Resolution E4528 DRAFT (Rev 2) September 13 2012 Pacific

resolution e-4528 draft (rev. 2) september 13, 2012 pacific gas and electric al 4069-e/ucd public utilities commission of the state of cal

Resolution E-4528 DRAFT (Rev. 2) September 13, 2012
Pacific Gas and Electric AL 4069-E/ucd
PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
Item # 39
I.D. # 11550
ENERGY DIVISION RESOLUTION E-4528
September 13, 2012
RESOLUTION
Resolution E-4528. Pacific Gas & Electric Company requests extension
of power purchase agreement with Bailey Creek.
PROPOSED OUTCOME: This Resolution approves without modification the
extension of a power purchase agreement with Bailey Creek while Bailey
Creek seeks to obtain a California Independent System Operator
Resource ID.
ESTIMATED COST: The resolution approves the extension of the expired
contract with no modifications.
By Advice Letter 4069-E filed on June 22, 2012.
__________________________________________________________
Summary
=======
Pacific Gas and Electric Company (“PG&E”) requests the California
Public Utilities Commission’s (“Commission” or “CPUC”) approval of an
amendment to the power purchase agreement (“PPA”) between PG&E and
Bailey Creek Hydroelectric Inc. (“Bailey Creek”). This amendment will
extend the now expired PPA beginning June 1, 2012 through the date
Bailey Creek obtains a California Independent System Operator
(“CAISO”) Resource ID, but no later than January 1, 2013.
Bailey Creek is a 630 kilowatt run-of-the-river hydroelectric
Qualifying Facility (“QF”) located in Shasta County and has sold power
to PG&E under a legacy contract which expired on May 31, 2012. In the
past, PG&E has aggregated Bailey Creek’s deliveries under an aggregate
CAISO Resource ID for the purpose of scheduling its deliveries to the
CAISO market. Bailey Creek requested to have its own individual CAISO
Resource ID and be removed from the aggregate CAISO Resource ID in
order to use a different scheduling coordinator under a successor
contract. To obtain a new ID the CAISO requires the generator’s
attributes to be modeled in its Full Network Model (“FNM”) before the
generator can be scheduled; only then will a Resource ID be issued.
On June 22, 2012 PG&E filed Advice Letter (“AL”) 4069-E seeking
Commission approval of an amendment to the expired PPA between Bailey
Creek and PG&E. The amendment would extend the expired PPA between
PG&E and Bailey Creek for the period beginning June 1, 2012 until the
earlier of January 1, 2013 or the date that Bailey Creek obtains a
CAISO Resource ID. This will allow Bailey Creek to obtain a CAISO
Resource ID and enable Bailey Creek to sign a successor contract with
a different scheduling coordinator. Once the CAISO assigns Bailey
Creek a unique CAISO Resource ID number Bailey Creek will seek a new
successor PPA with PG&E.
For the reasons discussed in detail below the Commission approves
Advice Letter 4069-E without modifications.
Background
==========
On June 22, 2012 PG&E filed Advice 4069-E with the Commission,
requesting a short term extension of a now-expired PPA with the Bailey
Creek facility. PG&E asserts the request is consistent with the
Qualifying Facility and Combined Heat and Power Program Settlement
approved by Commission in Decision (“D.”)10-12-035 (“QF/CHP
Settlement”). A subsequent PPA has not been signed with this facility
due to regulatory delays the facility has faced in obtaining a CAISO
Resource ID.
Under its now-expired PPA, Bailey Creek was aggregated with other
small generators under one CAISO Resource ID. Because the facility is
aggregated with other resources under a single CAISO Resource ID, it
is unable to schedule its individual deliveries to the CAISO. In order
to have the option of using a scheduling coordinator other than PG&E
under a successor contract, Bailey Creek must obtain its own
individual CAISO Resource ID. However, Bailey Creek’s legacy PPA
expired before it could obtain this ID, due largely to the fact that
new generating units are added to the CAISO Full Network Model only on
a quarterly basis.1 PG&E is requesting that the Seller be allowed to
continue generating under its now-expired PPA until its generation is
incorporated into the CAISO FNM and its own Resource ID is issued.
According to the CAISO’s FNM update schedule, this should occur no
later than December 31, 2012.
Notice
======
Notice of AL 4069-E was made by publication in the Commission’s Daily
Calendar. Pacific Gas & Electric states that a copy of the Advice
Letter was mailed and distributed in accordance with Section IV of
General Order 96-B.
Protests
========
Advice Letter 4069-E was not protested.
DiscussioN
==========
Bailey Creek Hydro is a small run-of-river hydroelectric facility that
produces RPS eligible energy a few months each year, beginning in late
spring. Bailey Creek’s PPA expired on May 31, 2012. According to PG&E,
PG&E has contacted Bailey Creek on several occasions to remind Bailey
Creek of its option to continue deliveries under a new contract
pursuant to the QF/CHP Settlement once its PPA has expired. However,
shortly before its expiration date, Bailey Creek informed PG&E of its
decision to obtain an individual Resource ID from the CAISO so that
its generation can be scheduled by a third party. Without the
extension of its existing PPA or a new PPA, Bailey Creek’s deliveries
to PG&E would cease.
The need for an individual CAISO Resource ID for Bailey Creek stems
from Bailey Creek facility’s request for the option to be scheduled
into the CAISO market by a third party scheduling coordinator under
the CAISO tariff. Bailey Creek needs additional time to undergo the
regulatory process required by the CAISO to provide the facility a new
CAISO Resource ID.
PG&E suggests that its request to extend Bailey Creek’s now-expired
PPA is consistent with the Section 11.2.1 of the QF/CHP Settlement
term sheet. Under the QF/CHP Settlement, CHP and Utility Prescheduled
Facilities operating under contract extensions ordered by the CPUC in
D.07-09-040 were required to enter into a Subsequent PPA within 120
days of the Settlement Effective Date, absent showing of good cause
for why transition to a Subsequent PPA was not possible within this
timeframe. The Settlement Term Sheet notes that “good cause” can
include “pending regulatory approvals from the CPUC, CAISO or other
Governmental Authority that prevents the delivery of power under a
Subsequent PPA”. To the degree there is a dispute between a QF and an
IOU regarding impediments to entering into a subsequent PPA, the
Settlement provides that the QF may submit a letter to the Director of
Energy Division.
We note that Bailey Creek is not a “CHP or Utility Prescheduled
Facility operating under an extension ordered by the Commission in
D.07-09-040” under section 11.2.1 of the QF/CHP Settlement. However,
the fact remains that Bailey Creek is a QF facility, and Bailey
Creek’s willingness and ability to enter into a subsequent PPA has
been constrained by the need for a separate CAISO Resource ID and the
time delays associated with the process to obtain this Resource ID.
It is reasonable, in our view, to extend the now-expired contract for
a limited time period. Importantly, the short-term renewal requested
by PG&E will enable the facility to continue to provide RPS eligible
energy while its resource ID request is pending with the CAISO. While
we grant the request, recognizing that regulatory delays are, to some
degree, outside of the utilities’ or generators’ control, in this
instance the regulatory delay associated with obtaining a CAISO
Resource ID was reasonably foreseeable and Bailey Creek should have
taken steps to initiate the process to obtain a CAISO ID sooner.
We also note that PG&E filed this request as a Tier 2 Advice Letter
but did not cite to authority for filing as a Tier 2 Advice Letter.
However, because the contract for which PG&E is requesting approval is
not an unmodified pro-forma PPA under the QF/CHP Settlement, General
Order 96-B requires that AL 4069-E should have been filed as a Tier 3
Advice Letter. (See Commission General Order 96-B, Energy Industry
Rule 5.3; see also QF/CHP Settlement Term Sheet Section 4.10 (Approval
of PPAs).)
In such cases of Advice Letters filed at the incorrect tier, the
Energy Division is empowered to either allow a supplemental filing to
rectify the error or reject the Advice Letter without prejudice so
that the Advice Letter can be filed at the correct tier. However, in
the interest of securing a just and speedy resolution of this
uncontested matter, the Commission will exempt Advice Letter 4069-E
from the Tier 3 filing requirement. PG&E should in the future always
adhere to the rules governing the appropriate Advice Letter Tier
filing requirements.
Comments
========
Public Utilities Code section 311(g)(1) provides that this resolution
must be served on all parties and subject to at least 30 days public
review and comment prior to a vote of the Commission. Section
311(g)(2) provides that this 30-day period may be reduced or waived
upon the stipulation of all parties in the proceeding.
No comments were received.
Consistent with Rule 14.6(c)2, as there were no protests to Advice
Letter 4069-E and given the time sensitive nature of the request, we
find it reasonable to reduce the comment period to 10 days.
Findings AND CONCLUSIONS
========================
1.
The Bailey Creek Hydroelectric Inc. (“Bailey Creek”) facility is a
630 kilowatt run-of-the-river hydroelectric Qualifying Facility
located in Shasta County.
2.
Under its original power purchase agreement (“PPA”), Bailey Creek
sold power to PG&E under a legacy contract which expired on May
31, 2012.
3.
Bailey Creek requested to have its own individual CAISO Resource
ID and to be removed from the aggregate CAISO Resource ID in order
to use a different scheduling coordinator under a successor
contract.
4.
For Bailey Creek to receive its own CAISO Resource ID, it will
need to go through the CAISO Full Network Model, which should
occur no later than December 31, 2012.
5.
Absent the requested extension proposed by Advice Letter 4069-E,
there will be a lapse in payments for renewable energy the
facility produces.
6.
Prior to its expiration, the costs associated with the Bailey
Creek PPA were recovered via PG&E’s Energy Resource Recovery
Account.
7.
The Bailey Creek PPA extension proposed by Advice 4069-E would
reinstate and extend the now expired PPA between PG&E and Bailey
Creek starting June 1, 2012 until the earlier of January 1, 2013
or the date that Bailey Creek obtains a CAISO Resource ID.
Therefore it is ordered that:
=============================
1.
The request of Pacific Gas and Electric Company in Advice 4069-E,
seeking approval to extend a power purchase agreement that expired
on May 31, 2012 between PG&E and Bailey Creek Hydroelectric Inc.
is found just and reasonable and is approved without
modifications.
2.
All costs associated with the extended Bailey Creek PPA may be
recovered through PG&E’s Energy Resource Revenue Account,
consistent with the manner in which the costs of the Bailey Creek
PPA were recovered prior to its expiration.
This Resolution is effective today.
I certify that the foregoing resolution was duly introduced, passed
and adopted at a conference of the Public Utilities Commission of the
State of California held on September 13, 2012; the following
Commissioners voting favorably thereon:
_______________
Paul Clanon
Executive Director
1 The CAISO Full Network Model (FNM) is a system reliability
simulation model that provides a detailed representation of the power
system under CAISO control. Any facility seeking its own CAISO
Resource ID is required to go through the CAISO FNM to ensure it meets
the CAISO network operating constraints. After Bailey Creek meets the
CAISO FNM constraints, the facility will be assigned a Resource ID and
be allowed to have its own scheduling coordinator.
*
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