed Decision in the Renewables Portfolio Standard proceeding.  
  • Require SDG&E to correct its double counting of Demand Response programs.  

ORA expects to file Comments on the Proposed Decision on October 12, 2015.  

See ORA’s November 4, 2014 Opening Comments on the utilities’ bundled procurement plans.  

See ORA’s November 20, 2014 Reply Comments in response to parties’ opening comment on the utilities’ bundled procurement plans.  

 

Proceeding Status  

See the Proceeding docket. 

 

Resources

ORA Long-Term Procurement Planning Portal and 2014 LTPP Phase 1 

CPUC 2014 LTPP Webpage