The Commission issued a revised Proposed Decision (“PD”) showing changes made to the proposed decision concerning modifications to the central procurement entity (“CPE”) structure. The revisions modify proposed requirements for self-shown resources, CPE solicitation selection criteria, CPE procurement timing, additional reporting requirements, and confidentiality. The revisions also reflect that the Commission will not issue deficiency notices to LSEs in the PG&E TAC area before January 1 as to provide additional flexibility in securing their year-ahead system and flexible RA portfolios for the 2023 RA compliance year. The revised PD is scheduled to be heard at the the March 17 Voting Meeting.
In D. 20-06-002, the Commission adopted a hybrid procurement structure in which the CPE would “secure a portfolio of the most effective local resources, use its purchasing power in constrained local areas, mitigate the need for costly backstop procurement in certain local areas, and ensure a least cost solution for customers and equitable cost allocation.” The hybrid framework allowed LSEs to voluntarily procure local resources to meet their system and/or flexible RA needs and count them towards the collective local RA requirements. An LSE that procures a resource that meets a local RA need may: (1) self-show the resource to the CPE to reduce the CPE’s overall local procurement obligation and retain the resource to meet the LSE’s system or flexible RA needs, (2) bid the resource into the CPE’s solicitation, or (3) elect not to show or bid the resource to the CPE and only use the resource to meet its own system and flexible RA needs. The Commission also provided that the CPE shall have discretion to defer procurement of a local resource to the CAISO’s backstop mechanisms, rather than through the solicitation process, if bid costs are deemed unreasonably high
D. 20-06-002 directed the CPEs to begin procurement in 2021 for 100 percent of the 2023 local requirements and 50 percent of the 2024 local requirements. In 2022, the CPE is responsible for procuring 100 percent of the three-year forward local requirements for 2023 – 2024 and 50 percent of the three-year forward local requirement for 2025.
In 2021, PG&E’s Annual Compliance Report revealed that for the 2023 RA compliance year, the CPE’s monthly procurement in PG&E’s TAC area was below the 100% local requirement by as low as 4,264 MW (or 37.6% of the local requirement) and up to 6,049 MW (or 53.4% of the local requirement). SCE’s Annual Compliance Report reflected only a small short position for a few months of the 2023 compliance year.
Given PG&E's 2023 shortfall, the Commission revised the PD to give LSEs in the PG&E TAC area additional flexibility in securing year-ahead system and flexible RA requirements for the 2023 RA compliance year by deferring any deficiency notices to after January 1 following the year-ahead showing deadline.
Backstop costs will be recovered pro-rata from all LSEs when an LSE self-shows a local resource but fails to perform for any reason, including reasons other than a planned outage
A self-showing LSE may substitute non-performing, self-shown resources with another like-for-like resource.
An LSE may replace a self-shown local resource for Year 3 with other local resources located in the same local capacity area and at least equal to the capacity of the local resources being replaced. The self-showing commitment year-ahead system and flexible RA portfolios for the 2023 RA compliance year is firm in Years 1 and 2 but may be substituted in Year 3.
The CPE solicitation process should not require heat rate information to be submitted, but the CPE should consider publicly available information that includes heat rate. To the extent heat rate information is not available, the CPE should consult with Energy Division and the CAM PRG to develop a proxy for heat rate information.
CPE may procure outside of the annual solicitation. If the CPE does not procure sufficient resources to meet its multi-year local requirements following its annual all-source solicitation, then it is authorized to procure additional local RA resources outside of its annual solicitation process. The CPE must consult with the CAM PRG on plans for conducting procurement outside of its all-source solicitation.
When procuring outside of the annual solicitation, the CPE may procure bilaterally or with brokers. If the contract is beyond 5 years, the CPE must submit a Tier 3 Advice Letter for approval. If the contract is less than 5 years, the CPE must notify the CAM PRG as soon as practicable after the execution of the agreement.
