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Southern California Edison (“SCE”) has remaining concerns regarding the possibility that “original build” S-PTO costs could be included in the CAISO’s Transmission Access Charge (“TAC”), and thus be recovered from the customers of CAISO load serving PTOs. As the CAISO reiterates in its Final Proposal, the S-PTO model should not “increase the TRR of the TAC” (however, except with respect to network upgrades, see last paragraph of Page 3).
The CAISO has committed to fully document the original build costs of the S-PTO in the Final Proposal (see Page 9). As SCE has previously commented, the TRR associated with the original build costs should be $0, since subscribers are paying for all original build costs. Accordingly, SCE believes there should be a provision in the tariff language stating that the TRR associated with the original build portion of the S-PTO facilities is required to be $0 for the life of the project as a condition of becoming an S-PTO. There is no defensible way for an S-PTO to justify a WAC based on the CAISO’s proposal. While there may be agreement on original project costs, SCE sees no mechanism on how to agree on 1) what portion of costs have been paid for by the subscribers, 2) in turn, what portion of costs are now expected to be recovered from Non-Subscriber users, and 3) what level of MWh volume of Non-Subscriber users will be assumed for ratemaking. Given the lack of information, it will be trivial, under the CAISO’s proposal, for the S-PTO to develop wheeling rates at or above the CAISO’s WAC. Thus, per the CAISO’s proposal, the S-PTO should be expected to try to recover rates capped at the CAISO’s WAC. This is not a reasonable result. And rather than address this obvious game and eliminate it (per SCE’s recommendation), the CAISO will instead force customers to litigate this at FERC. Again this is not reasonable and SCE opposes this approach.
By requiring the original TRR to be $0 as a condition of being an S-PTO, it not only removes the game noted above, it would eliminate the possibility that sometime in the future there could be ambiguity relating to the original build TRR. SCE urges the CAISO to reconsider this aspect of their proposal.
SCE also continues to believe that network upgrade costs initially funded by the S-PTO should not be refunded to the S-PTO, and thus included in the CAISO’s TAC, unless they are considered and approved as part of the CAISO transmission planning process. The network upgrade costs associated with an S-PTO are a consequence of the S-PTO facility being placed into service, and potentially could be significant. They should be paid for by the subscribers to the S-PTO capacity as part of their subscription costs in order to keep the “no impact to the CAISO TAC” principle fully in effect.
Another avenue whereby the original build costs could affect the TAC is through the proposed implementation of the Wheeling Access Charge (called the “Non-Subscriber Usage Payments” in the tariff language). The Final Proposal would distribute all non-subscriber Wheeling revenues exiting at the S-PTO Scheduling Points to the S-PTO (see page 13), and none to existing PTOs that may own the existing Scheduling Points that are in effect bypassed. The CAISO asserts that the new S-PTO Scheduling Points will generate additional Wheeling revenue (page 13), and so there would be no harm to the existing PTOs due to loss of revenue. However, it is not clear that there would be no impact to the existing PTO Wheeling revenue disbursement to the extent that existing SPs are substitutes for the new S-PTO SPs for market transactions. And to the extent that there is a loss of Wheeling revenue to the existing PTOs, the CAISO’s TAC would be affected (since all such revenues are credited to the TAC through the TRBAA mechanisms). To avoid this potential TAC impact, SCE urges the CAISO to reconsider the option of compensating the S-PTO for non-subscriber use of the facilities through CRRs.