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Long Term Procurement Planning Overview R.12-03-014 Commissioner Florio ALJ Gamson DRA EMC Presentation August 1, 2012.

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Presentation on theme: "Long Term Procurement Planning Overview R.12-03-014 Commissioner Florio ALJ Gamson DRA EMC Presentation August 1, 2012."— Presentation transcript:

1 Long Term Procurement Planning Overview R.12-03-014 Commissioner Florio ALJ Gamson DRA EMC Presentation August 1, 2012

2 2 What is LTPP?  Consideration of all electric resource procurement policies and programs for three large investor owned utilities (IOUs).  Generally occurs on a two-year cycle.  IOUs must submit:  Procurement plans that project system resource needs;  Action plan for meeting bundled customer needs;  Generally covers a ten-year horizon.

3 3 Brief History  Assembly Bill (AB) 57 established Public Utilities Code 454.5 (effective 2004).  Allowed IOUs to resume procurement of electricity for their customers, after the electricity crisis.  Pursuant to AB 57:  CPUC established up-front standards for IOUs’ procurement activities and cost recovery by reviewing/approving procurement plans.  Obviated need for after-the-fact reasonableness reviews for utility procurement transactions in compliance with up-front approved standards.  Previous LTPPs:  2004 LTPP (D.04-12-048).  2006 LTPP (D.07-12-052).  2008 LTPP (R.08-02-007, closed through Rulemaking to open 2010 LTPP)  2010 LTPP (Tracks 1 and 2 D.12-04-046, Track 2 D.12-01-033).

4 4 More History – 2010 LTPP  Decision (D.) 12-04-046 (Tracks 1 and 3) adopted settlement agreement for the 2010 LTPP as well as procurement rules.  The settlement agreement determined:  Parties agreed that no decision should be made on system need.  Renewable integration studies were inconclusive, and further work was necessary.  Need to consider a forthcoming CAISO study on the impact of once-through cooling power (OTC) power plant retirement due to state water resource control board regulations.  Need for determination of OTC retirement impact on local transmission-constrained areas of LA Basin, Big Creek/Ventura, and San Diego.  Recommendation that the Commission issue a decision by the end of 2012 on the need for resources to address renewable integration and OTC retirement.

5 5 Current LTPP  The 2012 LTPP will consider unresolved issues from the 2010 LTPP:  System need;  Long-term local reliability needs;  Renewable integration.  The 2012 LTPP will be divided into three major tracks: 1.Local Reliability. 2.System Needs. 3.Procurement Rules and Bundled Procurement.

6 6 Track 1 – Local Reliability  This is the first time the CPUC will determine whether there is a long-term local capacity requirement (LCR) need.  LCR is usually only considered on a year-ahead basis in the Resource Adequacy proceeding.  Consideration only for two Edison LCR areas:  Big Creek/Ventura;  LA Basin.  San Diego LCR area is being considered in a separate proceeding (A.11- 05-023).  No LCR for PG&E at this time.  CAISO completed a study of LCR needs through 2021, focused on retirement of once-through cooling (OTC) plants.

7 7 Track 1 – Schedule  May 23, 2012: CAISO submitted LCR analysis and recommendations as testimony.  June 25, 2012: Opening testimony by all parties in response to CAISO analysis.  July 23, 2012: Reply testimony by all parties, in response to opening testimony.  August 7-10 and 13-17, 1012: Evidentiary Hearings.  November/December 2012: Proposed Decision.

8 8 Track 1 – DRA Recommendations  CAISO analysis is extremely conservative.  There is a risk to over-procurement as well as to under-procurement.  Determination of need should include demand-side input assumption and transmission reinforcement assumption, which lowers CAISO’s estimated LCR need.  Reject CAISO’s determination of need for LCR areas, as CAISO has not accounted for preferred resources in accordance with California’s loading order.  Coordinate between LTPP and various other proceedings (including Resource Adequacy and SDG&E’s Power Purchase Tolling Agreement proceedings).

9 9 Track 2 – System Need  The Commission determined that in order to maintain and ensure reliability, must consider:  Potential retirement of existing plants;  Likelihood of relicensing of nuclear power plants;  Changes in mandates for renewable power;  Development of energy storage facilities;  Increased energy efficiency and demand response resources;  Development of distributed generation resources.  Determine standard planning assumptions.  Develop specific supply and demand scenarios for the next 20 years.  Resume renewable integration modeling and make a determination on need.  Determine resource mix to fill renewable net short.

10 10 Track 2 – Schedule  May 10, 2012: Energy Division (ED) proposal for standard planning assumptions.  May 31, 2012: Comments on ED proposal.  June 11, 2012: Reply Comments on ED proposal.  June 21, 2012: Assigned Commissioner Ruling (ACR) adopting standard planning assumptions.

11 11 Track 2 – Schedule (continued)  August 1, 2012: ED draft scenarios.  September 1, 2012: Comments on ED draft scenarios.  September 14, 2012: ACR adopting scenarios.  November 2012: Proposed Decision.  TBD: Schedule for renewable integration.

12 12 Track 2 – DRA Recommendations  Planning horizon should be limited to ten years.  Standard planning assumptions should be adjusted to:  Include uncommitted energy efficiency;  Include incremental nondispatchable and peak time rebate demand response;  Incremental photolvoltaics should be increased to account for expanded net metering; and  Include known and likely OTC replacement.

13 13 Track 2 – Adopted Standard Planning Assumptions  ED made few changes to standard planning assumptions:  Clarified some language;  Incremental energy efficiency assumptions were modified to reflect CPUC decisions and California Energy Commission forecasts (adjusted downward); and  Increased photovoltaic assumptions to reflect expanded net metering.

14 14 Track 2 – Renewable Integration Modeling  As we move toward 33% renewables in 2020, there will be a need for flexible resources to address variability issues.  A renewable integration model (RIM) was developed for 2010 LTPP, but results were inconclusive. Most results showed no need.  CAISO runs the renewable RIM.  DRA consultant plans to validate the RIM and run DRA-scenarios.  Considerations:  Assumptions and inputs greatly impact need for renewable integration.  There is a need for stochastic modeling.  May need to adjust the planning reserve margin.  Need to simulate variability at small intervals, which may lower the need – currently model at one hour increments.  Considering possible market that would use available flexible resources within Western Coordinating Council area, which would lower the need for new generation in California.

15 15 Track 3 – Procurement Rules and Bundled Procurement Plans  Two sections to Track 3. 1.Consider any changes to procurement rules, and whether any new rules are necessary. 2.Require IOUs to file bundled procurement plans.  The IOUs bundled plans should be easily compared to each other.  More detail and an updated schedule is forthcoming.

16 16 Track 3 – Schedule  October 15, 2012: Parties file proposed procurement rules.  November 5, 2012: Reply comments to proposed rules.  January 2013: Proposed decision on rules.  March 2013: IOUs file bundled procurement plans.

17 LTPP Team Project Manager: Karin Hieta Attorneys: Diana Lee Iryna Kwasny Analysts:(Nika Rogers) Peter Spencer Jordan Parrillo David Siao Yakov Lasko Radu Ciupega Alan Wecker

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