Simplifying Policy Management

addressed in these recent filings.

Support for the Proposed Decision

• Bloom Energy Corporation supports the Proposed Decision as it grants modifications to the NEM tariffs for the major investor-owned utilities, while noting that its own petition for modification was denied.

Treatment of Petition

• Bloom Energy Corporation acknowledges that its petition for modification was denied without prejudice, allowing for the possibility of resubmission if the California Air Resources Board (CARB) revises the NEM Fuel Cell (NEMFC) Greenhouse Gas (GHG) Emissions Standards in the future.

Memorandum Account for Cost Recovery

• The Joint Utilities argue that a new memorandum account is unnecessary and recommend using the existing Net Billing Tariff (NBT) memorandum accounts, with modifications to separately track costs for export value compensation, utility administration, and other expenses. They state this would be more administratively efficient and reduce the need for additional CPUC resources.

Extension of NEMFC Certification and Payment Requirements

• Bloom Energy Corporation notes the extension granted by the CPUC Executive Director regarding NEMFC customer generation certification and payment requirements, which will take effect after CARB issues a final decision on potential updates to the NEMFC GHG Emissions Standards. Bloom notes this extension eliminates the need for a stay on the relevant ordering paragraph.

requirements during non-peak (non-Q3) months, under certain conditions. This update provides a sampling of parties' positions on key topics addressed in the recent filings.

Bridge Resource Procurement Requirements

• Cal Advocates supports SCE’s request to exempt LSEs from procuring bridge resources for generic capacity and LLT requirements during non-Q3 months if they meet certain conditions, citing data that LSEs typically meet resource adequacy (RA) needs in these periods.
• San Diego Gas & Electric Company (SDG&E) supports aligning bridge resource procurement with actual short-term reliability needs and recommends that LSEs should not be required to procure bridge resources in any month where their System RA requirements are met.
• Pacific Gas and Electric Company (PG&E) recommends extending the elimination of bridging resources through 2028, with a future evaluation for 2029 and beyond.
• California Community Choice Association (CalCCA) supports exempting LSEs with long-term contracts from bridge procurement in non-Q3 months, provided they meet month-ahead RA requirements, and advocates for extending this to Diablo Canyon Replacement (DCR) procurement.
• Alliance for Retail Energy Markets (AReM) supports reducing the need for bridge contracts during October to June, provided RA requirements are met, to avoid unnecessary costs.
• Hydrostor, Inc. supports eliminating the requirement for LSEs to procure unmet LLT capacity through bridge contracts, arguing that such requirements increase costs and discourage diverse LLT technology procurement.
• Mussey Grade Road Alliance (MGRA) opposes the PFM, arguing that it would undermine incentives for timely procurement, shift costs to compliant LSEs, and potentially increase reliance on fossil fuels.
• Green Power Institute (GPI) supports eliminating bridge contracting requirements for non-Q3 months, contingent on LSEs meeting month-ahead system RA compliance, to minimize reliance on emitting resources and support emission reduction targets.

Cost Impacts and Ratepayer Considerations

• Cal Advocates recommends relieving LSEs from procuring extra capacity in non-Q3 months to reduce costs for ratepayers.
• SDG&E emphasizes that additional bridge procurement in Q3, when System RA obligations are met, could lead to unnecessary costs and recommends clarifying that short-term bridge procurement should not occur if compliance is satisfied.
• PG&E’s analysis indicates that eliminating bridge procurement requirements would reduce costs for customers while maintaining reliability.
• CalCCA argues that the proposed modifications would help LSEs avoid high costs associated with DCR bridge resources and support affordability during the transition from Diablo Canyon Power Plant.
• AReM states that current bridge contract requirements unnecessarily raise costs without enhancing reliability and supports the PFM for cost reduction.
• Hydrostor contends that bridge resource requirements for delayed LLT projects are unnecessary and detrimental, potentially imposing unnecessary costs on ratepayers.
• MGRA argues that bridge procurement could increase customer costs and suggests that the financial burden should fall on LSE shareholders, not ratepayers.

Resource Adequacy and Reliability

• SDG&E asserts that existing System RA compliance and Planning Reserve Margin (PRM) requirements are sufficient to ensure reliability without additional bridge procurement.
• PG&E contends that compliance with the RA program can adequately meet reliability needs through 2028 and supports a future evaluation for 2029 and beyond.
• CalCCA maintains that exempting LSEs from bridge procurement in non-Q3 months will not compromise reliability, provided RA requirements are met.
• GPI emphasizes the importance of right-sizing IRP procurement to align with current RA assessments and supports avoiding short-term bridge procurements that could inflate costs during low resource adequacy months.
• Hydrostor argues that the existing RA framework already reassesses system capacity annually, making bridge resource contracts redundant for reliability purposes.
• MGRA warns that reducing bridge procurement requirements could reduce the urgency to connect new clean resources, potentially impacting system reliability.

Penalty Mechanisms and Compliance Incentives

• GPI opposes changes to the penalty mechanism for IRP procurement orders, arguing that eliminating non-compliance penalties would complicate the system and create inequities among LSEs.
• MGRA supports maintaining penalties for procurement shortfalls, emphasizing that penalties are crucial for reliability and clean energy capacity, and suggests that non-compliant LSEs should pay a fee equivalent to the RA cost for non-Q3 months.
• AReM requests clarification that the limitation on bridging for delays of up to three years remains intact and that penalties for delays beyond three years are not reduced by the PFM.

Long Lead-Time (LLT) Resource Development and Technology Diversity

• Hydrostor highlights that bridge resource procurement obligations for delayed LLT resource development may discourage investment in diverse LLT technologies and favor established technologies, such as lithium-ion batteries, undermining resource diversity goals.
• Hydrostor calls for the removal of bridge procurement requirements to foster a more diverse LLT resource development landscape and support California’s SB 100 goals.

Diablo Canyon Power Plant Replacement and Related Procurement

• CalCCA advocates for extending the modified bridge procurement requirements to include Diablo Canyon Replacement procurement, arguing there is no immediate reliability need for DCR bridge capacity in non-Q3 months and that this would support the transition to zero-emission resources.
• PG&E recommends maintaining the need for bridging resources for the Diablo Canyon Power Plant replacement category during July to September, with future evaluation for 2029 and beyond.

Clarifications and Future Planning

• AReM requests clarification on the definition and application of bridge contracts, particularly regarding contracts with commercial operation dates beyond procurement order deadlines and the three-year bridging limitation.
• GPI recommends that the Resource Capacity Procurement and Planning Process (RCPPP) further explore IRP-RA alignment, bridge contracting requirements, and penalties for IRP non-compliance, and suggests implementing a Minimum Margin of Over-Procurement (MMOP) requirement.
• Hydrostor points to the upcoming RCPPP as an opportunity for comprehensive evaluation of resource needs and procurement requirements.

This summary reflects a sampling of positions from utilities, trade groups, and developers on the key issues raised in the recent filings related to SCE’s Petition for Modification in the IRP proceeding.

ratemaking. The following is a sampling of parties' positions on key topics addressed in recent comments.

Retroactive Ratemaking and Legal Process

• California Community Choice Association (CalCCA) argues that changes to the RA MPB should only be applied prospectively, as retroactive ratemaking is generally prohibited. CalCCA contends that revising the RA MPB formula and applying it retroactively would violate these prohibitions.
• California Large Energy Consumers Association (CLECA) emphasizes that any changes to the RA MPB should not affect previously approved general rates and that retroactive ratemaking is impermissible. CLECA urges the Commission to ensure due process and proper notice before implementing any modifications.
• Cal Advocates/N.STID/CPUC supports the position that the Commission can modify the RA MPB methodology without retroactive ratemaking concerns.
• The Utility Reform Network (TURN) states that proposed modifications to the MPBs do not constitute retroactive ratemaking and sees no procedural barriers to Commission action on Track 1 issues.

Expansion and Quality of RA MPB Data Set

• Cal Advocates/N.STID/CPUC proposes expanding the data set for RA MPB calculations by removing time limits, including long-term contracts, and ensuring a sufficiently large data set for improved forecast accuracy.
• Small Business Utility Advocates (SBUA) calls for the inclusion of longer-term contract data and the exclusion of affiliate, swap, and sleeve transactions from MPB calculations, as well as the elimination of non-market-based data.
• COALITION OF CALIFORNIA UTILITY EMPLOYEES (CUE) recommends expanding the transaction data used for calculating the RA MPB to include a broader historical range, such as data from 2020 to 2024, to mitigate short-term market volatility.
• TURN emphasizes the need to expand the timeframe for transaction data used in calculating RA MPBs, advocating for inclusion of both short-term and long-term contracts to better capture actual procurement costs and reduce volatility.

Combining RA Types into a Single Value

• Cal Advocates/N.STID/CPUC suggests combining system, local, and flexible RA into a single value to reduce ratepayer volatility and improve forecast precision, while requesting further modeling for unintended consequences.
• SBUA recommends consolidating system, local, and flexible RA into a single value, aligning with IOU values.
• CUE supports merging separate RA MPBs into a single value using a wider range of transactions, but raises concerns about potential mispricing if the distinct values of local RA across different IOUs are overlooked.
• TURN agrees with the proposal to combine System, Local, and Flexible RA into a single value to simplify calculations and address biases from limited transaction volumes.
• CLECA argues against combining System, Local, and Flexible RA into a single value without a solid data foundation, warning that such changes could lead to inaccurate results.
• Alliance for Retail Energy Markets (AReM) and Direct Access Customer Coalition (DACC) express concerns that combining all RA values into a single figure may not accurately reflect the RA market.

Exclusion and Definition of Non-Market Transactions

• Cal Advocates/N.STID/CPUC supports the exclusion of duplicative and non-market transactions from the RA MPB calculation data, advocating for the adoption of definitions for affiliate, swap, and sleeve transactions, and recommends that Load Serving Entities report these transactions for exclusion.
• SBUA recommends excluding affiliate, swap, and sleeve transactions from MPB calculations and eliminating non-market-based data.
• CLECA supports the exclusion of certain transactions—affiliate, swap, and sleeve—from the RA MPB calculation to enhance accuracy, but stresses the importance of clearly defining these transaction types before proceeding.
• TURN advocates for the elimination of non-market based transactions, such as swaps and affiliate transactions, from the MPB calculations, as these can distort market pricing.
• Shell Energy North America (US) L.P. supports straightforward measures such as excluding affiliate transactions once definitions are clarified.

Procedural Fairness and Evidentiary Process

• Shell Energy North America (US) L.P. opposes the Joint Utilities’ motion to admit testimony, arguing it is procedurally improper and would disadvantage other parties. Shell Energy urges the Commission to amend the schedule to allow all parties to submit direct and rebuttal testimony and to hold evidentiary hearings or workshops.
• CalCCA emphasizes the importance of transparency and substantial evidence to support the Commission's findings, advocating for a careful, evidence-based approach rather than a rushed process.
• CLECA calls for thorough record development before deciding on the potential consolidation of various RA values and insists that only market-based transactions should be included in the RA MPB calculation, pending clear definitions and criteria for identifying transactions.

Affordability and Customer Impact

• CalCCA urges the Commission to adopt its recommendations to address affordability issues, countering Joint IOUs’ arguments that the current PCIA methodology imposes "artificial costs" on bundled service customers.
• SBUA highlights concerns regarding the PCIA and its impact on bundled customers, requesting further comments in Phase II of the proceedings.

Resource Adequacy Market Volatility and Data Validation

• SBUA urges the Commission to utilize pricing data from other balancing authorities (e.g., WECC, SMUD, LAWP) to validate CAISO's pricing, arguing that current reliance on CAISO NP-15 and SP-15 prices is inadequate and overlooks longer-term contracts and other charges.
• CUE notes a significant decline in RA market liquidity, increasing the risk of outlier prices and manipulation, and supports expanding the dataset to address data scarcity and volatility.
• TURN identifies recent dramatic increases in RA MPB pricing, which negatively impact customer rates, and attributes this to the limited dataset currently used.

Principle of Indifference and Cost Allocation

• CUE emphasizes the PUC's legal obligation to ensure that when customers leave bundled IOU service, remaining customers do not bear costs incurred for those who departed, upholding the "indifference" principle through the PCIA mechanism.