Please provide a summary of your organization’s comments on the Interconnection Process Enhancements 2021 - Phase 1 draft tariff language:
Advanced Energy Economy and the Advanced Energy Buyers Group 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. 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.”
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.
 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.
 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.
 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.
 Tariff Language at 8.9.2. (emphasis added).