Prompts suggestions about shale gas options

Update courtesy of Utility Regulatory News #4054: The California Public Utilities Commission has approved changes to certain of its renewable energy plans, so as to incorporate recent legislative amendments to the state’s renewable portfolio standard (RPS) program, which amendments increase from 20% to 33% the proportion of the state’s retail electricity sales that must come from renewable resources by the end of 2020. The commission said that its program modifications would offer power sellers further guidance for complying with RPS requirements. One commissioner voiced concern that as the overall percentage of renewables in electric supply portfolios continues to rise, so, too, does the associated cost of electricity. He cautioned that while the goals of the RPS initiative are sound, regulatory authorities must work to prevent related implementation costs from becoming so onerous that commercial and industrial customers feel they have little recourse but to exit their present utility systems or leave the state all together in order to assure their economic survival. To that end, he urged the commission to examine the market opportunities represented by the emerging shale gas industry. Because such activities have contributed to substantial reductions in natural gas prices, he deemed developing shale gas markets to be an important consideration. For the full story, subscribe to URN.

Posted: January 27th, 2012 under energy policy, renewables.
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Invokes use of a wind proxy

Update courtesy of Utility Regulatory News #4054: Reviewing the methodology used by Rocky Mountain Power for its purchases of energy and capacity from wind-based qualifying small power production facilities (QFs), the Wyoming Public Service Commission has adopted a permanent avoided-cost pricing method for the utility. Referring to it as a “partial displacement differential revenue requirement” approach, the commission said that the new method involves two primary changes from previous avoided-cost rate formulas. First, capacity deferrals for all wind QFs will be premised on a wind proxy and will no longer be limited to 50 megawatts per year. Second, the timing and amount of such deferrals will depend on the need for and the costs of a wind unit or a combined-cycle combustion turbine, as reflected in the utility’s most recent integrated resource plan. In rejecting a counter-proposal for “front-loaded” capacity payments to wind QFs, the commission said that such treatment would be tantamount to rate basing of the facilities, a measure that is reserved solely for utility-owned generating resources and thus would be inapt for wind QFs. According to the commission, use of a wind proxy should produce QF rates sufficient to promote growth in the wind power industry in the state. For the full story, subscribe to URN.

Posted: January 27th, 2012 under ratemaking, renewables, wind power.
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Addresses frequency, timing, and eligibility requirements

Update courtesy of Utility Regulatory News #4035: Reviewing advice letters submitted by the state’s three largest electric utilities following a California Public Utilities Commission decision in December that had outlined an auction process for the procurement of energy supplies from small renewable facilities, the commission found that certain modifications were needed in order for the associated solicitations to meet the commission’s vision for its renewable auction mechanism (RAM).

The commission noted that the three utilities - Pacific Gas & Electric Co. (PG&E), San Diego Gas & Electric Co. (SDG&E), and Southern California Edison Co. (SCE) - had proffered advice letters that varied from each other as well as from some of the terms set forth in the commission’s December order. For instance, the commission pointed out, PG&E and SCE had proposed holding only one renewable auction per year, whereas the commission had specifically mandated a total of four auctions over the next two years. The commission also noted that although the December decision had explicitly provided for simultaneous auctions, the utilities had not coordinated their RAM schedules, and SCE had actually recommended that their auctions be staggered purposely. The utilities also disagreed as to what facilities could participate in the auctions and what minimum and maximum capacity limits should apply.

The commission nixed PG&E’s approach to eligibility, which would have restricted participation to new facilities only. Instead, the commission determined that SCE’s terms were preferable in that they would allow both new and existing renewable facilities to participate. As to capacity thresholds, the commission found that certain aspects of both PG&E’s and SDG&E’s proposals were apt. It thus ruled that eligibility would be based on a contract minimum of 1 MW and a project size minimum of 500 kW. However, the commission agreed that projects should be allowed to aggregate, so as to meet the 1-MW contract minimum if their capacity was less than that. Aggregation would be capped at 5 MW, however.

The utilities were instructed to file new advice letters showing compliance with the commission’s directives. For the full story, subscribe to URN.

Posted: September 13th, 2011 under energy policy, green energy, renewables.
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Approves pricing mechanism for net surplus generatorsUpdate courtesy of Utility Regulatory News #4029: In accord with its duties enunciated in Assembly Bill 920, the California Public Utilities Commission (PUC) has published a rate schedule applicable to those qualifying self-generation customers whose total electric generation during a consecutive 12-month period exceeds their on-site consumption during that same time frame. Such customers are known as net energy metering (NEM) customers. After considering NEM proposals from the state’s five largest electric utilities, the commission found that a NEM price based on a utility’s default load aggregation point (DLAP) would be the best way of assuring that net surplus compensation payments made to a customer would abide by avoided cost rate-making principles set forth in the Public Utility Regulatory Policies Act of 1978.

The commission held that the NEM price should be predicated on a simple rolling average of each utility’s DLAP price from 7:00 a.m. to 5:00 p.m., a period the PUC deemed to coincide with the times during which a net surplus generator would be most likely to be actively producing electricity. In essence, the commission said, the rate would be representative of the 12-month average spot market price for those particular hours for the year in which the customer has net-generated. The commission averred that at a later date, an adder will be applicable for the renewable energy attributes of the generator. The commission explained that it is unable to set that adder at the present time because the California Energy Commission has not yet issued a ruling on how a self-generator’s compliance with the state’s renewable portfolio standards program will be certified. For the full story, subscribe to URN.

Posted: August 25th, 2011 under energy policy, renewables.
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Qualifies Net Metering For More Customers

Update courtesy of Utility Regulatory News #4030: Discovering that the physical logistics of many affordable housing complexes made them ineligible for virtual net metering (VNM) under the California Solar Initiative (CSI), the California Public Utilities Commission has amended the CSI program so as to allow greater numbers of consumers to qualify for VNM.

The CSI was first implemented in 2006 and was structured as a 10-year “market transformation” plan that would offer various incentives for the installation of solar facilities. In 2008, the commission established a CSI subcomponent targeted at residents of affordable housing units. Known as MASH (the Multifamily Affordable Solar Housing) program, the commission had intended that the MASH concept would bring VNM to more residential customers overall. However, after several years of experience, the commission learned that many affordable housing developments, though under common ownership, fan out over an extensive area and have multiple service delivery points.

Because the MASH protocol was designed to offer VNM only to one service delivery point per MASH-eligible complex, the commission found that many residential customers were missing out on VNM opportunities. Accordingly, the commission revamped the MASH program to explicitly incorporate those MASH units that may be spread out over many city blocks and have several points of delivery.

While the reworked CSI terms were aimed at MASH dwellings, the commission added that the benefits of solar energy and VNM should be extended to all forms of multitenant buildings, be they residential, commercial, or industrial, and need no longer be limited to just affordable housing complexes. For the full story, subscribe to URN.

Posted: August 25th, 2011 under renewables.
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