The Tier 2 Advice Letters (“AL”) request approval of pro-forma contracts for allocations under the RPS VAMO and to commence allocations in January 2023. Each IOU submitted modified the terms and conditions of Commission-approved model PPAs to create the Voluntary Allocation pro formas and accommodate VAMO implementation requirements. Notably, SDG&E’s proposed contract includes specific credit and collateral terms, while PG&E and SCE’s exclude such terms. Responses and Protests to the ALs are due March 21.
D. 21-05-030 requires the IOUs to offer voluntary allocations of RPS resources to CCAs and ESPs in their respective service territory. In accordance with D. 21-05-030, the IOUs filed, and the Commission approved on October 25, 2021 and effective September 22, 2021, the IOUs’ proposed methodology for implementing the VAMO and dividing its RPS portfolios into shares to be allocated based on vintaged annual load. In D. 22-01-004 approving 2021 RPS procurement Plans, the Commission ordered the IOUs to submit Voluntary Allocation pro formas to be used in the VAMO.
The three IOUs submitted individual Tier 2 AL requests for approval of their respective pro forma contracts. The proposed pro formas have been modified to incorporate various RPS VAMO implementation requirements and all contemplate the first allocations to begin in January 2023. One notable difference amongst the submissions is the performance assurance section which allows SDG&E to impose a credit and collateral requirement upon evaluation by its credit department. In contrast, both PG&E and SCE explicitly exclude any credit or collateral requirements from their proposed pro formas.
SDG&E modified the terms and conditions of its Commission approved model PPAs to create the Voluntary Allocation pro formas and accommodate the necessary commercial arrangements to implement the D.21-05-030 mandate. Article 4 of SDG&E’s pro forma includes a Performance Assurance section which indicates that, upon evaluation by SDG&E, a counterparty may be required to post some form of collateral before engaging in the allocation.
PG&E’s VA Contract is a confirmation letter to an Edison Electric Institute (“EEI”) Master Power Purchase and Sale Agreement (“Master Agreement”), similar to the existing confirmation letter used in PG&E’s bundled RPS energy sales. Eligible LSEs in PG&E’s service territory that participate in the Voluntary Allocation process will need to have a Master Agreement in place with PG&E prior to the execution of the VA Contract. Article 6 waives the credit and collateral requirements of the EEI Master Agreement
SCE’s VA Contract includes many concepts from SCE’s Commission approved PCC 1 REC Sales Agreements including terms and conditions from the EEI Master Agreement modified with SCE’s standard terms and provisions (EEI Enabling Agreement) that are incorporated by reference as part of the REC Sales Agreement. To avoid the necessity of negotiating and executing the EEI Enabling Agreement with many of the Voluntary Allocation counterparties, SCE developed the VA Contract as a standalone agreement with some of the EEI Enabling Agreement’s general terms and conditions incorporated. SCE intends for its VA Contract to be a nonnegotiable, standard offer contract to facilitate the contracting process. SCE clarifies that LSEs will not be required to post collateral under the VA Contract, similar to SCE’s REC Sales Agreement, unless there is an Event of Default because the LSE does not timely pay for the RPS Energy received and SCE agrees not to terminate the VA Contract
