Parties Submit a Joint Petition for Modification of the ReMAT Decision

The following are the Joint Parties' requested modifications to the ReMAT Decision's Pricing Methodology:

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The Pricing Methodology should be modified to properly account for the levelized price of contracts that use fixed escalating prices in the Reference Contracts data set.

• By erroneously setting the price based on the first year of an escalating fixed price contract, the Commission undervalues the resource and has set the price below its true market price, i.e., below the utility’s avoided cost, contrary to legislative directive.
• The pricing error is evident from a review of the weighted average pricing adopted for both the Baseload Product and As-Available Peaking Categories, which are shown in Appendix A of the Decision.
• The Commission erred by omitting this levelized price adjustment to properly reflect the market price of an escalating fixed price contract, and should immediately correct the price for the Baseload Product Category to $78.22/MWh.
• The Commission should recalculate the prices for As Available Peaking and As Available Non-Peaking Product Categories using levelized price for all Contracts in Reference Contracts that use escalating fixed prices.

Reference Contracts should exclude contracts from the Green Tariff Shared Renewables (“GTSR”) program which, due to their unique contract structure, are not the costs paid by the utility buyer nor the prices received by the projects.

• The contracted price of electricity in these PPAs is a floor price that is paid to the seller only if the seller fails to contract directly with retail customers for the full output of the project. Under GTSR, Sellers may contract directly with retail customers and do so at a discount to their retail rate which will be priced far higher than the floor price. Thus, the “Contract Price” in GTSR contracts is not a fixed price and does not reflect avoided costs, since they are not the price the seller receives for the output of the project.

The Reference Contracts data set must be revised to exclude facilities greater than 20 MW, which the Decision explicitly sought to exclude.

• The Decision’s inclusion of the five RE Gaskell West contracts in its Reference Contracts data set, however, is inconsistent this finding and requires correction. This is because RE Gaskell West 1, RE Gaskell West 2, RE Gaskell West 3, RE Gaskell West 4, and RE Gaskell West 5, each of which represents 20 megawatts of contracted capacity, are not separate facilities, but are in fact a single 125 MW facility with a single point of interconnection that is permitted as one facility, and is thus well over the size threshold deemed relevant by the Commission for determining avoided cost under ReMAT.
• Since the Decision appropriately found that facilities greater than 20 MW do not represent Avoided Cost, the Reference Contracts must be revised to exclude contracts for portions of facilities larger than 20 MW, and should immediately remove the RE Gaskell contracts 1-5 from the data set, in addition to any other contracts that are parcel to one facility greater than 20 MW.

The Reference Contracts data set must be revised to only include Avoided Cost Prices.

• The Commission erred by including in the Reference Contracts data set Contract Prices that are not adjusted for TOD Factors and therefore not reflective of the utility’s avoided cost.
• In many California investor-owned utility RPS contracts, the contract includes a “Payment Section” or Exhibit wherein the ultimate costs owed under the contract are calculated by multiplying the metered production in MWh in a given hour by the Contract Price multiplied by the Payment Allocation Factor for the Time-of-Delivery (“TOD”) period being calculated (the Payment Allocation Factor and TOD periods together are commonly referred to as “TOD Factors”).
• The hourly settlements using this methodology are summed for each month to establish the monthly settlement which ultimately determines what the utility actually pays, i.e. the effective price, for the power delivered. These TOD Factors either increase or decrease the amount actually paid for electricity, and result in the effective price that is equal to the utility’s avoided cost. As such, it is an error to use the Contract Price alone as a proxy for avoided cost, without adjusting for TOD Factors.
• In contracts that do not use TOD Factors, the defined Contract Price is reflective of what the utility actually pays, and thus is already reflective of the utility’s avoided cost.

The Decision should be modified to include a direction that the “effective price” paid by the utility for each product type is equal to the avoided cost

as determined by the Reference Contracts.

• If the prices determined based on the Reference Contracts are already avoided costs, having already accounted for TOD factors, then applying current TOD Factors changes the effective price the utility pays and thus results in payments that are no longer avoided cost.

Transmission network upgrade costs should be reflected in the avoided cost rate.

• Projects interconnecting to the transmission grid do so under the CAISO tariff. These interconnections often include upgrades characterized as “Network Upgrades,” which while paid for in advance by the interconnecting customer, are ultimately refunded and paid for by the interconnection utility, socializing these costs to the transmission ratepayer. Distribution interconnected projects must pay for all of their interconnection costs while transmission interconnected projects receive a subsidy which is not reflected in their avoided co
• The Commission erred in not accounting for the cost of Network Upgrades when calculating the Avoided Cost of transmission-interconnected projects in the Reference Contracts. Either the Commission should only use distribution interconnected projects in the list of Reference Contracts, or the costs of transmission interconnected projects in the Reference Contracts should have their costs adjusted upwards to account for the cost of the socialized Network Upgrades.