Update: Commissioner Peterman’s Alternative Proposed Decision on the PCIA



Tuesday afternoon, Assigned Commissioner Carla Peterman issued her alternative proposed decision on Modifying the Power Charge Indifference Adjustment (PCIA) Methodology.  This update follows my previous post on ALJ Roscow’s proposed decision from August 1, 2018.

The attached Digest of Differences on p. 2 of the alternative proposed decision (APD) states that the proposed decision (PD) excludes legacy utility-owned generation(UOG) from cost recovery from Community Choice Aggregators (CCAs) and retains a 10-year limit on PCIA cost recovery for post-2002 UOG and certain storage costs.  The PD also establishes a PCIA collar with an upper cap starting at 2.2 cents/kWh and a lower floor of 0 cents/kWh. The digest states that the APD differs substantively from the PD in four ways:

  • The APD finds that UOG is PCIA eligible and should be recovered from CCA customers.
  • The APD terminated the 10-year limit on PCIA cost recovery for post-2002 UOG and certain storage costs.
  • The APD establishes a PCIA collar starting in 2020 with a cap limiting upward or downward changes in the PCIA to 25% in either direction from the prior year.
  • For the 2019 ERRA forecast only, the APD adopts the Platt’s Portfolio Content Category 1 REC index value for the Market Price Benchmark’s (MPB) RPS Adder (see Appendix 1).

The digests state that “In all other ways, the alternative matches the outcome of the proposed decision.”  The following will address these changes.

Alternative proposed decisions are defined under Article 14.1 of the CPUC’s Rules of Practice and Procedure as substantive revision by a Commissioner to a proposed decision or draft resolution not proposed by that Commissioner that either:

  • Materially changes the resolution of a contested issue; or
  • Makes any substantive addition to the findings of fact, conclusions of law, or ordering paragraphs.

The APD edits the PD to reframe certain statements regarding the CPUC’s role and relationship to the parties.  This is particularly true in the changes made that relate to CCAs (see p. 25-28 of the APD).  Substantive changes to finding of fact, conclusion of law, and ordering paragraphs can be found below (see p. 100-108 of the APD):

Pre-2002 UOG (p. 103, Statement of Law Paragraph 10.-12.) This statement of law is based on legal and statutory interpretation analysis found on p. 47-48 of the APD.  The APD makes this finding based on an argument that this legal interpretation makes AB 117 and SB 350 consistent without violating principles of statutory interpretation or making statutory language ineffective.  The APD argues that this is necessary to ensure cost-indifference without violating statutory intent.

10-year Limitation on Recovery of Post-2002 UOG Costs and PCIA-eligible Storage (p. 104, Statement of Law Paragraph 13.-14.) The ADP addresses this statement on p. 48-52.  The ADP argues that the 10-year limit on cost recovery of post-2002 UOG unfairly burdens bundled customers by placing cost recovery solely on bundled customers upon expiration of the 10-year period.  The ADP did not find justification for the argument that IOUs mismanaged their portfolio by not accurately forecasting departed load. It restated current planning and procurement proceeding requirements that forecasts for departed load based on available information and seeks to limit procurement where departing load is forecast. The ADP also found a need to revise the assumptions made during the post-crisis period to ensure that uneconomic stranded costs are equitably allocated among customers for whom those costs were incurred.  The ADP concludes that there is no justification to continue a 10-year limit on recovering costs for post-2002 UOG from departing load.  The ADP finds that post-2002 UOG should not be treated differently than post-2002 PPAs or pre-2002 UOG that do not use a 10-year limit.

Additionally, Statement of Law Paragraph 14. of the ADP states that PCIA-eligible energy storage resources will be treated the same as other resources in the IOU portfolio and not be subject to a 10-year limitation on recovery.  This changes the PD’s statutory finding that the 10-year limitation on cost recovery for energy storage resources adopted in D. 14-10-045 does not violate Public Utilities Code Sections 365.2, 366.2, and 366.3.  It also finds that this APD resolves issues left unresolved in D.14-10-045 by treating energy storage the same as other IOU portfolio resources and omitting energy storage from the 10-year limitation on recovery, ensuring indifference.

Collar, Floor, & Cap (p. 107, Ordering Paragraph 6. a.- b.)  The ADP set a PCIA collar at 75% of the prior year’s PCIA starting in forecast year 2020 as opposed to zero for the PD.  The ADP changes the cap level of the PCIA collar to 125% of the prior year’s PCIA from the PD’s 2.2. cents per kWh for its initial cap and eliminates the annual change difference found in the PD’s Ordering Paragraph 6. c. without providing a different explanation than that found in the original PD (see ADP p. 67-70 compared to PD p. 81-85).

RPS Adder MPB Forecast (p. 105, Ordering Paragraph 1. b.)  The ADP orders that, for the 2019 RPS Adder only, the Energy Division shall use the PCC 1 REC index value or California Bundled REC (Bucket 1) mid value as of November 1, 2018.  The ADP finds this method preferable for timely implementation because it is an interim method and subject to the short remaining time period to calculate the 2019 ERRA forecast in light of the administrative burden of collecting RPS contract data. The ADP also notes that there are issues with relying on Platts’ index for a final market value for PCC 1 resources (see ADP p. 94) beyond the 2019 forecast. This does not change the overall reasoning or conclusion for valuing the RPS Adder after the 2019 ERRA forecast.

The ADP also omits the PD’s Finding of Fact Paragraphs 8., 15., 16., and 17.

Parties have 20 days to file comments and 5 days after that to file reply comments on the ADP. This time frame places reply comments within the 10-day agenda notice period for the September 13, 2018 CPUC Business Meeting that will notice whether the PD and APD will be on the agenda.

About Joe Kaatz

Staff Attorney at the Energy Policy Initiatives Center, University of San Diego School of Law.
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1 Response to Update: Commissioner Peterman’s Alternative Proposed Decision on the PCIA

  1. Pingback: CPUC Unanimously Approves Peterman’s Revised PCIA Alternative Decision | The EPIC Energy Blog

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