Second Phase to Reform “Exit Fees” Paid by CCAs Begins

We have previously discussed on this blog the California Public Utilities Commission’s (“CPUC”) decision in its Power Charge Indifference Adjustment (“PCIA”) proceeding. (see post 1 and post 2). The CPUC’s recent decision deferred to a second phase the development of a long-term solution to the PCIA or “exit fee” charged by California’s large investor-owned utilities (“IOUs”) on customers who begin taking electric service from community choice aggregation programs (“CCAs”)

The second phase has now begun, with nearly a dozen parties filing responses to questions posed by the CPUC to help it establish a “working group” process that will enable parties to further develop a number of proposals for future CPUC consideration. The CPUC proposed four topics for consideration in working groups: (1) Benchmark True-up, including both Resource Adequacy (“RA”) and Renewables Portfolio Standard (“RPS”); (2) Prepayment; (3) Portfolio Optimization and Cost Reduction; and (4) Allocation and Auction.

The CPUC will hold a prehearing conference on December 19, 2019 for parties to discuss their recommendations for the working group process, which will inform the scope the CPUC adopts for Phase 2. Below is a high-level categorical summary of party recommendations

Number and Scope of Working Groups

Several parties have supported using the working groups specified by the CPUC. Others supported consolidating the Portfolio Optimization and Cost Reduction working group and the Allocation and Auction working group into a single group.

A number of parties proposed additional working groups, such as the Forecasting and Bill Presentation working groups proposed by the California Community Choice Association (“CalCCA”), which represents CCAs throughout the state; the Procurement Review Group and Independent Evaluator Process Reforms working group proposed by Protect Our Communities; and a ^“miscellaneous” working group to address issues such as retail cost allocation, rate design, and bill presentation proposed by several parties including the IOUs.

Three northern California based CCAs – Peninsula Clean Energy, Marin Clean Energy, and Sonoma Clean Power (collectively, the “NorCal CCAs”) – recommended that the Commission initiate a separate track, which they referred to as the “Unavoidable and Attributable” Track, to determine (1) whether costs included in the PCIA to date were avoidable and/or were not attributable to departed customers and (2), if so, how an appropriate recompense should be structured, including whether such recompense should come from utility shareholders.

Governance of Working Groups

Several parties, including the IOUs and CalCCA, recommended that each working group be co-chaired by representatives from both a utility and a non-utility load-serving entity. Another party recommended that only one party be assigned the facilitator role for each working group and if an IOU was not given this role, then an IOU should be appointed as a “deputy” facilitator. Some parties recommended that Energy Division staff should facilitate and/or be assigned to assist the working groups, whereas others recommended that Energy Division should not play a role in facilitation or management.

Schedule and Timelines

Parties generally agreed with the CPUC’s proposal to issue a proposed decision addressing each working group’s recommendations by September 2019 and proposed subject-specific tasks, milestones, and deliverables for each working group to accommodate this timeline.

Only one party supported the Energy Division facilitating a single “kick-off” workshop for the purpose of forming each of the proposed working groups. The majority of parties stated that they did not think such a workshop was necessary.

Several parties, including all CCA groups, the IOUs, and the Public Advocates Office, among others, supported prioritizing  the RA and RPS benchmark true-up working groups since the outcomes will have immediate and direct impacts on the PCIA calculation approved in the decision issued in Phase 1 and it must be completed in time for integration in the IOUs’ next Energy Resource Recovery Account (“ERRA”) proceedings that are used to determine which fuel and purchased power costs can be recovered in rates.

The Norcal CCAs recommended a schedule to address its proposed separate “Unavoidable and Attributable” Track discussed above.

Evidentiary Hearings

A couple parties stated evidentiary hearings are necessary, others contended they are not, and several stated that it is premature to know whether hearings will be necessary. A couple recommended avoiding hearings if possible and others recommended retaining the right to request hearings if working groups are unable to reach consensus. One party recommended that each working group recommend whether evidentiary hearings are necessary.

Appropriate Category for Phase 2

The majority of parties recommended that Phase 2 be categorized as ratemaking. Only one party recommended it be categorized as a rulemaking. The IOUs stated they were amenable to either a rulemaking or ratemaking categorization.

Discovery Issues

The IOUs recommended the Commission issue guidance strictly limiting further discovery in Phase 2 to information material to structures and processes to avoid unwarranted delay. The NorCal CCAs requested a clear determination that past portfolio management and forecasting are within scope of Phase 2 and that the Commission will require timely and responsive answers to data requests on those issues. Several parties recommended that Phase 1 non-disclosure agreements (“NDAs”) should be used for discovery in Phase 2, although one party recommended use of NDAs should be discouraged so as not to restrict certain working group member’s ability to participate fully in group deliberations.