ALJ Issued Ruling Seeking Comments on MPB Calculations

RPS MPB

The Ruling includes a Staff Implementation Plan to Address RPS Voluntary Allocation Transactions in MPB Calculations., which recognizes that the requirement to use the RPS MPB in VAMO transactions raises the question of how to account for the voluntary allocations in future MPB calculations. Staff plans to address this by excluding RPS voluntary allocation transactions from RPS MPB calculations.  This exclusion will have no bearing on how the voluntary allocations are accounted for in PCIA ratemaking, as adopted in D.21-05-030.

The MPB itself is not a negotiated market price and may not reflect market dynamics that would be important to capture when calculating a new (e.g., true-up) MPB. Including voluntary allocations when calculating newer RPS MPBs will effectively weight a new MPB by the value of the earlier MPB. In other words, including RPS voluntary allocation transactions in the RPS MPB calculation will constrain the ability of the RPS MPB to reflect market prices and dynamics outside the voluntary allocations, which use a mandated price instead of relying directly on the market.

Energy Index MPB

The IOUs are directed to jointly file a detailed Energy Index proposal that answers questions that include:

• What is the problem with the current Energy Index calculation methodology and/or data source?
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• Would it be sufficient to continue using Platts data to calculate on-peak and off-peak indices, with the Commission simply updating the percentage weights that each investor-owned utility (IOU) applies to the on- and off-peak indices? Why or why not?
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• Platts data are proprietary. Are there non-proprietary data sources that could result in an Energy Index of equal or better quality than the current Energy Index? If so, what are those data sources?
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• If only proprietary data sources would result in an Energy Index of equal or better quality than the current Energy Index, what are those data sources?
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• Is there a cost to obtain any of the data you identified in your responses above? If so, what is the cost?

SCE argued, and the SDG&E and PG&E agreed:

The IOUs’ PCIA-eligible generation supply portfolios are comprised of a mix of technologies, including a prominent amount of solar and wind resources, with markedly differing generating profiles across the time of day as well as time of year. Those PCIA eligible generation portfolio supply resources often garner CAISO market revenues that are far less than the Platt’s on- and off-peak index predicted “average” that is reflected in the index, and which is currently used to set the Energy Index MPB component of forecast PCIA rates

The Energy Index MPB should be re-set based on the IOUs’ PCIA supply/generation portfolios presented in their respective annual ERRA Forecast cases, instead of historical bundled load demand and the monthly Platt’s on peak/off peak energy forecast prices. To that end, each IOU should be authorized to forecast the market value of the energy from its PCIA portfolio using the same methodology/model used to set the IOU’s bundled service and overall PCIA forecast rates, which for SCE is a production cost model.