Joint IOU Implementation of RPS VAMO

In D. 21-05-030, the Commission largely adopted the WG3 Proposal regarding the Voluntary Auction 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 explains why allocations from the IOU to LSEs of PCIA-eligible customers should retain initial RPS attributes (i.e., RECs), but those RECs should be subject to current classification rules for any subsequent downstream transactions.

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RPS Allocation Methodology

• 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

• 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.

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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