Comments of Southern California Edison Company Concerning Revised Straw Proposal on Resource Adequacy Deliverability for Distributed Generation

Transcription

1 Comments of Southern California Edison Company Concerning Revised Straw Proposal on Resource Adequacy Deliverability for Distributed Generation Submitted by Company Date Submitted John C. Marler Southern California Edison Company ( SCE ) March 13, 2012 The Southern California Edison Company ( SCE ) appreciates this opportunity to respond to the California Independent System Operator s ( CAISO s ) Revised Straw Proposal on Resource Adequacy Deliverability for Distributed Generation. SCE s comments below are structured to respond to the questions the CAISO posed in its template. SCE provides additional questions and comments in Section 4 below. SCE believes the Revised Straw Proposal is an improvement on the prior draft. SCE s chief concerns at this time are (1) whether and how the proposed process will synch with existing procurement and interconnection processes, and (2) whether the Load-Serving Entities ( LSEs ) or the Local Regulatory Authorities ( LRAs ) will have responsibility to allocate DG ( distributed generation ) deliverability. SCE recommends that the LSEs have that responsibility, for the reasons discussed in its prior comments and reiterated below. Section 1: Clarifications and Refinements Made Between the 2/28/2012 Revised Straw Proposal and the Earlier 12/12/2011 Issue Paper and Straw Proposal. 1. The revised straw proposal specifies six objectives that this initiative seeks to achieve. SCE has the following questions and comments on the six objectives listed on page 8 of the Revised Straw Proposal: First, the third objective is to determine the amount of Distributed Generation ( DG ) that will be fully deliverable without, among other things, needing any further deliverability assessment. SCE asks the CAISO to clarify whether the DG deliverability identified pursuant to the proposed approach would be subject to the annual NQC ( Net Qualifying Capacity ) process governed by Section 40 of the CAISO Tariff. It is SCE s understanding that the CAISO performs an annual study each year, and if a particular area is oversubscribed, affected resources may receive NQC values that are lower than their full capacity deliverability status and Southern California Edison Company Page 1 of 6

2 qualifying capacity ( QC ) values would imply. 1 approach be subject to such NQC de-rates? Will DG identified pursuant to the proposed Second, the sixth objective is to [i]nform DG developers of locations where sufficient deliverability capacity exists to accommodate additional DG resources. SCE comments that DG developers should be changed to interested stakeholders to reflect the fact that many entities, such as project developers, utilities, and regulatory agencies, may be interested in having access to this information. 2. In response to stakeholder questions about the definition of DG resources in the previous proposal, the revised straw proposal clarifies that the definition of DG resources as used in the proposal is limited to facilities that are connected at the distribution level and that are not connected to the ISO grid; moreover, the proposal does not specify MW size limits and is intended to apply to both renewable and non-renewable resource types. SCE appreciates these clarifications to the definition of distributed generation and believes the clarifications are appropriate. 3. In response to stakeholder questions about the relationship between the proposed process for DG deliverability determination/allocation and the relevant processes for generation interconnection, the revised straw proposal clarifies that the proposal is solely a means to provide deliverability status to DG resources, that DG projects must still apply for and obtain interconnection through either Rule 21 or WDAT, that a DG project awarded deliverability through this proposal may still be responsible for reliability network upgrades (RNU) or distribution system upgrades, and that the proposal is not applicable to projects requesting interconnection through the ISO s GIP. SCE appreciates these clarifications and believes they are appropriate. 4. Several stakeholders make the argument that DG resources should be considered deliverable as long as the total DG production below any given ISO network node does not exceed the amount of load below that node (i.e., no backflow ). The revised straw proposal explains that such a backflow criterion is not sufficient and, in fact, it not even relevant for establishing deliverability of DG resources. SCE appreciates the CAISO making this distinction and clarification. 1 CAISO Technical Bulletin, Generator Interconnection Procedures; Deliverability Requirements for Clusters 1-4, February 2, 2012, at 11. Southern California Edison Company Page 2 of 6

3 Section 2: The Three Major Components of Step 1 of the Annual Process to Provide RA Deliverability Status to DG Resources 5. Development of the base case study model. The revised straw proposal describes a sequence the ISO proposes to follow in building the base case study model for use in the DG deliverability studies. SCE s understanding of the proposal is that the CAISO will use the DG component of the 33% renewable base portfolio developed for the current TPP cycle to specify the set of network nodes and initial MW targets of DG for the MW deliverability amounts at each node. 2 While SCE will participate in the stakeholder processes related to the establishment of the 33% renewable base portfolio, SCE comments here that it is concerned about the potential for inaccurate assumptions making their way into the base portfolio and having impacts on the deliverability analyses of resources at both the transmission and distribution levels. 6. Perform the DG deliverability analysis using the base case study model built for this purpose. To the extent the study reveals that the network cannot provide full deliverability to all the generation projects and DG per the modeling approach described above, the ISO will reduce the amounts of DG at each node as necessary to achieve full deliverability. This approach appears reasonable. 7. Summarize the deliverable MW quantity of DG at each network node. The MW quantity at each node will be less than or equal to the amount that was specified in the 33% renewable base portfolio. This approach seems reasonable, although SCE reiterates its concern from (5) above that such reasonableness depends on the assumptions inherent in the base portfolio. Section 3: The Three Major Components of Step 2 of the Annual Process to Provide RA Deliverability Status to DG Resources 8. ISO determines LRA shares of the total MW of DG deliverability available. This will be based on the share of system peak load forecast attributable to those LSEs subject to that LRA s jurisdiction. The ISO will notify LRAs of their load share of the MW quantities of DG deliverability and any applicable geographic parameters that may limit eligibility to request specific nodes (e.g., it may be necessary to prevent the situation where the simple load-ratio share rule might impede the ability of an LRA for a smaller LSE to procure deliverable DG close to its load). The ISO requests stakeholder comment on this potential situation and also requests stakeholders provide potential solutions for consideration. SCE first comments that the CAISO needs to clarify that determination of shares of the total MW of DG deliverability available will be revisited each year, as new system models are 2 CAISO Revised Straw Proposal, Resource Adequacy Deliverability for Distributed Generation, February 28, 2012, at 14. Southern California Edison Company Page 3 of 6

4 run and the amount of DG deliverability available across the system changes, and as the loadratio share changes from year to year. SCE interprets (8) above as addressing LRA shares for a given year, as the presentation materials indicated that [a]ny portion of deliverability not assigned to projects by LRAs in the current cycle will NOT carry over to the next annual cycle. 3 If SCE s interpretation is consistent with the CAISO s proposal, then SCE recommends that shares of DG deliverability should be based on the share of system peak load forecast attributable to those LSEs subject to that LRA s jurisdiction. The CAISO should not impose any geographic parameters on allocation of shares as certain DG procurement programs allow LSEs to procure from resources outside their service territories. 9. LRAs make nominations. Each LRA will make their nominations by submitting a request to the ISO for MW amounts of DG deliverability by node, up to each LRA s maximum MW amount as adjusted by any valid transfers and any locational limits. All nominations will be honored if nodal totals of all nominations are within the amount of DG deliverability available. Otherwise LRA nominations are reduced so that the total is deliverable while preserving LRA load-ratio shares. For any node where the total requested amount exceeds the available amount, each requesting LRA will receive a share of its requested amount proportional to its total share of system peak load. If the total MW amounts requested at each node are within available quantities, but the requested amount of some LRAs making up the total is greater that their maximum amount while others are less, then the requested amount of those exceeding their maximum amount will be reduced proportional to its total share of system peak load and those requesting less than their maximum amount will receive no adjustment. SCE does not support a process where an LRA can make nominations to request DG deliverability the LSEs themselves should make the request for projects currently in, or expected to be in, their resource portfolios. The LRAs roles should be to develop policy objectives and broad process guidelines that LSEs will use in awarding DG deliverability. However, the actual administration of awarding and monitoring DG deliverability awards should be left to the LSEs. 3 Deliverability for Distributed Generation Revised Straw Proposal PowerPoint Presentation, March 6, 2012, at 20. Southern California Edison Company Page 4 of 6

5 10. LRAs (or its regulated LSE) make assignments of DG deliverability to specific DG projects and these assignments become an attribute of the specific DG project and are not transferrable to another DG project. Each LRA reports assignments to the ISO before the start of the subsequent annual cycle. Each LRA will ensure that specific DG projects to which assignments have been made make satisfactory progress toward commercial operation (each specific DG project must meet LRAspecified retention criteria in order to retain the RA deliverability status). LRAs will monitor the progress of each specific DG project and compare that against the retention criteria and report to the ISO any assignments that are revoked. Any portion of deliverability not assigned by LRAs (or its regulated LSE) to specific DG projects in the current cycle will not carry over to the next annual cycle. The resulting outcome of these actions will be reflected in subsequent DG deliverability studies and GIP studies. As an initial matter, SCE appreciates the CAISO s referring to the DG deliverability as an attribute of a specific DG project. SCE expressed concern about the prior proposal to make deliverability a property right of a specific resource. SCE recommends that DG deliverability be an attribute that can attach to a resource, but that cannot be transferred to another DG project, either by the resource, by the LSE, or by an LRA. Next, SCE emphasizes its objections to providing DG deliverability allocation responsibility to LRAs. The allocation of deliverability should reside with the LSEs. The LSEs are best positioned to determine how to utilize their deliverability capacity based on their resource portfolios. Trading rules should be established (similar to CRRs and RA import capacity) so that LSEs can acquire distribution deliverability to match their resource portfolios. Section 4: Additional Comments Timing Concerns SCE s specific comments on the questions in the CAISO s template notwithstanding, SCE has concerns about the timing of the proposed DG deliverability award process. SCE is concerned that the schedule the CAISO has proposed does not provide adequate time for the LRA 4 to award deliverability. Assuming the CAISO leaves the details of the award process to the LRA, if some consideration is not given, even at a high level, to how the CAISO's process will integrate with the LRA s process and the interconnection process, we may end up with three well-designed processes that don't work together. Specifically, SCE is concerned that the ISO is only allowing two months for the LRA to award deliverability. While the details of the award process have not been determined, deliverability may be awarded to generators that an LSE has contracted with or intends to contract with. 5 Interconnection applications are received 4 SCE recommends that LSEs should award DG deliverability, not LRAs. 5 This is because if deliverability is awarded to a generator before that generator is selected through an auction, that generator will have market power over other generators that were not awarded deliverability and will be able to command a higher price. If a particular procurement contract requires deliverability, the market power will be that much greater. If deliverability is not awarded to a generator on or around the time the PPA is executed, the generator may not be able to execute the PPA because of the uncertainty associated with awarding deliverability. Southern California Edison Company Page 5 of 6

6 throughout the year and generators are allowed to participate in various procurement opportunities as their project progresses through the study process. Because LSE procurement goes on continuously throughout the year, deliverability should be available to be awarded throughout the year. It s hard to imagine how the LRA would allocate deliverability in a two-month window. Certainly the LRA has some expectations about where projects that require deliverability are locating. Those expectations will be used by the LRA to make its request for allocations of deliverability. However, the process of actually awarding deliverability to viable generation projects will most likely take longer than 2 months. If the LSE is required to award deliverability in a two-month window, that may force all procurement to be compressed into that same two-month window. That would create an unacceptable workflow pattern for the LRA, the LSE and the interconnecting entity. SCE recommends that the deliverability allocated to an LSE be available for an extended period of time, preferably a year. Additional time could easily be accommodated in the CAISO s current schedule. There is a period between February and June that could be used to increase the time for the LRA to award deliverability. By beginning the allocation process at the end of February rather than at the beginning of June the CAISO will add several months to the LRA s award window. However, SCE urges the CAISO to go even further than that and to restructure its proposal so that the amount of deliverability the LRA is allocated will be available to it for awards to generators over a one-year period. Base Case The CAISO states on page 15 of Revised Straw Proposal that to develop the base case CAISO will start with the most recent cluster Phase 2 deliverability power flow base case. SCE asks whether the Phase 2 deliverability power flow base case will be the case with problematic DNU removed as described in the CAISO s February 2, 2012, revised technical bulletin on Generation Interconnection Procedures, Deliverability Requirements for Clusters 1-4. SCE s understanding is that removal of the problematic DNU may have a significant impact on the amount of deliverability available in the system. Southern California Edison Company Page 6 of 6