Commission Partially Approved RPS VAMO Implementation

Background

In D. 21-05-030, the Commission largely adopted the Working Group 3 ("WG3") Proposal regarding the Voluntary Allocation and Market Offer (“VAMO”) of PCIA-eligible RPS resources. In that Decision, the Commission ordered the IOUs to jointly submit a Tier 2 AL proposing:

1. A methodology for calculating potential Voluntary Allocation shares based on vintaged, annual load forecasts, and
2. A methodology for dividing their RPS portfolios into shares to be allocated.
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In addition to describing the methodologies described above, the AL requested that allocations from the IOU to LSEs of PCIA-eligible customers retain initial RPS attributes (i.e., RECs), but those RECs should be subject to current classification rules for any subsequent downstream transactions.

The Commission ultimately approved the proposal to allocate short-term and long-term PCIA-eligible RPS resources to CCAs and ESPs in proportion to vintaged, forecasted annual load share. Upon election, CCAs will be required to pay the applicable year's RPS market price benchmark ("MPB").  The first round of allocations will occur in 2023.

Summary of VAMO Implementation Timeline

• April 2022 - As part of the ERRA Meet & Confer Process, the IOUs will finalize the CCAs' potential VAMO shares based on vintaged, annual load forecasts.
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• May 2022 - CCAs will inform IOUs of their interest in Voluntary Allocation shares and finalize their elections. Payment based on the 2023 RPS MPB will be due upon election.
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• June 2022 - IOUs and CCAs include the proposed Voluntary Allocations in their 2022 RPS Plans.
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• December 2022 - Commission expected to issue a decision on 2022 RPS Plans and address VAMO.
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• January 2023 - IOUs file final RPS VAMO Plans to comply with Commission decision.
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• 21 Days After Final RPS Plans - IOUs commence Voluntary Allocations.
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• October 2023 - Initial payments trued-up based on updated RPS MPB.
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RPS Allocation Methodology

• Energy Division determined that the RPS Voluntary Allocation methodology, as it pertains to calculating proposed allocation shares, in AL 4569-E/6305-E/3835-E is consistent with Ordering Paragraph 7 and Ordering Paragraph 2 (a)-(f) of D.21-05-030 and is approved.
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• The Voluntary Allocations of PCIA-eligible RPS energy shall comprise a “slice” of an IOU’s entire PCIA-eligible RPS portfolio. LSEs may elect to take a short-term allocation, a long-term allocation, or may choose to decline all or a portion of their allocation.
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• LSEs will be offered allocations of the RPS portfolio in proportion to their vintaged, forecasted annual load share as determined through the methodology described in the section on Load Forecasting Methodology. Each election shall be made in 10 percent increments of the LSE’s vintaged, forecasted annual load share.
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• Each LSE electing to accept an RPS allocation is required to pay for it at each applicable year’s RPS MPB for the allocated volumes elected and will be required to meet certain credit or collateral requirements, netting agreements or other commercial arrangements established by each IOU for such payments.
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• The initial payment owed by the LSE for each calendar year’s RPS Allocation election will be trued up upon the Energy Division’s determination of the Trued Up (Final) RPS MPB in or around October of each calendar year, which could result in a further payment owed from the LSE to the IOU, or a credit owed to the LSE from the IOU.
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• Long-term allocations will last through the end of the term of the longest contract in the particular PCIA vintage, which must last at least 10 years from the allocation start date, with the exclusion of evergreen contracts and utility-owned generation resources. Once the long-term RPS Allocation is accepted, the LSE may not decline its long-term allocation election in future years.
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• RECs allocated to LSEs retain their original PCC classification upon allocation under the current RPS rules. However, if the LSE receiving the RECs chooses to re-sell them, the RECs would be subject to the same RPS compliance requirements that the Commission previously established for resales of RPS energy.

Load Forecasting Methodology

• Energy Division approved the IOUs’ proposed load forecasting methodology for CCAs and found that the existing Meet and Confer process is an appropriate venue to discuss, compare, and agree upon CCA load forecasts.
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• Each LSE’s forecasted vintaged, annual load shares and the RPS energy deliveries will change from year-to-year based on the updated forecasts of vintaged, annual loads and the actual RPS energy volumes realized in each year of the allocation term.
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• The IOUs will use the existing ERRA and RA Meet & Confer process to determine individual CCAs’ year-ahead load forecasts. If applicable, expansions and new formations of CCAs are added to, and load and accounts departing to ESPs from that CCA’s service territory are subtracted from, that CCA’s total load and accounts.
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• For each CCA, recent metered usage data for customers in each vintage will be used to calculate that vintage’s share of the CCA‘s annual forecasted load.
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• Due to apparent statutory and/or regulatory restrictions, the IOUs will exclude PURPA and ReMAT RECs from VAMO entirely.
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Downstream Allocations and PCC Classification

• The framework proposed by the Joint IOUs assumes that all RECs allocated through the Voluntary Allocation process retain their original PCC classification. The proposed framework also assumes that allocations are only permitted from an IOU’s PCIA-eligible portfolio to non-IOU LSEs of PCIA-eligible customers and that downstream allocations of the RPS attributes of an IOU’s PCIA-eligible portfolio are prohibited.
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• Once the RECs are allocated from the IOU to the LSE, the LSEs receiving those RECs may resell Voluntary Allocation shares of RPS energy, subject to the same RPS compliance requirements which already apply to resales of RPS energy in any LSE portfolio. So, if an LSE is allocated PCC 0 RECs that are subsequently resold, those RECs will be reclassified upon resale as PCC 1, PCC 2, or PCC 3 RECs consistent with the requirements of D.11-12-052.

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