1.
Please provide your organization’s comments on Section 3.1 of the revised final proposal: Allowing Operational Energy Only Projects to Seek Deliverability.
LSA has no objection generally to the Revised Final Proposal framework allowing all Energy Only projects to seek a new TPD Allocation through either the PPA Group (with a qualifying executed PPA) or the Conditional Group (without such a PPA), or excluding non-LSE PPAs from qualifying for the PPA Group. The benefits of allowing EO projects (including pre-Cluster 15 projects) to qualify for the PPA Group would balance the disadvantages of placing those without PPAs in the Conditional Group (i.e., last in line for TPD Allocations, given the priority of FCDS/PCDS projects within that group).
However, LSA still strongly objects to the CAISO’s proposal with respect to TPD transfers, especially for pre-Cluster 15 projects, for three main reasons:
- The CAISO did not clarify that any of the TPD-related proposals for “operational EO projects” applied to pre-C15 projects until very late in the process.
- The CAISO did not propose some of the TPD transfer restrictions (for transfers to operational EO projects) until the Limited Revisions to the Final Proposal.
- The proposed restrictions are not justified on their merits.
This initiative began with a discussion about whether C15+ EO projects could acquire TPD Allocations after they reach COD, and the early initiative documents were very clearly limited to that question. Somewhere, along the way in the CAISO’s mind, it became a discussion of all “operational Energy Only projects,” including pre-C15 projects, but it’s not clear when that transition occurred.
Below is the history of the CAISO pronouncements on this topic (underline added to the excerpts, and LSA comments in italics).
Straw Proposal (p. 14): No changes to existing C15+ policy that EO projects cannot acquire deliverability through TPD Allocation or transfer. No mention of any policy changes for pre-C15 projects.
Draft Final Proposal (p.17)
The ISO proposes to allow Energy Only projects in cluster 15 and later that have completed the interconnection process and are in commercial operation to seek TPD in the Commercial Operation allocation group developed in IPE 2023 track 3 and approved by the ISO Board of Governors.
Energy Only projects (and Energy Only capacity of a PCDS project) in commercial operation will only be eligible to seek an allocation of TPD in the Commercial Operation allocation group.
Any TPD that is allocated through the Commercial Operation allocation group cannot be transferred….
This proposal version began with an explicit focus on C15+ projects, and there was no indication that the applicability included pre-C15 projects. There was no mention of any limitations on TPD transfers to projects in the Commercial Operation Group.
Draft Final Proposal meeting presentation (Slide 11)
- Proposal: Allow Energy Only projects in cluster 15 and later that are in commercial operation to seek TPD in the Commercial Operation allocation group developed in IPE 2023 track 3.
- Projects will be required to demonstrate having a procurement agreement with an LSE that has a resource adequacy obligation and that requires the project to seek TPD and procures the project’s RA capacity for five or more years.
- These requirements apply equally to all projects seeking an allocation in the Commercial Operation group, regardless of cluster they are in.
Again, the language started with a clear statement that the proposal applies to C15+ projects, and the focus here is on PPA requirements. Given the ambiguity in the third statement, LSA requested clarification about whether the PPA requirement applied to pre-C15 projects, given the third statement. We also requested clarification about TPD transfers, since there was still no mention of them.
Final Proposal (p.xx)
Energy Only projects (and Energy Only capacity of a PCDS project) in commercial operation will only be eligible to seek an allocation of TPD in the Commercial Operation allocation group. As stated above, to be eligible to seek TPD, all Energy Only projects will be required to demonstrate having a procurement agreement that requires the project or Energy Only capacity to seek TPD, and procures its RA eligible capacity for five or more years, including cluster 14 and earlier projects beginning with the 2028 TPD allocation cycle. Cluster 14 and earlier Energy Only projects will not be required to demonstrate such an agreement to qualify for the Commercial Operation group in the 2027 TPD allocation cycle.
Any TPD that is allocated through the Commercial Operation allocation group cannot be transferred to a project in the interconnection queue but can be transferred to another project in commercial operation. In addition, the ISO includes the clarification that allocations obtained through the Conditional allocation group are not transferable.
This was the first explicit mention that changes apply to pre-C15 projects, but only with respect to PPA requirements. Again, there was no mention of TPD transfers to Commercial Operation Group projects, for projects in any cluster, and LSA again requested clarification on this point.
Revised Final Proposal meeting presentation (Feb.9) (Slide XX): “No changes to the transferability of TPD from Final Proposal.”
See above.
Limited Revisions to the Final Proposal (p.8)
Energy Only capacity within an operational project cannot receive TPD via a transfer from a queued (non-operational) project.
This was the first indication that there would be any restrictions of TPD transfers to operational EO projects, and the CAISO clarified only at the March 2nd stakeholder meeting that this provision would apply to pre-C15 projects.
In summary, there was no written statement about any limitations on TPD transfers to projects in Commercial Operation until the Limited Revisions to the Final Proposal, and even that mention was unclear. LSA has been requesting clarification of the CAISO policy for TPD transfers to operational C15+ projects throughout this initiative, but the CAISO response has been ambiguous at best.
In addition to the very problematic process issues, LSA maintains that this TPD transfer policy is both unfair and illogical. The CAISO’s justification in the Limited Revision is that:
These limitations will ensure projects do not acquire TPD for the purpose of transferring it to projects that otherwise would not have received an allocation. They also ensure that transfers cannot be used to prolong a TPD reservation staying in queue, depriving ratepayers of the benefit of the transmission capacity.
This discussion implies that a project in queue (including a pre-C15 project) would somehow scheme to acquire a TPD Allocation (for which it mostly would have had to provide some project-specific development milestones, like a GIA (and monthly payments) and a PPA) solely for the purpose of holding it for a later project that does not yet exist, because it thinks the later, non-existent project will not qualify for an allocation on its own. This is a highly improbable scenario.
Projects remaining in the queue with TPD Allocations must meet increasingly stringent requirements, including Commercial Viability Criteria. Compliance is costly and difficult, and it is highly unlikely that developers will incur such expenses and obligations (e.g., monthly GIA payments, land-control costs, PPA obligations, permitting expenses) just to save a TPD Allocation for a speculative later-queued project.
Moreover, if a non-operational project transfers its TPD Allocation to an operational, later-queued project, ratepayers would receive the deliverability benefits of that allocation right away (or as soon as any required upgrades are complete), instead of waiting until the non-operational project becomes operational.
Sometimes things happen (permitting, etc) to make an earlier-queued project less viable than a later-queued project in the same area (probably the reason that the later-queued project was able to reach COD earlier), and it makes sense to recognize that through a TPD transfer and withdrawal of the earlier project.
Finally, the CAISO has not justified placing even more restrictions on pre-C15 EO projects. The CAISO has already greatly restricted pre-C15 EO projects in their deliverability-related activities, i.e., before, they could request pre-COD TPD Allocations in the annual process without limits, transfer TPD and receive TPD transfers before and after COD, and request post-COD allocations ahead of projects coming off the study process without PPAs.
They now must wait until COD to request an allocation, and now the CAISO is proposing (in the very last part of this initiative, without due consideration with stakeholders) to restrict their ability to make and accept TPD transfers.
Instead, the CAISO should allow all operational EO projects (or at least pre-C15 projects) to at least accept TPD transfers from any other projects, operational or not.
3.
Please provide any additional comments on the Limited Revisions to Final Proposal or March 2 meeting discussion.
