Comments on Draft tariff language

1. Please provide a summary of your organization’s comments on the Interconnection Process Enhancements 2021 - Phase 1 draft tariff language:

 Advanced Energy Economy[1] and the Advanced Energy Buyers Group[2] appreciate the opportunity to provide input in response to CAISO’s “Draft tariff language - Interconnection Process Enhancements 2021.” AEE and AEBG appreciate CAISO’s willingness to consider feedback on the important issue of Transmission Plan Deliverability (TPD) allocation, and we acknowledge that the proposal has improved incrementally since the issuance of the Draft Final Proposal.[3] Unfortunately, the proposed tariff redlines continue to put voluntary renewable energy buyers at a disadvantage relative to load serving entities (LSEs) when seeking power purchase agreements (PPAs) with renewable energy projects delivering clean energy and capacity to California. This dynamic will harm California’s growing voluntary renewable energy market at a time when CAISO is poised to play an even greater role across the Western U.S. with the rollout of the Extended Day-Ahead Market. The voluntary market can and should play an important role in bringing online new renewable energy capacity in California and across the West; CAISO’s unnecessary and unexplained preference for projects with LSE offtakers will hamper the growth of this market with no benefit to consumers or to grid reliability.

Specifically, the tariff language continues to put voluntary renewable energy buyers at a disadvantage relative to offtakers that have a Resource Adequacy (RA) obligation (i.e., LSEs) when seeking renewable energy to meet their voluntary goals by prioritizing TPD allocation to projects with power purchase agreements and stating that, for these purposes, all power purchase agreements must be with an LSE procuring the capacity to meet its RA obligation. CAISO has included a provision to allow projects with non-LSE offtakers to be treated the same for purposes of TPD allocation, but such projects must meet the following requirements:

“Interconnection Customers with power purchase agreements with counterparties that are not Load Serving Entities procuring the capacity to meet their Resource Adequacy obligations may attest to having a power purchase agreement only if the counterparty can demonstrate the same capacity is under contract with a Load Serving Entity procuring the capacity to meet its Resource Adequacy obligation for a term of three (3) years or more and pursuant to a regulatory requirement. Without limitation, financial incentives, the intent to sell Resource Adequacy Capacity later, or being shortlisted with a Load Serving Entity to provide Resource Adequacy Capacity do not meet this requirement.”[4]

While AEE and AEBG appreciate CAISO’s consideration of our prior feedback with respect to TPD allocation and we recognize that the requirements above have improved incrementally since the Draft Final Proposal, we find that the tariff language still falls short of providing a viable pathway for projects with non-LSE offtakers to receive TPD allocation.

First and foremost, we maintain that the inclusion of any special requirement that applies only to non-LSE offtakers is both unequal and unnecessary; unequal because it places an extra requirement on projects with non-LSE offtakers, and unnecessary because non-LSE offtakers have a clear financial incentive to ensure that the RA of a project they have contracted with is ultimately utilized by an entity with an RA obligation. As we explained in our initial comments, the requirements on LSEs to meet their RA obligations already create a clear and strong demand for RA, which makes it financially irrational for a PPA offtaker that does not have its own RA obligation to do anything other than ensure that the RA of its project(s) is used by a party that does. Such an offtaker may do so in a variety of different ways: some corporate offtakers may use the RA value of the project they have under contract to offset the RA obligation of their LSE through a direct access arrangement; other corporate offtakers might simply sell the capacity to an LSE in a typical RA transaction. Just as financial incentives are trusted to dictate most other decisions and actions by CAISO market participants, so too should they be sufficient here to ensure optimal use of all available RA.

Our conviction that there is no need or justification to place restrictions on projects with PPAs with non-LSE offtakers notwithstanding, we also note that the specific structure of the restrictions CAISO proposes to place on such projects will be difficult, if not impossible, to navigate, and will put LSEs in the position of being able to block TPD allocation to projects with non-LSE offtakers. As AEE and AEBG noted in our prior comments, placing an upfront requirement prior to TPD allocation on a project to demonstrate that its capacity is under contract with an LSE and requiring that such a contract must span multiple years is incompatible with the structure and timeline of voluntary PPAs and the RA market. Making such a demonstration would require non-LSE offtakers to enter into RA arrangements with LSEs far in advance of a project’s in-service date, and would dictate a contract structure and term that is not compatible with the liquid nature of the RA market; shortening this requirement from five years to three years does not resolve this fundamental disconnect. As a result, a non-LSE offtaker’s success in receiving TPD allocation for its project(s) would hinge upon an LSE’s willingness to take on additional risk in the form of purchasing RA on an earlier timeframe and for a longer contract period than is typical.

We ask that this preference for projects with LSE offtakers be eliminated. Because voluntary buyers have a clear financial incentive to ensure that the RA value of the projects with which they enter into PPAs is utilized, putting such projects on equal footing will not harm reliability nor misuse ratepayer investments in transmission capacity. Rather, doing so will allow the voluntary renewable energy market to grow in California and help to accelerate the state’s transition to a decarbonized electricity system. While we strongly maintain that projects with non-LSE offtakers should not have any additional requirements placed on them in order to receive TPD allocation, should CAISO adopt such requirements, it must avoid putting projects with non-LSE offtakers at a disadvantage. This requires developing a clear, flexible, and fair process for non-LSE offtakers to develop projects that are eligible for TPD allocation if the party ensures that the RA will be made available to an entity with an RA obligation. Such a process should take into account the practical constraints and timelines of the RA market and voluntary PPAs and must avoid putting PPAs with entities that do not have an RA obligation at a disadvantage with respect to TPD allocation.

[1] Advanced Energy Economy (AEE) is a national association of businesses that are making the energy we use secure, clean, and affordable. It works to accelerate the move to 100% clean energy and electrified transportation in the U.S. Advanced energy encompasses a broad range of products and services that constitute the best available technologies for meeting energy needs today and tomorrow. These include energy efficiency, demand response, energy storage, solar, wind, hydro, nuclear, electric vehicles, biofuels and smart grid. AEE represents more than 100 companies in the $238 billion U.S. advanced energy industry, which employs 3.2 million U.S. workers.

[2] The Advanced Energy Buyers Group (AEBG) represents the views of a coalition of large electricity customers, with member companies spanning the retail, manufacturing, and technology sectors. These companies are among the 76% of Fortune 100 companies and 60% of Fortune 500 companies that have established renewable and/or climate targets as part of our corporate sustainability commitments. AEBG members share a common interest in expanding our use of advanced energy, including renewable energy like wind, solar, geothermal, and hydropower; demand-side resources like energy efficiency, demand response, and energy storage; and onsite generation from solar, advanced natural gas turbines, and fuel cells.

[3] See AEE and AEBG’s previous feedback on TPD allocation, submitted February 15, 2022, and March 31, 2022, available at https://stakeholdercenter.caiso.com/StakeholderInitiatives/Interconnection-process-enhancements-2021#phase1.

[4] Tariff Language at 8.9.2. (emphasis added).

2. Please upload redlined tariff language using the “attachments” field below.

N/A

1. Please provide a summary of your organization’s comments on the Interconnection Process Enhancements 2021 - Phase 1 draft tariff language:

See Attachment 1 - Amazon Comments on Final Proposal 5-5-22

2. Please upload redlined tariff language using the “attachments” field below.

See Attachment 2 - DraftTariffLanguage-InterconnectionProcessEnhancements2021Phase1_marked 5-5-22 - D 05.09.22

1. Please provide a summary of your organization’s comments on the Interconnection Process Enhancements 2021 - Phase 1 draft tariff language:

Golden State Clean Energy (“GSCE”) has provided proposed revisions to the draft tariff language in the attached document. The following calls out our proposed revisions in the attached draft tariff language and provides our comments and explanation of the proposed revisions:

• Appendix DD § 8.9.2 regarding deliverability allocation groups
  • Third paragraph change proposed and reasoning: Struck a sentence in the third paragraph for clarity (see the purple text with strikethrough). We agree with the stakeholder concern raised during the 4/28 meeting that the proposed language creates some confusion regarding the TPD allocation priority for energy only projects (i.e., whether energy only applying to Group A has priority over FCDS applying to Group B, or whether Group A EO has a lower priority than Group D FCDS). CAISO clarified during the meeting that allocations occur in the order of groups A-D, regardless of TPD status, subject to the restriction that energy only cannot trigger a DNU. We propose a simple change to create that clarity.
    • In considering what language to add to better explain the priority of energy only projects within the TPD allocation groups, it seems that sufficient detail to fully explain this may be too involved for this tariff section and that examples would be particularly helpful too but are not suited for the tariff. We suggest taking on a more detailed explanation in the GIDAP BPM, including examples that show how energy only applying to Group A may compete for TPD with an FCDS projects applying to Group B. The tariff language as we propose should sufficiently address the terms and conditions applicable to energy only seeking an allocation of TPD.
  • Fifth paragraph change proposed and reasoning: Removed CAISO’s proposed reference to the “GIDAP” and reverted to the reference to “Section 8.9” (see the purple text with strikethrough and underlining). This reference provides the scope of the PPA eligibility applicability. If the new PPA eligibility criteria for TPD allocation and retention applies to the entire GIDAP, commercial viability criteria (Appendix DD § 6.7.4) and automatic PPA-COD alignment (App. DD §6.7.5) would require a PPA of at least three years in length that is with an entity with an RA obligation. However, CAISO only ever proposed these PPA eligibility requirements in terms of TPD allocations and retention. It is made especially clear that CAISO only proposed to apply the new PPA eligibility criteria to the TPD allocation and retention process when CAISO provided its rationale for imposing new PPA eligibility criteria: “[these new PPA eligibility criteria] are proposed to ensure that the TPD capacity built at transmission ratepayer expense to provide sufficient transmission capacity for the RA requirements and CPUC policy are fully and effectively utilized to the greatest extent possible.” (Final Proposal at 15; see Final Proposal at 7-8). Thus, the new PPA eligibility criteria were only expressly proposed for the TPD allocation process and was supported by the needs of the RA program, which is separate from CAISO’s queue management practice that requires commercial viability to retain TPD past CAISO’s time-in-queue date or the interconnection customer-specific commercial considerations underpinning the ability to automatically align a project’s COD with a PPA and thereby not force a project online before the offtaker has agreed to purchase energy or related products.
    • Moreover, GSCE specifically commented during the initiative that corporate PPAs should be eligible for a TPD allocation and for commercial viability criteria,[1] yet CAISO’s subsequent proposals never addressed GSCE’s comment with respect to commercial viability criteria and CAISO continued to only propose the PPA eligibility be for seeking and retaining TPD.
    • We find applying the PPA requirements to the entire GIDAP as outside the scope of CAISO’s proposal and without stakeholder vetting.
  • Sixth paragraph change proposed and reasoning: Added a sentence to clarify that the PPA minimum term for re-sold RA also does not apply until the 2023-24 allocation cycle (see the underlined text in purple).
• Appendix DD § 8.9.2.3 regarding deliverability allocation Group D restrictions
  • Second paragraph change proposed and reasoning: Added additional scenarios where a project or portion of a project is exempt from Group D restrictions. To make it easier to follow, we also broke this paragraph up into romanettes. The first romanette is CAISO’s existing proposed language.
    • Added the second romanette to specify the policy clarification CAISO provided during the 4/28 meeting (see the underlined text in purple). The Final Proposal (at p. 13) only specifies that Group A and B recipients are exempt from Group D restrictions (including portions thereof), but many differently situated projects with TPD allocations can apply to Group D for additional TPD in the 2022-23 allocation cycle. CAISO confirmed that any project that received TPD through a means other than a Group D allocation should not have that non-Group D allocated portion subject to Group D restrictions. Thus, we proposed an additional sentence to more broadly reference projects with TPD that are applying to Group D.
    • Added the third romanette to avoid an untenable result for FCDS projects that later add storage and are seeking additional TPD via Group D for the storage in the fall of 2022 (see the underlined text in purple). If such a project is not phased, then it doesn’t seem possible for CAISO to apply the Group D restrictions to just the storage addition. And in general, it is not clear how a project that has a portion of its capacity exempt from Group D restrictions would be able to distinguish a restricted portion from an exempt portion if the project is not phased. The better result is to exempt the entire project rather than creating the risk that an entire project must be subject to Group D restrictions when a portion has already received TPD via another allocation group.
      • We focus on storage additions because CAISO should be encouraging storage additions and offering the opportunity for new storage to seek deliverability without subjecting the rest of the project that has deliverability to Group D restrictions.
      • Since we believe it would not be possible to exempt a portion of an unphased project from the Group D restrictions, we propose language carving this circumstance out from the Group D restrictions.

[1] Golden State Clean Energy comment on Issue Paper and Straw Proposal, Jan. 5, 2022 (see our response to question 3 addressing corporate PPAs).

2. Please upload redlined tariff language using the “attachments” field below.

Please see the attached document for proposed revisions to CAISO’s draft tariff language. Revisions were made using purple text and either underlining or strikethrough, and for further clarity all revisions are called out in our response to question 1.

1. Please provide a summary of your organization’s comments on the Interconnection Process Enhancements 2021 - Phase 1 draft tariff language:

LSa appreciates the opportunity to comment on the 2021 IPE Phase 1 draft tariff language.  Our comments consist of: (1) Suggested changes, especially where the proposed tariff language is unclear and/or does not match the CAISO;s Final Proposal; and (2) suggested clarifications and grammatical corrections to improve the quality of the document.

2. Please upload redlined tariff language using the “attachments” field below.

Done

1. Please provide a summary of your organization’s comments on the Interconnection Process Enhancements 2021 - Phase 1 draft tariff language:

Please see attached mark-up.

2. Please upload redlined tariff language using the “attachments” field below.

Please see attached mark-up.