IOUs Respond to Protests on the RPS-VAMO Pro Formas

PG&E:

• First, AReM requests that the Commission direct PG&E to include in its Voluntary Allocation contract (“VA Contract”) the Product Content Category (“PCC”) classification of all renewable energy credits(“RECs”) allocated pursuant to that contract. AReM’s requested relief should be disregarded as out of scope of the Energy Division’s authority to review and approve the VA Contract. Further, AReM’s request should be procedurally discarded as inconsistent with GO Rule 7.4.2 because the issue of PCC classification is pending in a Commission proceeding.
• In its Protest, AReM seeks revisions to PG&E’s illustrative Voluntary Allocation timeline to accommodate a “side-by-side” comparison of PG&E’s VA Contract to its Market Offer contract. Energy Division should reject such a request. The scope of Advice 6517-E is to address contractual terms of the VA Contract and AReM’s proposal is wholly unrelated to the Commission’s review of proposed contractual terms. Moreover, AReM’s interest in “comparison shopping” is not supported by D. 21-05-030 and such a request poses potential risks that would undermine the success of the Commission’s portfolio optimization framework. Ultimately, the goal of any portfolio optimization should be to capture value from the IOUs PCIA eligible portfolios, not to enable an LSE to chase a bargain. Customers do not benefit where there is a “race to the bottom” in such transactions.
• In its Protest, CalCCA requests delay of Energy Division’s disposition of Advice 6517-E until after the Commission rules on the Joint IOU Motion concerning PCC classification of RECs allocated through the VA Contract, and seeks certain modifications to the VA Contract. CalCCA’s request for delay is out of scope. PG&E's VA contract terms will accommodate any outcome determined in R. 18-07-003 concerning PCC classification.
• In its Protest, CalCCA raises a concern that PG&E’s proposed VA Contract’s short-term and long-term pool structure would prevent an LSE from electing short term procurement from the long-term contract pool. PG&E agrees to modify its proposed VA Contract to permit an LSE to take up to its entire “slice” of the PCIA eligible portfolio eligible for voluntary allocation as a short-term allocation. PG&E’s revisions would not permit an LSE to elect a combined long-term and short-term allocation exceeding the amount available for allocation to such LSE. To encourage expeditious resolution of this matter, PG&E intends to file this supplement with updates to the VA Contract on or before April 11, 2022.
• In its Protest, CalCCA requests clarification that Utility Owned Generation (“UOG”) resources are included in PG&E’s proposed VA Contract. PG&E confirms that RPS-eligible UOG resources eligible for PCIA cost recovery are included in PG&E’s VA Contract. Such UOG resources are listed in the Long-Term Resource Pool in proposed Appendix C, and can be readily identified with the label of “PGE…” under the column “Resource Name.”
• In its Protest, CalCCA expresses concern that PG&E’s VA Contract permits “virtually unlimited” modifications to its PCIA-eligible portfolio. PG&E will incorporate Notice language in the VA Contract submitted as a supplement to Advice 6517-E where PG&E will provide Notice to an LSE as soon as practicable regarding any changes to the Resource Pools. With regard to the potential removal of a resource from the Resource Pools, PG&E believes its proposed language in Section 2.5 of the VA Contract clearly describes the situations where PG&E may change the resource pool and does not believe it necessary to include CalCCA’s proposed change. PG&E will propose language in Section 2.5 further clarifying that a resource may be removed from the PCIA-eligible portfolio due to an order or direction from a governmental authority or entity.
• PG&E acknowledges CalCCA’s request to receive preliminary data regarding deliveries within 15 days of Calculation Period. However, CalCCA’s request that the VA Contract include this information is impossible and inconsistent with the goals of D. 21-05-030 to continue portfolio optimization activities in addition to VAMO. Providing data at this juncture is not possible as this does not give PG&E sufficient time to adjust its portfolio for any bilateral sales contracts (described as “Third Party Sales” in the VA Contract) that would come before settlements for the VAMO process.

SCE:

• The Commission should approve the Tier 2 Advice Letter regardless of whether it takes action on the Joint IOUs’ Motion Regarding PCC Classification. D.21-05-030’s proposed schedule shows that Voluntary Allocations should be made in May 2022.
• AReM asserts that the Commission should delay the Voluntary Allocations elections until after the Commission has adopted a Market Offer Process. This is unnecessary and inconsistent with the schedule laid out in D.21-05-030, at pp.36-38, showing that Voluntary Allocations occur before the submission of the Market Offer Process as part of the Draft 2022 RPS Procurement Plan. Contrary to AReM’s assertions, nothing in D.21-05-030 indicates that there is any need for LSEs to conduct a side-by-side comparison of the VAMO contracts in order to choose between them. The intent of the Decision is to allow LSEs to accept their allocated load share, not to hedge their participation in the VAMO Process, which could potentially increase costs to all PCIA customers.
• CalCCA’s protest suggests that SCE must confirm that LSEs may take their entire slice of the portfolio as short-term, even if those resources could qualify as long-term. To fully address CalCCA’s concerns, SCE notified PCIA-eligible LSEs regarding their ability to elect short-term allocations from the portion of SCE’s portfolio that is long-term. SCE posted a communication to this effect on its website related to the PCIA VAMO process on March 21, 2022 and sent the communication to PCIA-eligible LSEs on March 22, 2022. The communication is attached to this reply as Attachment 1 and clarifies that LSEs may elect a percentage (in 10% increments) of their final load share allocation in the form of a short-term allocation from resources that are eligible for long-term treatment. SCE further clarifies that in doing so, the PCIA-eligible LSEs must first elect 100% of their allocations from the portion of SCE’s portfolio that is short-term before electing any short-term allocations from the portion of SCE’s portfolio that is designated as long-term. In addition, SCE explains this to LSEs as SCE meets with them during the meet and confer process.
• CalCCA asserts that the VA Contract should clarify that Utility-Owned Generation (UOG) resources are eligible for Long-Term Allocation. On March 19, 2022, SCE submitted a supplement to its Tier 2 Advice Letter to change page 1 of the VA Contract to make plan that evergreen contracts and UOG will be allocated to LSEs through the Voluntary Allocation process.
• CalCCA requests that the VA Contract be modified to require SCE to provide “notice to Buyer as soon as practicable” of the addition or removal of a resource to the resource pool. SCE is willing to provide such notice “as soon as practicable.” The provision of notice should be as soon as practicable, but should not interfere with these larger purposes of portfolio optimization. SCE is willing to amend its contract to make this minor change.
• CalCCA’s protest asserts that SCE should provide LSEs with timely access to meter data. Meter data that has not been properly validated is speculative and often subject to change. Using this inaccurate data for forecasting and planning is not recommended and can lead to inaccurate decision making by LSEs. This is why SCE waits until the meter data is validated and filed with WREGIS before it is used for invoicing. The meter data that CalCCA wants access to is voluminous. SCE cannot reasonably provided it to LSEs on a monthly basis. Further, if SCE were to provide the preliminary meter data available to it by the fifteenth day of the month following the delivery month as CalCCA demands, the meter data LSEs would receive would be incomplete and unverified.

SDG&E:

• The Joint CCA’s protest that pricing unbundled allocations using RPS Benchmark Adders should be rejected as an impermissible collateral attack on a Commission decision approving SDG&E AL 3835-E.
• The Joint CCA protest of the Voluntary Allocation methodology and value of PCC 0 RECs is a collateral attack on that Commission decision and should be rejected.
• The Joint CCA’s inaccurately claim that the Unbundled Confirms’ terms should account for the value of the RECs beyond compliance purposes. SDG&E recognizes the effect of unbundled RECs on the Power Content Label ("PCL") and adds that the same impact is true for the IOUs’ PCL when reporting unbundled out-of-state PCC 0 RECs. Consistent with the Commission’s directive on allocating a “slice” of the PCIA-eligible portfolio, the pro forma Voluntary Allocation templates have been developed as a means to allocate from SDG&E’s entire PCIA-eligible RPS portfolio, thus no changes are needed to SDG&E’s Voluntary Allocation pro forma contracts.
• The Joint CCAs unsubstantiated claims that LSEs in the SDG&E Service Area will be particularly impacted by the unreasonable pricing terms should be rejected. It is unclear from the Joint CCAs' language (i.e., "significant, guaranteed losses") exactly what, if anything, is at issue in AL 3962-E that warrants change as inconsistent with a Commission decision.
• The Joint CCAs assert that there is a more favorable treatment for SDG&E to reduce its carbon cost obligation associated with imported power and that the Joint CCAs would not receive the same benefits via the proposed Voluntary Allocation pro forma. SDG&E disagrees because, as discussed, the Joint CCAs’ and SDG&E’s PCL will be impacted similarly.
• Additionally, the Joint CCAs state that a cost shift to its customers will occur because “SDG&E will also receive the RPS adjustment value from the unbundled RECs that are allocated to and paid for by the non-IOU allocatees. This, too, is inaccurate. SDG&E will not be able to claim any RPS benefit from the portion of the out-of-state RECs allocated to non-IOU LSEs and, therefore, no cost shift will occur.
• The PCC Classification issue has no bearing on the Pro Forma Contract and is not part of the scope of this Advice Letter. The pro forma contract language will not need to change based on the Commission’s resolution of this matter. The Commission’s rules on REC classification upon allocation will dictate the classification, not the pro forma contract.
• CalCCA is incorrect in claiming that a “[non-IOU LSE] may take all or increments of its load share percentage as a short-term allocation, notwithstanding some resources may qualify for a long-term election.” The Disposition Letter for SDG&E’s AL 3835-E, explains that “[t]he IOUs will execute both long-term and short-term contracts and long-term and short-term allocations will be calculated separately based on the amount of each type of RPS contract in the IOUs’ portfolios.” The presumption that SDG&E is required to offer special treatment to LSEs to elect additional short-term RPS from the long-term resource pool is at odds with and without any support in D.21-05-030.
• CalCCA’s claim that SDG&E should not have the ability to remove resources from its voluntary allocation pools of resources is not supported by the record and should be ignored. D.21-05-030 sets the parameters for Voluntary Allocation and Market Office (VAMO) and also found “it is reasonable to direct IOUs to propose RFIs for Contract Modifications and Contract Assignments.” In tandem with the VAMO, this Commission directive is intended to optimize the IOUs’ PCIA-eligible RPS portfolio. Indeed, RFI activities may impact the pool of PCIA-eligible RPS portfolio resources, thus SDG&E included a provision in its pro forma contract that provides the LSE with advance notice regarding any change to the resource pool.
• In its protest, CalCCA requests timely access to meter data. SDG&E understands CalCCA’s position and is simply unable to accommodate earlier delivery of relevant meter data. Therefore, SDG&E will continue its existing process of providing counterparties with summary meter data at the time the invoices are provided.
• In its protest, CalCCA requested that SDG&E remove its collateral requirements, replace the proposed dispute resolution with its standard language deferring to jury trials and restore the standard Master EEI Agreement definition for “Losses” when calculating replacement damages for a non-defaulting party as a result of an event of default. SDG&E explained in its Advice Letter that including allowing for collateral language requirements provides SDG&E the ability to require posting collateral when deemed necessary based on evaluation of the specific recipient of the allocation quantity, as Ordering Paragraph 2(c) allows, but SDG&E’s contract may not require collateral from every LSE taking its voluntary allocation. SDG&E can find no requirement that the IOUs Voluntary Allocation commercial terms be identical.
• SDG&E agrees with AReM’s statement in its protest that SDG&E’s Advice Letter does not address the term of the short-term Voluntary Allocations. Because this question of timing is related to allocation methodology that has been decided by the Commission already, SDG&E did not need to seek approval for this issue again in AL 3962-E.
• AReM erroneously states in its protest that SDG&E’s Advice Letter does not address the PPC classification of allocated RECs. SDG&E clearly states in- its Advice Letter that SDG&E does not determine the PCC classification. Because much of the PCC classification is beyond SDG&E’s control, SDG&E is unable to provide any determination of the status of PCC classification of allocated RECs. SDG&E does provide in its pro forma contracts a description of the location of each of the specific resources being allocated.
• AReM requests that the Commission extend the timeline for voluntary allocations to enable LSEs an opportunity to compare “side-by-side” the Voluntary Allocation option versus what is available to them in the Market Offer. The Commission should reject AReM’s request because it is beyond the scope of SDG&E’s Advice Letter filing.

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