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Containing the Cost of California’s RPS. Yuliya Shmidt, Senior Analyst. February 2, 2012. About DRA. - PowerPoint PPT Presentation
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Containing the Cost of California’s RPS
Yuliya Shmidt, Senior Analyst
February 2, 2012
The Division of Ratepayer Advocates (DRA) is a consumer advocate within the California Public Utilities Commission (CPUC) that represents customers’ interests on investor owned utility (IOU) matters.
DRA’s statutory mission is to obtain the lowest possible rates for utility services consistent with safe
and reliable service levels. In fulfilling this
goal, DRA also advocates for consumer and
environmental protections. The Voice of Consumers, Making a Difference! 2
About DRA
Renewables Portfolio Standard (RPS)
Legislation in California SB 107 (Simitian, 2006): Accelerated the RPS to 20% by
2010 with flexible compliance extending the deadline to 2013
SB 1036 (Perata, 2007): Adopted ratepayer protections through limits on above-market costs. Above-Market Funds (AMFs) are allocated to the costs
of each RPS contract above the Market Price Referent AMFs for each utility were exhausted in 2009
SBx1 2 (Simitian, 2011): Established a 33% RPS by 2020. Requires reporting on total cost of program each year Requires CPUC to establish and enforce a cost limitation for
each investor-owned utility
Limits procurement to resources that can be procured without exceeding a de minimis increase in rates The Voice of Consumers, Making a Difference! 3
The Voice of Consumers, Making a Difference! 4
Expenditures of Above-Market Funds
$-
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
Billio
ns
$773,106,060 $6,007,377,760 AMFs allocated AMFs incurred
Note: Data from August 2010 AMF Calculators. Figures in nominal dollars.
Implementation of 33% RPS Legislation by CPUC
Opened Rulemaking (R.) 11-05-005 to apply
SBx1 2
Addressed technical and definitional issues
in 2011
Addressing cost limitation mechanism in Q1
2012
Issued two Final Decisions in December 2011The Voice of Consumers, Making a Difference! 5
CPUC Decision: Implementing 33% RPS
Decision (D.) 11-12-052 on Portfolio Content Categories implements SBx1 2 restrictions on unbundled renewables
The Voice of Consumers, Making a Difference! 6
Compliance Period Bundled Unbundled
REC-only Firmed and Shaped
2011-2013 At least 50% Up to 25% Remainder
2014-2016 At least 65% Up to 15% Remainder
2017-2020 At least 75% Up to 10% Remainder
CPUC Decision: Implementing 33% RPS
Decision (D.) 11-12-020 on procurement quantity requirements
The Voice of Consumers, Making a Difference! 7
RPS Procurement Targets
20% 20% 20%21.7%
25%
27%
31%33%
29%
23.3%
0%
5%
10%
15%
20%
25%
30%
35%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Compliance Period 1 Compliance Period 2 Compliance Period 3
Utilities are on Track to Meet 33%
The Voice of Consumers, Making a Difference! 8
Note: based on executed contracts
Risk Profile of Forecasted RPS Generation
California’s Renewable Mix
The Voice of Consumers, Making a Difference! 9
Renewable Technology Mix by Energy (GWh/yr)
biogas1%
geothermal21%
small hydro1%
wind36%
solar thermal17%
solar PV20%
biomass4%
Renewable Technology Mix by Capacity (MW)
biogas1%
geothermal8%
small hydro0%
wind44%solar thermal
19%
solar PV26%
biomass2%
Notes: Only contracts from 2002 and on are included. Includes contracts not yet online and those pending approval. Solar PV Program contracts are included but Feed-in Tariff and other programs are not. All data from http://www.cpuc.ca.gov/PUC/energy/Renewables/, updated January 2012.
Variety of Renewable ProgramsMultiple programs and procurement methods have
been createdto increase renewables:
Utility Requests for Offers (RFOs) Bilaterally Negotiated RPS Contracts Utility Owned Generation (UOG) California Solar Initiative (CSI) Feed-In-Tariff (FIT) Qualifying Facilities (QFs) Renewable Auction Mechanism (RAM) Self Generation Incentive Program (SGIP) Emerging Renewables Program (ERP) Tradable Renewable Energy Credits (TRECs – now referred to as
unbundled RECs) Net Energy Metering (NEM) New Solar Homes Partnership (NSHP)
The Voice of Consumers, Making a Difference! 10
The Renewable Jungle
The Voice of Consumers, Making a Difference! 11
CSI = California Solar Initiative
ERP = Emerging Renewables Program
FIT = Feed-in Tariff
NEM = Net Energy Metering
NSHP = New Solar Homes Partnership
PPA = Power Purchase Agreement
QFs = Qualifying Facilities
RAM = Renewables Auction Mechanism
RFO = Request for Offers
RPS = Renewables Portfolio Standard
SGIP = Small Generator Incentive Program
SPVP = Solar Photovoltaic Program
TRECs = Tradable Renewable Energy Credits
UOG = Utility Owned Generation
DRA Guide: www.dra.ca.gov/dra/jungle.htm
Note: Not to Scale
Renewable Programs by Technology & Size
Size Solar PV Wind Other
Less than 1 MW
California Solar Initiative
New Solar Homes Partnership
Emerging Renewables Program
Net Energy Metering
Emerging Renewables Program
Small Generator Incentive Program
Net Energy Metering
Net Energy Metering
1-3 MW Feed-in Tariff
Renewables Auction Mechanism
Solar Photovoltaic Program
Request for Offers Power Purchase Agreement
Bilateral Power Purchase Agreement
Feed-in Tariff
Renewables Auction Mechanism
Small Generator Incentive Program
Request for Offers Power Purchase Agreement
Bilateral Power Purchase Agreement
Feed-in Tariff
Renewables Auction Mechanism
Request for Offers Power Purchase Agreement
Bilateral Power Purchase Agreement
1-20 MW Solar Photovoltaic Program
Request for Offers Power Purchase Agreement
Renewables Auction Mechanism
Bilateral Power Purchase Agreement
Request for Offers Power Purchase Agreement
Renewables Auction Mechanism
Bilateral Power Purchase Agreement
Request for Offers Power Purchase Agreement
Renewables Auction Mechanism
Bilateral Power Purchase Agreement
Greater than 20 MW
Request for Offers Power Purchase Agreement
Utility Owned Generation
Solar Photovoltaic Program
Bilateral Power Purchase Agreement
Request for Offers Power Purchase Agreement
Utility Owned Generation
Bilateral Power Purchase Agreement
Request for Offers Power Purchase Agreement
Bilateral Power Purchase Agreement
Utility Owned Generation
The Voice of Consumers, Making a Difference! 12
Renewable Program Costs
Solicited RPS Contracts: estimated $20.8 billion to be expended 2003 - 2020
Bilateral RPS Contracts: estimated $13.3 billion to be expended 2003 - 2020
Qualifying Facilities: estimated $20.7 billion to be expended on renewable
QFs 2003 - 2020
California Solar Initiative: $2.1 billion budgeted for the program
New Solar Homes Partnership: $400 million budgeted for the program
Small Generator Incentive Program: $623 million spent from 2001 - 2009
The Voice of Consumers, Making a Difference! 13
Rate Impacts Rate impacts of renewables are not yet known A substantial portion of each utility’s RPS
portfolio has not yet come online and therefore not yet entered rates
Rates are likely to increase but it is unclear how much of that is due to renewables
Renewable costs may increase the utilities’ revenue requirement in several areas including: cost of purchased power, utility-owned generation, transmission, and distribution
The Voice of Consumers, Making a Difference! 14
Revenue Requirement Breakdown
PG&E SCE SDG&E Total %
Generation/Energy Procurement
Purchased Power $4,739,030 $3,723,745 $1,080,290 $9,543,065 37%
Utility Owned Generation $1,561,807 $1,909,857 $343,157 $3,814,821 15%
Distribution (includes taxes) $3,267,148 $3,663,902 $982,858 $7,913,908 30%
Transmission $752,286 $591,273 $279,789 $1,623,348 6%
Demand Side Management $726,316 $795,646 $219,246 $1,741,208 7%
Bonds & Fees $808,151 $500,441 $111,821 $1,420,413 5%
Total 2010 Revenue Requirement $11,854,738 $11,184,863 $3,017,161 $26,056,763 100%
The Voice of Consumers, Making a Difference! 15
2010 IOU Revenue Requirement Summary (000)
Source: AB 67 Report, April 2011, p. 7.
Containing RPS CostsSBx1 2 (Sec. 399.15(c)):
“The commission shall establish a limitation for each electrical corporation on the procurement
expenditures for all eligible renewable energy resources used to comply
with the renewables portfolio standard.”
The CPUC is currently seeking input from parties on the design of the cost containment mechanism
Stakeholders will file comments on February 16 and March 1
A lengthy process involving workshops and stakeholder input will likely ensue with a final decision months away
The Voice of Consumers, Making a Difference! 16
Contact Information
Yuliya Shmidtys2 @cpuc.ca.gov
www.dra.ca.gov