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Friday, January 29, 2016

PCIA and Community Choice

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On December 17, 2015 the California Public Utilities Commission (CPUC) voted 4-1 (Sandoval in opposition) to increase the Power Charge Indifference Adjustment (PCIA) exit fee by an unprecedented 95%, making the PG&E exit fee almost the highest it has ever been. This would result in an average MCE customer paying $156 per year and in total would result in approximately $36 million being collected by PG&E from MCE customers in 2016. This increase was approved, despite overwhelming statewide advocacy urging the CPUC to limit the fee.



1. Background
2. Acronyms/Definitions
3. Business Case
4. Benefits
5. Risks/Issues
6. Success Criteria
7. Next Steps
8. Parties 
9. Links

1.Background
  • xxx
  • On December 17, 2016 the CPUC adopted Pacific Gas and Electric Company's (PG&E) 2016 electric procurement cost revenue requirement forecast of $4,772.0 million for PG&E, which consists of:
    •  $4,277.7 million for the Energy Resource Recovery Account, 
    • $187.3 million for the Ongoing Competition Transition Charge, 
    • $118.7 million for the Power Charge Indifference Amount, and 
    • $188.3 million for the Cost Allocation Mechanism;
  • Approves PG&E’s 2016 electric sales forecast and rate proposals associated with its electric procurement related revenue requirements to be effective in rates January 1, 2016

  • Orders that a workshop be held in the first half of 2016, outside of this proceeding, by the Commission’s Energy Division, to address the methodologies and inputs used for calculating the Power Charge Indifference Amount, with notice of this workshop provided to the service lists of all currently open ERRA proceedings, both forecast and compliance; and
  • xxx
  • At the same December 17, 2015 meeting,  the Commission issued a decision that ordered the Commission’s Energy Division to hold a workshop within the first quarter of 2016, to address the methodologies and inputs used for calculating the PCIA.1 The scope of the workshop will include:
    1. the methodology for calculating the PCIA; 
    2. whether the calculation of the PCIA should be different for DA and CCA entities, and if so, what those different methodologies should be; 
    3. the inputs to the calculation of the PCIA; and 
    4. ensuring that all proposals are in compliance with existing Public Utilities Code Sections, including but not limited to ensuring no bias or harm to DA, CCA, or bundled customers
     The Commission ordered that parties may conduct discovery in advance of the workshop.
  • March 12, 2015 Workshop
    • Participants PG&E, SCE, SDG&E, MCE,  City of Lancaster, and the Direct Access Parties (through their representative MRW Associates)
    •  The purpose of the Workshop was to address two issues identified in the Ruling: 
      • 1. Whether departure dates used to establish vintage for departing customers for Community Choice Aggregation (“CCA”) service territories should be tied to the individual customer, or the service point address.
      •  2. Should new service points established in a CCA service area after the phase in date be assigned Power Charge Indifference (“PCIA”) vintages. 
    • x
  • How PCIA is calculated currently 
    • PCIA Customer Vintages are tied to the property (i.e. Service Point)
    • Once a customer at a designated Service Point departs from bundled service to join a CCA, that particular Service Point is attributed a Customer Vintage based upon the date of the customer’s departure
    • If that customer moves from the Service Point, the Customer Vintage stay tied to that Service Point, not to the customer. 
    • When a new service point is initiated within a CCA’s service territory, it is assigned a customer vintage that corresponds with start of service date for that service point.  PG&E assumes it will be the default load provider for all new load growth within communities served by CCAs

2. Acronyms/Definitions
  1. CTC - Competition Transition Charge - Intended to recover legacy ctentsagned prior to December20, 1995 from non exempt departing customers.

  2. Direct Access -The right of customers to choose between different electricity suppliers, just as they choose between other goods and service providers, from cellular carriers and internet service providers to grocery stores.
  3. Direct Access - Comparison of CCA to Direct Access (“DA”), on issue of tying vintage to customer vs. service point

  4. ERRA - Energy Resource Recovery Account - x

  5. ESP - Energy Service Provider - An entity that offers electrical service to customers within the service territories of PG&E, SCE and SDG&E and which has met state registration requirements.

  6. PCIA - Power Charge Indifference Amount -
    Indifference = Ongoing CTC + PCIA
    PCIA = Indifference-Ongoing CTC

  7. VPCIA - Vintaged Power Charge Indifference Adjustment 

    There are three methods of calculating VPCIA
    1. Launch-Date based vintaging methodology - MCE and Lancaster reiterated their proposal for a PCIA vintaging methodology based on the CCA phase-in date.  MCE wants to consider customer vintages holistically, from the community perspective. MCE’s proposal is that the whole community gets the same vintage date, which is administratively simple.
    2. Individual customer based vintaging methodology - PG&E and SCE support a PCIA vintaging methodology based on an individual basis, whether it be tracked to the service point address or the individual customer. Both utilities are concerned with customers that choose to remain a bundled customer at the time of CCA phase in, and then later switch to CCA service. This results in bundled service customers incurring stranded costs on behalf of departing customers.

      PG&E argues as of 2012, PG&E had been procuring on behalf of load in a CCAs territory. When the 2012 forecast was developed, MCE had just formed and there was only a small amount of load, so the 2012 forecast does not reflect load for MCE’s region. Even for the 2014 LTPP forecast, there is not separate treatment of CCA by region. PG&E contends that it still has procurement responsibility for regional load growth, and MCE’s proposal to apply 2010 vintage to all customers in MCE territory is inconsistent with how the LTPP load forecast reflects CCA load. So long as PG&E has the provider of last resort responsibility, it is appropriate to adjust customer vintages.

      Clarification requested by the City of Lancaster on how PG&E distinguishes itself as the provider of last resort when the CCA program is the default provider.  PG&E: PG&E distinguishes between the two based on the notion of “obligation to serve.” While a CCA program may be the default provider, if a customer opts out of a CCA program, the law states that the investor-owned utility (“IOU”) serving that region must serve the customer. CCAs are voluntary. 
    3. Service point address based vintaging methodology  The service point approach creates a disconnect between customer and CCA participation; if a customer has chosen CCA service, that customer could lose his or her vintage by moving. Attaching the vintage to the customer resolves that issues, but MCE’s preferred approach is to tie the community/geographic region to phase-in dates. MCE’s approach is the most simple because vintages would just be tied to phasein date for a particular area. MCE is concerned that continually re-setting vintages creates stranded cost issues and improvements need to be made here and in the LTPP.

      From the customers’ perspective their ‘choice’ to take CCA service is reset every time they move 2. Each time an unbundled customer is assigned a new PCIA Vintage, they on the hook for new stranded costs incurred after their initial choice to leave bundled service 3. Loyal CCA customers are effectively penalized by PCIA Vintages if they move.

      PG&E Rebuttal to Launch Date vintaging: zzz

      Hypothetical #1  
      • CCA service becomes available in 2010 in specific area 
      • Customer remains a bundled customer in 2010; the investor-owned utility (IOU) retains the obligation to serve the customer 
      • This customer later becomes a CCA customer in 2020 
      • Existing PG&E Policy: Customer would receive 2020 vintage 
      • MCE Proposal: Customer would receive 2010 vintage

      Hypothetical #2 
      • CCA service becomes available in 2010 in specific area 
      • Customer becomes a CCA customer in 2010 
      • \The customer returns to PG&E’s bundled service in 2012; the IOU now has the obligation to serve the customer 
      • The customer returns to CCA service in 2020 
      • Existing PG&E Policy: Customer would receive 2020 vintage 
      • MCE Proposal: Customer would receive 2010 vintage

  • xxx
  • 3. Business Case
    • On December 17, 2015, the CPUC ruled that  challenges to the Commission’s existing policy and/or rules are beyond the scope of  PG&E's  2016 Energy Resource Recovery Account (ERRA) proceeding and must be raised via a Petition for Modification of the decision that established the policy and/or rule in question. Also, many of the policy issues raised by parties would impact California’s other Investor-Owned Utilities (IOUs), which are not parties in this proceeding. This proceeding is limited to a year ahead forecast for a single utility and thus is not the appropriate venue for addressing broad policy issues that impact all of California’s IOUs. Therefore, this issue was not considered in this proceeding.
    • Instead, it is being considered under PG&E's 2015 Energy Resource Recovery Account (ERRA) proceeding  The second phase of the 2015 proceeding examines the application of PCIA vintages to:

      1) departing customers serviced by Community Choice Aggregation (CCA) providers, and
      2) new service points established in CCA territories after the phase-in date.

      The First Amended Scope was additionally served on Southern California Electric Company (SCE) and San Diego Gas & Electric Company (SDG&E). Pursuant to the First Amended Scope, a workshop was held on Mar 12, 2015, PG&E filed and served its workshop report on Mar 27, 2015; Opening comments to the workshop report were submitted on Apr 30, 2015 by SCE and jointly by Marin Clean Energy (MCE) and the City of Lancaster (Lancaster); Reply Comments were submitted on May 15, 2015 by PG&E and SCE. 
    • In the First Amended Scope, the Commission sought to examine two issues related to PCIA vintaging methodology:

      1) Whether departure dates used to establish vintage for departing customers in CCA service territories should be tied to the individual customer, or the service point address; and
      2) Whether new service points established in a CCA service area after the phase-in date should be assigned PCIA vintages.

      During the workshop and through their comments, MCE and Lancaster reiterated their proposal for a PCIA vintaging methodology based on the CCA phase-in date rather than the two options currently contemplated in the First Amended Scope. MCE and Lancaster cite extensively to past Commission decisions relating to the establishment of CCA programs as contemplating a launch-date based vintaging methodology. MCE contends its customers are being assigned a new vintage each time they move to a service address that had previously opted out of CCA service.
    • PG&E asserts a number of factors, some of which are outside PG&E’s control, that have caused PG&E’s forecasted PCIA to increase, including: 
      • 1) The expiration of the California Department of Water Resources contracts;
      •  2) Decreases in market prices, which have the effect of lowering the market price benchmark and increasing stranded costs associated with contracts entered into on behalf of departing customer; 
      • 3) Changes in PG&E’s portfolio mix; 
      • 4) Other factors such as a reduction in Department of Energy Litigation funds.
    • XXX
    4. Benefits
    • xxx
    5. Risks/Issues
    • Anti-Competitive - MCE believes that the increase in customer bills, resulting from PG&E’s PCIA request, is unfair and anti-competitive.
    6. Success Criteria
    1. xxx
    Next Steps Parties  have been asked by the CPUC to provide briefing on the following for the March 8, 2016 workshop
    • How should past Commission decisions and resolutions be interpreted to determine PCIA vintaging methodology for CCA customers. Please specify how a proposed vintaging methodology should affect the customer’s PCIA in each of the following scenarios:xxx
      1. Current CCA customer moves to a new address where the prior customer also had CCA service; 
      2. Current CCA customer moves to a new address where the prior customer had opted out of CCA service and remained a bundled customer;
      3.  New CCA customer moves into an address where the prior customer had CCA service; 
      4. New CCA customer moves into an address where the prior customer had opted out of CCA service and remained a bundled customer; 
      5. New CCA customer moves into a new service point established within the CCA territory after the phase-in date; and 
      6. A customer in CCA territory that had previously opted out and remained a bundled service customer, but decides later to take CCA service instead.

  • Please identify any scenario not identified in question 1 and explain how a proposed vintaging methodology should affect the customer’s PCIA vintage in that scenario.   Rather than limiting vintaging methodology to the two options as previously identified in the First Amended Scope, the CPUC ask parties to come up with a method which complies with Commission precedent, reduces stranded costs to bundled customers, and allows for an eventual end to vintaging charges.
  • 8. Parties 
    1. AECA - Agricultural Energy Consumers Association -A not-for-profit agricultural advocacy organization dedicated to California energy issues. AECA was formed in 1991 by farmers and agricultural water managers concerned about skyrocketing energy costs.

    2. AReM - Alliance for Retail Energy Markets - The Alliance for Retail Energy Markets is a not for profit corporation that advocates for continued development of successful customer choice in retail energy markets and provides a focused voice for competitive energy retailers and their customers in selected public policy forums on the state level.

      The Alliance brings together many of the nation's leading retail energy suppliers, including Constellation NewEnergy, Direct Energy and Noble Americas Energy Solutions, collectively serving the majority of competitively served electric load in California

      ARem is a member of the California Alliance for Competitive Energy Solutions (CACES), a coalition of public and private entities that support lifting the suspension of Direct Access to the electricity market

    3. CLECA - California Large Energy Consumers Association -  An ad hoc group of large industrial electric customers of PG&E and Edison, active on electric rate and service issues since 1987. Member companies are found in the steel, cement, industrial gas and refined oil products industries
    4. CFBF -  California Farm Bureau Federation - Sacramento -

    5. DACC - Direct Access Customer Coalition -

    6. Lean Energy USA - Mill Valley - A non-profit, membership organization dedicated to the accelerated expansion and competitive success of clean energy CCA nationwide.

    7. MCE - Marin Clean Energy - San Rafael

    8. Modesto Irrigation District   /   Merced Irrigation District (Modesto/Merced).

    9. ORA - Office of Ratepayer Advocates - San Francisco - Statutory mission is to obtain the lowest possible rate for service consistent with reliable and safe service levels. In fulfilling this goal, ORA also advocates for customer and environmental protections.

    10. City and County of San Francisco - San Francisco is in the process of implementing a CCA program known as CleanPowerSF. San Francisco expects to begin providing service to San Francisco residents and business under CleanPowerSF in the spring of 2016. San Francisco has an interest in this proceeding because PG&E’s PCIA rate will impact CleanPowerSF’s service to its residents and businesses. In addition, adjustments to the PCIA will affect the rates of San Francisco’s constituents who are bundled customers. San Francisco seeks to ensure that the rates for all customers are fair.
    11. SCP - Sonoma Clean Power - Santa Rosa -



    9. Links
    1. xxx

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