1.
Please provide a summary of your organization’s comments on the draft tariff language:
PG&E appreciates the CAISO’s efforts to provide redlined draft tariff language for stakeholder review and input in this initiative. PG&E offers the following comments and proposed edits as they relate to the redlined tariff language attached. PG&E recognizes that the CAISO is “working...to develop the pro forma language” for a CPE Agreement (Draft Final Proposal, p. 10) and notes that its comments are subject to PG&E’s review of the CPE pro forma agreement once such agreement is available to stakeholders for comment.
Section 4:
In Section 4.5.2.3, the CAISO proposes additional language as follows: “[e]ach Scheduling Coordinator representing a CPE shall within ten (10) days of a request by the CAISO provide the CAISO with a list of the Load Serving Entities whose RA Capacity procurement obligations have been allocated by a Local Regulatory Authority to the CPE.”
PG&E asks for clarification on both the reasoning for adding this reporting obligation for the CPE and whether this is a continuing obligation that the SC of the CPE will be held to throughout its relationship with the CAISO. As a general matter, PG&E may not know exactly which LSEs it is procuring local RA resources on behalf of, as this is within the jurisdiction of the LRA. Accordingly, this reporting relationship may be more suited between CAISO and the LRA.
PG&E believes that the newly proposed language in Section 4.18 outlining the relationship between the CAISO and the CPEs does not accurately depict the role of the CPEs as contemplated under the CPUC Decision (D.) 20-06-002 and recommends that the CAISO edit the language to remove or clarify the limitation on the SC of the CPE’s ability to submit Bids into the CAISO Markets.
In D.20-06-002, PG&E and SCE were identified to serve as the CPEs for their distribution service territories to procure local RA on behalf of the LSEs in their respective TAC areas. (See D.20-06-022). Along with that procurement authority, the CPUC required the CPE to “include dispatch rights, or other means that stipulate how local resources bid into the energy markets, in its solicitation as an optional term that bidders are encouraged to include.” (D.20-06-002, OP 8(e), p. 94). The CPUC also stated that they “strongly encourage the CPE to procure dispatch rights along with the RA capacity, whenever doing so is in the financial interest of all ratepayers…” (D.20-06-002, p. 49).
As such, PG&E believes that the role of the Scheduling Coordinator of the CPE as it has been outlined in the proposed draft tariff language should be clarified to align with the procurement authority that the CPE has under D.20-06-002.
PG&E also has concerns that Section 4.18.1, when coupled with the new definition of Central Procurement Entity in Appendix A, would unintentionally bind an entity who is the SC of both a CPE and LSE to the limitations and obligations that apply to the SC of a CPE. As written, this would result in an entity who is the SC of both the CPE and LSE not being able to submit Bids into the CAISO Markets on behalf of the LSE it represents, which is untenable. While it is clear that distinct SCID Codes would be needed for operations of an SC who represents both a CPE and LSE, the CAISO should provide clear direction on the separate functions that a shared SC that represents both a CPE and an LSE would be able to engage in and to what extent that SC would be bound in its representation of both.
PG&E reiterates that clarification is needed as to the reasoning behind the CPE applicant providing a list of the LSEs whose RA capacity obligations have been allocated to it. PG&E believes that it is more appropriate for the LRA to provide this information to the CAISO given that the LRA provides the RA allocations to its LSEs and the CPE as well as allocates out any related credits.
Similar to the clarification needed in Section 4.5.2.3 and Section 4.18.2.1(b), PG&E requests clarification on whether this ongoing obligation as suggested by the title of this section refers specifically and is limited to an ongoing obligation during the application process only and concludes upon acceptance or rejection of the application.
If Section 4.18.3 relates to an ongoing obligation outside of the application process and survives throughout the relationship of the SC of the CPE with the CAISO, PG&E suggests that the timing be edited to conform to the timing requirement in Section 4.5.2.3 for consistency.
Section 40
The CAISO’s draft tariff language in Section 40.3.2(d) proposes a new process for the assignment of any bundled system and flexible attributes of resources procured by a CPE. The CAISO’s draft tariff language states that “The Local Regulatory Authority may decline to provide such assignment, in which case the system and flexible attributes of the resources will remain with the CPE.”
PG&E is concerned that the CAISO’s proposal risks stranding significant MWs of system and flexible attributes if there is no default allocation of these attributes back to the individual LSEs. In the attached redlined version of the tariff language, PG&E proposes tariff edits to allow for system and flexible attributes to be allocated to individual LSEs based on a default formula, if the assignment has not been determined by LRA.
Section 43A:
- Section 43A.8.1 and Section 43A.8.2
PG&E disagrees with the edits proposed by the CAISO regarding Sections 43A.8.1 and 43A.8.2 as it relates to the cost allocation of CPM Capacity Payments due to individual local RA deficiencies in annual or monthly RA plans. The CAISO proposes language that allocates costs pro rata to SCs of an LSE or a CPE that hold the local RA obligation within the TAC area where CPM designations occurred. PG&E believes that these edits appear to violate the cost causation principle under the current hybrid framework and are premature given the ongoing CPUC proceeding that has taken up proposals to the self-shown resource aspect of the hybrid procurement framework that was adopted for the CPE.
Within that CPUC proceeding, the CAISO has submitted its own proposal where the local RA obligation for self-shown resources is allocated back to the LSE of those resources in order to resolve the cost causation issue that arises with CPM cost allocation following the local RA obligation at the CAISO. However, if that proposal is not adopted, the draft tariff language as proposed would result in the CPM Capacity Payment costs caused exclusively by the non-performance of an LSE who self-showed a resource to the CPE being allocated fully to the CPE and then socialized to all LSEs/customers benefitting from CPE procurement.
A CAISO cost allocation rule that appears fair on its face may still be contrary to law if it results in unfair cost allocation in practice. If the CPM costs incurred due to an individual deficiency associated with a non-performing showing LSE are socialized to all benefitting LSEs/customers, then CAISO’s proposal appears to violate the cost causation principle. LSEs commit to show under the hybrid framework in order to benefit from retaining the system and flex attributes (and reduce the total CPE costs incurred). If the LSEs do not, or a single LSE does not, end up performing, then the non-performing LSE still gets to retain the system and flex attribute benefits (which it can use for various purposes, including, for example, substitution), and should bear/be allocated the costs associated with its non-performance (in this case, the CPM costs).
With regards to CAISO’s response to PG&E’s proposal to allocate CPM costs based on an LRA methodology, to the extent that CAISO objects to the LRA’s ability to assign CPM costs in a way that does not align with cost causation, PG&E agrees that such an allocation would not be permissible. As such, PG&E suggests that the CAISO specify that the LRA must assign costs in a manner that aligns with cost causation and, specifically, in the event that a showing LSE does not perform its showing obligations, the LRA must assign the individual CPM costs incurred due to that LSE’s non-performance, if any, to that non-performing showing LSE.
Appendix A:
- Central Procurement Entity Definition
PG&E believes clarification on the use of “entity” at the beginning of the definition is needed given that the CPE is a group within PG&E and therefore operates as the same legal and financial entity as other groups within PG&E that may have an established and defined relationship with the CAISO. Defining the CPE within PG&E as an entity with strict limitations on the functions it is limited to in the CPE Agreement pro forma, would bind PG&E as a whole from operating outside of those functions. Therefore, PG&E believes further clarification is needed. ?
Appendix B:
- Appendix B.23: Central Procurement Entity Agreement
PG&E seeks clarity on the process for reviewing and adopting the pro forma agreement for the CPE that the CAISO intends to use and asks the CAISO to provide a copy of the pro forma to stakeholders for review and comment through this stakeholder process prior to being adopted by the CAISO.
