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Home My WebLink About2022-02-24; Clean Energy Alliance JPA; ; Power Charge Indifference Adjustment Overview~ CLEAN ENERGY ALLIANCE DATE: TO: FROM: ITEM 4: Staff Report February 24, 2022 Clean Energy Alliance Board of Directors Barbara Boswell, Chief Executive Officer Power Charge Indifference Adjustment Overview RECOMMENDATION Receive presentation from Keyes and Fox regarding the Power Charge Indifference Adjustment. BACKGROUND AND DISCUSSION The Power Charge Indifference Adjustment (PCIA), also known as the "exit fee" is charged to customers that receive their electric generation service from another provider, such as Clean Energy Alliance. The law requires that the remaining San Diego Gas & Electric (SDG&E) customers be "indifferent" to another customers provider choice. SDG&E has entered into contracts for energy for the customers that have departed, and these contracts are now being liquidated on the open market. To the extent that SDG&E incurs any losses on the liquidation, the losses are made up by CEA customers through the exit fee. Customers are assigned a vintage based on when customers left SDG&E. Solana Beach customers who transferred to CEA from Solana Energy Alliance are in the 2017 PCIA vintage and customers that enrolled with CEA in 2021 are assigned the 2020 PCIA vintage. CEA takes exit fees into account when setting its rates. For 2022, the breakdown of SDG&E, CEA and exit fees are as follows: 0.12 0.1 O.CB o.o; 0.04 0.01 0 SOC£ CEA Generation Rate Comparison Exit Fees { SDG&E } -------------------- CEA 2017Vlntag,e ■GeneratlonRate ■Eic1tFees CEA Generation Rate February 24, 2022 PCIA Overview Page 2 of2 CEA 2020Vlntall" SDG&E sets the PCIA rates through its annual Energy Resource Recovery Account (ERRA) rate setting process. CEA has engaged the services of Keyes and Fox to assist with participating in this rate setting process. Keyes and Fox staff has expertise with utility rates setting processes and the PCIA. FISCAL IMPACT There is no fiscal impact by this action. ATTACHMENTS Attachment A -Power Charge Indifference Adjustment Presentation Item 4 Attachment A Power Charge Indifference Adjustment (PCIA) KEYES &FOXLLP Lee Ewing & Jacob Schlesinger -Keyes & Fox LLP February 24, 2022 PCIA Overview • Law requires remaining SDG&E customers to be left economically "indifferent" to CEA's customers leaving SDG&E's service. • The PCIA is the "exit fee" that is intended to ensure such indifference . • The PCIA can be negative (SDG&E customers paying CEA customers) or positive (CEA customers paying SDG&E customers) KEYES &fQXuP I.I.I u z 1-w Z a: ::> ~ ~ 0 u u.. 2 Q. o ct z II ~ a, ·-c! I a, > 0 < -u a. I-u.. wO ::i:::w a: ::> ct ...I 2~ 0 I.I.I ::i o1! 0 C, u.. 0 I--Ill a: 0 Q. II ~ u. ~ "' LJ.J > LJ.J ~ Example PCIA Revenue Requirement by Vintage $OOOs UOG Legacy 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total Portfolio Costs 398,775 80,561 83,401 Portfolio Market Value 296,371 15,823 47,501 Total Forecasted Indifference 102,405 64,737 35,899 PABA True Up Balance (62,177) (21,116) (2,404) ERRA True Up Balance Total Revenue Requirement $40,228 $43,622 $33,495 Setting the PCIA: SDG&E Annua l ERRA Forecast Applications 234,403 113,449 5,171 1,018 13,275 41,494 971,547 196,716 84,070 5,509 2,199 16,369 35,764 700,322 37,687 29,379 (338) (1,181) {3,094) 5,730 271,225 (28,465) {12,819) {9,623) 1,478 (6,714) 4,212 26,737 {6,563) 70,976 (65,207) (111,684) 194,286 16,600 210,886 $9,222 $16,559 -$9,961 $297 -$6,714 $0 $1,118 $32,467 -$6,563 $265,262 -$48,607 $0 $370,426 • SDG&E files an ERRA Forecast application on May 15 of each year (previously filed on April 15) • SDG&E's ERRA Forecast application includes proposed PCIA rates for t he next calendar year • PCIA rates include: • The "Indifference Amount" • The Portfolio Allocation Balancing Account ("PABA") • The rates are also based on each customer's "vintage": the year the customer departed IOU bundled service • Bundled customers are vintaged to the latest year (e.g., 2022 in t he 2022 ERRA Forecast application) and pay the PCIA as part of their commoaity rate 4 Reviewing the PCIA: SDG&E Annual ERRA Compliance Applications • SDG&E files an ERRA Compliance application on June 1 of each year • Essentially a detailed review of SDG&E's individual procurement transactions and actual resource performance during the preceding year; includes an audit of SDG&E's respective procurement accounts, including its PCIA and PABA BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORl~ Application of San Diego Gas & Electiic Company (U 902-E) for Approval of: (i) Contract Administration, Least-Cost Dispatch and Power Procurement Activities in 2020. (ii) Costs Related to those Activities Recorded to the Energy Resource Recovery Account, Portfolio Allocation Balancing Account. Power Charge Indifference Adjustment Undercollection Balancing Account, Transition Cost Balancing Account, and Local Generating Balancing Account in 2020, and (iii) Costs Recorded in Related Regulatory Accounts in 2020. Application 21-06-_ (Filed June 1, 202 I) APPLICATION OF SAN DIEGO GAS & ELECTRIC COMPANY (U 902-E) FOR APPROVAL OF ERRA COMPLIANCE FOR RECORD PERIOD 2020 KEYES &fOXuP Participation in ERRA Proceedings • Focus is on the PCIA, PABA, GTSR, and bundled customer commodity rates • 2022 ERRA Forecast Application Issues 0 Bundled customer sales forecast o Access to workpapers supporting the year-end PABA o GTSR balance amortization and delay • Potential issues for SDG&E's ERRA proceedings in 2022 (2023 ERRA Forecast & 2021 ERRA Compliance) o Resource adequacy (RA) sales and accounting o Re-vintaging amended contracts o RPS Voluntary Allocation and Market Offer (VAMO) o Continued COVID impacts (e.g . sales, uncollectibles) KEYES &fQXuP .r:; $0.050 ~ $0.045 vi'. $0.040 $0.035 $0.030 $0.025 $0.020 $0.015 $0.010 $0.005 $0.000 ~ ~ \7, SDG&E's PCIA Trends SDG&E PCIA Rates Over Time Vintage 2015 -Residential ~ ~ ~ ~ ~ ~ ~ ~ ~"" :,; ~"; ;-.,, ~'\, ;\! ~--; ~ ...,v \?>~ \v \?>~ \v 4~· ...,.;:; \?>~ ~ ~ ~ '\, '\, ~ ~'\, ~ ~~ '." ~"' '." ',v \7>~ \v \'l>~ \v \'l>~ KEYES&FOXLLP QUESTIONS? Contact Info: Tim Lindi Tlindl@keyesfox.com 510-314-8385 Lee Ewing Lewi ng@keyesfox.com 410-978-2437 Jake Schlesinger Jschlesinger@keyesfox.com 970-531-2525 KEYES &FOXup