HomeMy WebLinkAbout2020-06-26; Clean Energy Alliance JPA; ; Clean Energy Alliance Resource Adequacy ProcurementClean Energy Alliance
JOINT POWERS AUTHORITY
Staff Report
DATE: June 26, 2020
TO: Clean Energy Alliance Board of Directors
FROM: Barbara Boswell, Interim Chief Executive Officer
ITEM 3: Clean Energy Alliance Resource Adequacy Procurement
RECOMMENDATION:
Authorize Interim Chief Executive Officer to execute agreements for resource adequacy procurement,
for amount not to exceed $14MM over three (3) years and which have been accounted for within the
Clean Energy Alliance Pro-Forma assumptions, subject to Special Energy Transactions Attorney approval.
BACKGROUND AND DISCUSSION:
As a load serving entity (LSE), Clean Energy Alliance (CEA) is required to procure resource adequacy (RA),
an energy product to ensure sufficient generating capacity to meet energy demands and ensure
reliability. RA procurement requirements are based on year-ahead forecasted energy demands and
allocated to each LSE by the California Public Utilities Commission (CPUC).
There are three distinct types of RA that are needed to be procured:
• Local -Identified by the state grid operator (CAISO) to serve the local region
• System -Can be located anywhere in the state
• Flex -Can fulfill either
In recent years local RA has become increasing more difficult to procure due to recent regulatory
changes resulting in a multi-year (3-year) procurement requirement and diminishing supply due to
fewer natural gas plants and clean energy replacements being slow to come on line. These conditions
make it increasingly difficult to find local RA in necessary quantities and are driving up prices.
CEA's solicitation resulted in several offers of local RA as well as local RA with flex. While the pricing was
higher than what had been assumed in the CEA pro-forma, they are at levels that CEA's consultants are
seeing for other similar solicitations currently being held for other CCAs. RA costs based on this
solicitation have been factored into the most recently prepared CEA Pro-Formas which were reviewed at
the June 18, 2020 CEA Board meeting.
It is recommended that CEA procure from the solicitation the following quantities:
• 50% of the 2021-2022 requirements
• 25% -30% of the 2023 requirements
In parallel with CEA's solicitation, SDG&E has a solicitation is still underway to sell anticipated surplus
RA, and it is anticipated that some, of CEA's remaining open position can be filled through successfully
participating in SDG&E's solicitation. Once that is complete, should CEA have a remaining open position,
June 26, 2020 Item #3 Page 1 of 2
June 26, 2020
Resource Adequacy
Procurement
Page 2 of 2
subsequent solicitations will continue in order to procure the needed RA to meet the requirements as
established by the CPUC.
CEA is required to demonstrate com pliancy through adequacy procurement via a filing due October 31,
at which time all of CEA's RA obligation must be secured through contracts.
FISCAL IMPACT
Resource Adequacy is included as part of power supply in the CEA pro-forma scenarios, and will be
budgeted for in January when the budget adjustment related to CEA operations for May & June 2021 is
presented to the Board for consideration in the fall.
ATTACHMENTS:
None
June 26, 2020 Item #3 Page 2 of 2
Item 3: Resource Adequacy
Procurement
Barbara Boswell, Interim Chief Executive Officer
Brian Goldstein, Pacific Energy Advisors
6/2G/20 CLEAN ENERGY ALLIANCE FINAL 13
I
Item 3: Resource Adequacy Procurement
• Recommendation
0 Authorize Interim Chief Executive Officer to execute
agreements for resource adequacy procurement, for amount
not to exceed $14MM over three {3) years, and which has been
included within the Clean Energy Alliance Base Pro-Forma,
subject to Special Counsel approval.
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Item 3: Resource Adequacy Procurement
• Solicitation resulted in several offers of local RA as well as local
RA with flex
0 Pricing was higher than original pro-forma assumed
0 Updated pro-forma reflects sufficient revenues to meet cost
• Recommended that the following quantities be fulfilled
through initial solicitation:
0 50% of 2021-2022 Requirements
0 25% -30% of 2023 Requirements
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Item 3: Resource Adequacy Procurement
• In parallel with this procurement, SDG&E has issued a
solicitation for the sale of 2021-2023 System, Local, and
Flexible RA, which CEA will be participating in
• Results of that process will inform CEA of any remaining open
positions for which subsequent procurement may be needed
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Item 3: Resource Adequacy
Procurement
Board Discussion
6/26/20 CLEAN ENERGY ALLIANCE -FINAL 19