;STATE OF CALIFORNIA
Edmund G. Brown Jr., Governor
PUBLIC UTILITIES COMMISSION
SAN FRANCISCO, CA 94102-3298
September 8, 2016
Advice Letter 3300-E and 3300-E-A
Russell G. Worden
Director, Regulatory Operations
Southern California Edison Company
8631 Rush Street
Rosemead, CA 91770
Subject: Submission of the SEGS Contracts for Procurement of
Renewable Energy from SCE’s 2014 RPS Solicitation and
Supplemental Filing
Dear Mr. Worden:
Advice Letter 3300-E and 3300-E-A are effective as of August 18, 2016 per
Resolution E-4759.
Sincerely,
Edward Randolph
Director, Energy Division
Russell G. Worden
Managing Director, State Regulatory Operations
October 28, 2015
ADVICE 3300-E
(U 338-E)
PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA
ENERGY DIVISION
SUBJECT:
I.
Submission of the SEGS III, IV, and V Contracts for
Procurement of Renewable Energy From SCE’s 2014
Renewables Portfolio Standard Solicitation
INTRODUCTION
A.
Purpose of the Advice Letter
Southern California Edison Company (“SCE”) submits this Advice Letter pursuant
to California Public Utilities Code Section 399.11 et seq. (the “RPS Legislation”)
seeking approval of three Renewables Portfolio Standard (“RPS”) power
purchase agreements (the “SEGS Contracts”) between SCE and Luz Solar
Partners Ltd., III, IV, and V (“Seller” or “Luz III, IV, and V”).
The following table summarizes the SEGS Contracts:
Seller
Luz III
Luz IV
Luz V
Generation
Type
Solar
Thermal -Trough
Solar
Thermal -Trough
Solar
Thermal -Trough
Size
(MW)
Estimated
Average
Energy
(GWh/Yr)
Forecasted
Commercial
Operation Date
Term of
Agreement
(Years)
30
67
March 1, 2017
10
30
69
March 1, 2017
10
30
68
February 1, 2018
10
SCE requests that the California Public Utilities Commission (“Commission” or
“CPUC”) issue a resolution containing findings in the form requested in this
Advice Letter within nine months (July 28, 2016).
P.O. Box 800
8631 Rush Street
Rosemead, California 91770
(626) 302-4177
Fax (626) 302-4829
ADVICE 3300-E
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October 28, 2015
In accordance with General Order (“GO”) 96-B, the confidentiality of information
included in this Advice Letter is described below. This Advice Letter contains
both confidential and public appendices as listed below.
Confidential Appendix A:
Consistency with Commission Decisions and
Rules and Project Development Status
Confidential Appendix B:
2014 Solicitation Overview
Confidential/Public Appendix C:
Independent Evaluator Report
Confidential Appendices D-(1-3): Contract Summary
Confidential Appendices E-(1-3): Comparison of the SEGS Contracts with SCE’s
2014 Pro Forma Renewable Power Purchase
and Sale Agreement
Confidential Appendices F-(1-3): SEGS Contracts
Confidential/Public Appendix G: Renewable Net Short Calculations
Appendix H:
Confidentiality Declaration
Appendix I:
Proposed Protective Order
B.
Subject of the Advice Letter
The SEGS III, IV, and V projects (individually SEGS III, IV, and V, and
collectively, the “SEGS Projects”) are existing, 30 MW solar thermal - trough
facilities and have been operating since the late 1980s. The projects are
contiguously located at 41100 Highway 395, Boron, California 93516. The
projects are interconnected at the Kramer Substation in SCE’s service territory.
The SEGS III, IV, and V projects are owned by Luz III, IV, and V, respectively.
Each Luz entity is a California limited partnership primarily owned by the
following limited liability companies that comprise each entity’s governing general
partners: NextEra Energy Resources, Fortress Investment Group, and
Constellation. The extent of each general partner’s ownership of each of the
SEGS Projects is as follows:
ADVICE 3300-E
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Project
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October 28, 2015
NextEra Energy
Resources
Fortress Investment
Group
Constellation
Other
(%)
(%)
(%)
(%)
SEGS III
50
46.8
0
3.2
SEGS IV
37.8
50
12.2
0
SEGS V
45.8
50
4.2
0
Each of the SEGS Projects are currently operating and delivering energy to SCE
under a qualifying facility (“QF”) power purchase agreement (“PPA”). The term of
each of the SEGS Contracts should begin shortly after the expiration of each QF
PPA.1 Since the interconnection facilities agreements (“IFAs”) expire
simultaneously with the QF PPAs, Seller has correctly notified the California
Independent System Operator (“CAISO”) and SCE of its intention to convert the
expiring IFAs to new interconnection agreements as allowed under Section 25 of
the CAISO Tariff.
The SEGS Contracts originated from SCE’s 2014 RPS Solicitation.
C.
General Project Description
Project Name
SEGS III
SEGS IV
SEGS V
Technology
Solar Thermal -- Solar Thermal -Trough
Trough
Solar Thermal - Trough
Capacity (MW)2
30
30
30
Capacity Factor (Term
Year 1)
26%
26%
26%
Expected Generation
(GWh/Year)3
67
69
68
Initial Commercial
January 26,
January 20,
January 1,
1
2
3
The expiration dates for the current QF PPAs are as follows: January 26, 2017 for
SEGS III; January 30, 2017 for SEGS IV; and January 1, 2018 for SEGS V.
See Appendix D, Section D under “Capacity” for further details on the SEGS III, IV,
and V capacity.
This expected generation represents the annual average of generation that SCE
expects to make payments on over the contract term.
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Operation Date
1987
1987
1988
Date Contract Delivery
Term Begins
March 1, 2017
March 1, 2017
February 1,
2018
Delivery Term (Years)
10
10
10
Vintage (New / Existing /
Repower)
Existing
Existing
Existing
Location (City and State)
SEGS III, IV,
and V
contiguously
located at
41100 Highway
395, Boron, CA
93516
SEGS III, IV,
and V
contiguously
located at
41100 Highway
395, Boron, CA
93516
SEGS III, IV,
and V
contiguously
located at
41100 Highway
395, Boron, CA
93516
Control Area (e.g.,
California Independent
System Operator
(“CAISO”), Bonneville
Power Administration
(“BPA”))
CAISO
CAISO
CAISO
Nearest Competitive
Renewable Energy Zone
(“CREZ”) as identified by
the Renewable Energy
Transmission Initiative
(“RETI”)
Kramer
Kramer
Kramer
Type of cooling, if
applicable
Wet
Wet
Wet
D.
Project Location
The SEGS Projects are existing projects located on contiguous sites near the
town of Boron, California in San Bernardino County. The sites are located in the
Mojave Desert.
ADVICE 3300-E
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E.
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October 28, 2015
General Deal Structure
The SEGS Contracts are based on SCE’s 2014 Pro Forma Renewable Power
Purchase and Sale Agreement, which was accepted by the Commission in
Decision (“D.”) 14-11-042 on November 20, 2014.4
SCE is purchasing all electric energy produced by the SEGS Projects throughout
the contract term, net of station use (if any), and all green attributes, capacity
attributes, and Resource Adequacy benefits generated by, associated with, or
attributable to the SEGS Projects.
The point of delivery is located at the Kramer Substation, which is in SCE’s
service territory. As discussed in Section I.B, Seller has correctly notified the
CAISO and SCE of its intention to convert the expiring IFAs for the SEGS
Projects to new interconnection agreements as allowed under Section 25 of the
CAISO Tariff.
The SEGS Projects meet the eligibility requirements and are consistent with the
preferred project characteristics for SCE’s 2014 Request for Proposals (“RFP”),
which are described in further detail in Sections II.A.2 and II.A.3. The SEGS
4
D.14-11-042 at 124 (Ordering Paragraph 1).
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Projects are expected to deliver a portfolio content category 1 (“Category 1”)5
product and have a first point of interconnection within the CAISO.
The SEGS Projects are considered “Multifuel Facilities” by the California Energy
Commission (“CEC”) and as such may burn a de minimis6 quantity of
nonrenewable fuel. As long as no more than such de minimis quantity of nonrenewable fuel is utilized, each MWh of energy generated is considered
renewable and creates an associated renewable energy credit (“REC”).7
Additional information regarding the SEGS Contracts is provided in Appendix D.
F.
RPS Statutory Goals and Requirements
By providing renewable energy from an eligible renewable energy resource
(“ERR”) as defined in the RPS Legislation, the SEGS Contracts are consistent
with, and contribute to, the RPS program’s statutory goals. Pursuant to Public
Utilities Code Section 399.11(b), the Legislature determined that procurement of
electricity products from ERRs, such as the SEGS Projects, provides unique
benefits to California, including among other things, displacing fossil fuel
consumption within the state, reducing air pollution in the state, meeting the
state’s climate change goals by reducing emissions of greenhouse gases
associated with electrical generation, and meeting the state’s need for a
diversified and balanced energy generation portfolio.
Based on SCE’s analysis of its renewable net short (“RNS”) position prior to
executing 2014 RPS solicitation contracts, SCE projected a long-term renewable
procurement need in the third compliance period and beyond. Consistent with
this need, the SEGS Projects will provide long-term RPS and Category 1-eligible
energy over 10-year terms starting on March 1, 2017 for SEGS III and IV, and
February 1, 2018 for SEGS V. SCE’s RNS calculations are included in Appendix
G.
5
6
7
As defined in Public Utilities Code Section 399.16(b)(1) and D.11-12-052.
Generally, the de minimis quantity is two percent of the annual energy input to the
facility, unless otherwise noted. See California Energy Commission, Renewables
Portfolio Standard Eligibility Commission Guidebook (the “CEC RPS Eligibility
Guidebook”) at 33 (8th ed. 2015), available at
http://www.energy.ca.gov/2015publications/CEC-300-2015-001/CEC-300-2015-001ED8-CMF.pdf.
See id.
ADVICE 3300-E
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G.
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October 28, 2015
Confidentiality
SCE is requesting confidential treatment of Appendices A, B, D-(1-3), E-(1-3), F(1-3), and the confidential versions of Appendices C and G to this Advice Letter.
The information for which SCE is seeking confidential treatment is identified in
the Confidentiality Declaration attached as Appendix H. The confidential version
of this Advice Letter will be made available to appropriate parties (in accordance
with SCE’s Proposed Protective Order, as discussed below) upon execution of
the required non-disclosure agreement. Parties wishing to obtain access to the
confidential version of this Advice Letter may contact Cathy Karlstad in SCE’s
Law Department at [email protected] or (626) 302-1096 to obtain a
non-disclosure agreement. In accordance with GO 96-B, a copy of SCE’s
Proposed Protective Order is attached as Appendix I. It is appropriate to accord
confidential treatment to the information for which SCE requests confidential
treatment in the first instance in the advice letter process because such
information is entitled to confidentiality protection pursuant to D.06-06-066,8 and
is required to be filed by advice letter as part of the process for obtaining
Commission approval of RPS power purchase and sale agreements. SCE would
object if the information were disclosed in an aggregated format.
The information in this Advice Letter for which SCE requests confidential
treatment, the pages on which the information appears, and the length of time for
which the information should remain confidential are provided in Appendix H.
This information is entitled to confidentiality protection pursuant to D.06-06-066
(as provided in the Investor-Owned Utility (“IOU”) Matrix).9 The specific
provisions of the IOU Matrix that apply to the confidential information in this
Advice Letter are identified in Appendix H.
II.
CONSISTENCY WITH COMMISSION DECISIONS
A.
SCE’s 2014 RPS Procurement Plan
1.
SCE’s 2014 RPS Procurement Plan Was Approved by
the Commission and SCE Adhered to Commission
Guidelines for Filing and Revisions
SCE filed its 2014 RPS Procurement Plan on June 4, 2014. On August 20,
2014, SCE filed an amended 2014 RPS Procurement Plan.
In D.14-11-042, the Commission conditionally accepted SCE’s 2014 RPS
Procurement Plan, including the solicitation materials for SCE’s 2014 RPS
8
9
D.06-06-066 at 80 (Ordering Paragraphs 1 and 2).
Id., Appendix 1.
ADVICE 3300-E
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October 28, 2015
solicitation.10 The Commission also ordered SCE to make certain changes to its
2014 RPS Procurement Plan and to file a final plan by December 8, 2014. On
December 8, 2014, SCE filed its final 2014 RPS Procurement Plan. Consistent
with the schedule set forth in D.14-11-042, SCE issued its 2014 RFP on
December 18, 2014.
2.
Summary of SCE’s Assessment of Portfolio Needs and
Preferred Project Characteristics
As explained in SCE’s 2014 RPS Procurement Plan, SCE had a long-term need
for renewable energy in the third compliance period and beyond. Since the filing
of its final 2014 RPS Procurement Plan, SCE updated its forecasted RNS with
more current information to provide a more accurate depiction of need, and
weigh that need against current market trends when formulating its approach for
the 2014 RPS solicitation.
In the 2014 RPS Procurement Plan, SCE received approval to conduct a
targeted solicitation to meet its need for renewable resources. In its 2014 RPS
RFP, SCE accepted proposals for projects with commercial operation dates of
January 1, 2016 or later, and limited its procurement to Category 1 products and
long-term portfolio content category 3 (“Category 3”)11 unbundled REC products.
SCE stated that prior to the start of the term of the contract with SCE, sellers
may, at their discretion, deliver energy, capacity or other attributes of the project:
(1) through the CAISO market, (2) to a balancing authority, or (3) to a third-party
off-taker. SCE also stated that it may, but is not obligated to, purchase any
Resource Adequacy benefits attributed to a project while it is delivering energy
prior to the commencement of the term of the contract with SCE.
SCE required that projects have either a Phase II Interconnection Study or
equivalent, a signed interconnection agreement, or an equivalent or better
interconnection study, agreement, process, or exemption in order to submit a
proposal. Additionally, if the California Environmental Quality Act (“CEQA”) or
the National Environmental Policy Act (“NEPA”) applies to the project and a lead
agency has been designated under the applicable law, then SCE considered
proposals from such projects only if the project had achieved, at a minimum, an
“application deemed complete” (or equivalent) status under the land use
entitlement process by the agency designated by CEQA or NEPA as the lead
agency.
Projects with a contract capacity of 500 kW or greater were eligible to participate
in SCE’s 2014 RPS RFP. SCE indicated that it continued to solicit ERR
generating facilities in the Western Los Angeles sub-area of the Los Angeles
10
11
D.14-11-042 at 124 (Ordering Paragraph 1).
As defined in Public Utilities Code Section 399.16(b)(3) and D.11-12-052.
ADVICE 3300-E
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basin local reliability area to meet local capacity requirements and specifically,
resources that are interconnected to SCE’s distribution system in the Johanna
and Santiago sub-station area to meet SCE’s Preferred Resources Pilot goals.
For in-state12 generating facilities that are, or will be, interconnected to the
CAISO, SCE required the delivery point to be the point where the generating
facility connects to the CAISO-controlled grid. For in-state generating facilities
that are, or will be, interconnected to a California Balancing Authority other than
the CAISO, SCE required the delivery point to be the intertie point where the
seller’s transmission provider ties to the CAISO.
For out-of-state13 generating facilities, sellers had to reasonably demonstrate to
SCE that the output of the proposed generating facility can in fact be scheduled
on an hourly or sub-hourly basis into a California Balancing Authority, without
substituting electricity from another source, or dynamically transferred into a
California Balancing Authority.
SCE decided on the total projected contract energy it signed based on several
factors, including projected long- and short-term needs, the impact of reducing
federal tax credits, variation in the performance of SCE’s existing portfolio,
technology resource risk, risk of delay of new projects, risk of new projects not
performing as expected, and variation in bundled retail sales, among other
factors.
3.
The SEGS Contracts Are Consistent with SCE’s 2014
RPS Procurement Plan, Portfolio Needs, and Preferred
Project Characteristics
The SEGS Contracts align with the portfolio needs identified in SCE’s 2014 RPS
Procurement Plan. Specifically, the SEGS Contracts will provide renewable
energy from three existing 30 MW solar thermal – trough facilities starting in 2017
for SEGS III and SEGS IV, and 2018 for SEGS V, each for a 10-year term. This
is consistent with SCE’s long-term renewable procurement need in the third
compliance period and beyond.
12
13
A generating facility was considered “in-state” if such generating facility’s first point of
interconnection is, or will be, to the transmission or distribution system of a California
Balancing Authority, and the generating facility delivers Category 1 or Category 3
product.
A generating facility was considered “out-of-state” if such generating facility’s first
point of interconnection is not, or will not be, to the transmission or distribution
system of a California Balancing Authority but the generating facility is delivering
Category 1 or Category 3 product. Sellers are required comply with all requirements
pertaining to “Out-of-State Facilities” as set forth in the CEC RPS Eligibility
Guidebook.
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The SEGS Projects also met all of the eligibility requirements and are consistent
with the preferred project characteristics for SCE’s 2014 RFP. The SEGS
Projects’ first point of interconnection is within the CAISO, and thus the SEGS
Contracts are expected to provide a Category 1 product. Additionally, the SEGS
Projects’ 30 MW contract capacities are consistent with SCE’s 500 kW minimum
size requirement. As existing resources, the SEGs Projects also met the
requirement to have a Phase II Interconnection Study or the equivalent or better,
as described in SCE’s RPS Procurement Plan and Protocol. Furthermore, the
SEGS Projects will satisfy the delivery requirements for SCE’s 2014 RFP
because the projects’ delivery point will be where the projects connect to the
CAISO-controlled grid. Additional information is included in Appendix A.
4.
The SEGS Contracts are Consistent with SCE’s Portfolio
Optimization Strategy
As described in detail in SCE’s 2014 RPS Procurement Plan, the objective of
SCE’s renewables portfolio optimization strategy is to minimize costs to its
customers while ensuring that RPS procurement goals are met or exceeded.
SCE determines the procurement target for each RPS solicitation based in part
on its assessment of SCE’s renewable procurement position and need, i.e.,
SCE’s RNS. This includes a calculation of SCE’s net short or long renewables
position and SCE’s bank. SCE carefully evaluates its renewable procurement
need by assessing bundled retail sales, the performance and variability of
existing generation, the likelihood of new generation achieving commercial
operation, expected commercial on-line dates, technology mix, expected
curtailment, and the impact of pre-approved procurement programs, among other
factors.
The SEGS Contracts meet the primary objectives of SCE’s portfolio optimization
strategy. The three SEGS Projects are expected to start delivery on March 1,
2017 and February 1, 2018, as described in Section I, which will help meet
SCE’s renewable procurement need in the third compliance period and beyond.
As existing resources, the SEGS Projects will increase SCE’s overall portfolio
viability by offsetting potential new project development delays or failures. The
SEGS Projects will also strengthen SCE’s RPS portfolio by enhancing resource
diversity. Additional information is included in Appendix A.
ADVICE 3300-E
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B.
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October 28, 2015
Least-Cost Best-Fit (“LCBF”) Methodology and Evaluation
SCE evaluates and ranks proposals based on LCBF principles that comply with
criteria set forth by the Commission in D.03-06-071 and D.04-07-029 (the “LCBF
Decisions”).14 The goal of SCE’s evaluation and selection criteria and processes
is to provide decision metrics so that SCE can procure renewable energy
economically, while providing the most value to its customers. The LCBF
analysis evaluates both quantitative and qualitative aspects of each proposal to
estimate its value to SCE’s customers and its relative value in comparison to
other proposals.
Although assumptions and methodologies have evolved slightly over time, the
basic components of SCE’s evaluation and selection criteria and process for
RPS contracts were established by the Commission’s LCBF Decisions.
Consistent with those LCBF Decisions, the three main steps undertaken by SCE
in its evaluation and selection process were: (1) initial data gathering and
validation, (2) a quantitative assessment of proposals, and (3) adjustments to
selections based on proposals’ qualitative attributes. SCE applied these criteria
to the proposals received in its 2014 RPS RFP in order to establish a shortlist of
proposals from sellers with whom SCE would engage in contract negotiations.
Prior to receiving proposals, SCE finalized the shortlist selection criteria with the
Independent Evaluator (“IE”). SCE then finalized the major assumptions and
methodologies that underlie SCE’s valuation, including power price forecast,
SCE’s existing and forecast resource portfolio, capacity value forecast,
renewable integration cost adder (“RICA”) methodology, and capacity limits at
interties. SCE also finalized and published congestion adders for sellers to use
in preparing their proposals.
Once proposals were received, SCE began an initial review of proposals for
completeness and conformity with the solicitation protocol. The review included
an initial screen for required submission criteria such as a Phase II
interconnection study or equivalent, evidence of “application deemed complete”
land use entitlement process status as required by the Commission, Geographic
Information Systems files as required by the Commission, all SCE required
attestations, and other items necessary to deem a proposal complete and
conforming. Sellers lacking any of these items were allowed a reasonable cure
period to remedy any deficiencies. Following this check for conformity, SCE
conducted an additional review to determine the reasonableness of proposal
parameters such as generation profiles and capacity factors. SCE worked
14
The Commission has also made rulings on various evaluation criteria in its decisions
on the IOUs’ RPS Procurement Plans.
ADVICE 3300-E
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directly with sellers to resolve any issues and ensure the data was ready for
evaluation.
After these reviews, SCE calculated the Renewable Premium and the Net Market
Value (“NMV”)15 for each complete and conforming proposal and ranked the
proposals based on this quantitative assessment of costs and benefits. Benefits
were composed of separate capacity, energy, curtailment (if applicable), and
congestion components (congestion reduction if applicable). Costs included the
contract payments, debt equivalents, congestion cost, RICA, and transmission
cost. SCE discounted the annual benefit and cost streams to a common base
year. The result of the quantitative analysis was a merit order ranking of all
complete and conforming proposals by NMV that helped define the shortlist.
Following the quantitative analysis, SCE conducted an initial assessment of the
qualitative attributes of the top proposals with a competitive NMV. This analysis
utilized the Project Viability Calculator to assess certain factors, including the
company/development team, technology, and development milestones.
Additional attributes such as portfolio fit of commercial operation date, contract
term, significant transmission network upgrade costs for projects outside of the
CAISO but within California, seller concentration, and resource diversity were
also considered in the qualitative analysis. These qualitative attributes were then
considered to either eliminate proposals or add projects to the shortlist of
proposals, or to break ties, if any.
Following its analysis, SCE consulted with its Procurement Review Group
(“PRG”) regarding SCE’s proposed final shortlist and specific evaluation criteria.
SCE then negotiated with the shortlisted sellers for a 90 day period. At the end
of the contract negotiation period, SCE sought to execute contracts with the
shortlisted sellers with which SCE successfully completed negotiations.
SCE’s 2014 RPS Shortlist Report was submitted to the Commission on April 23,
2015 in Advice 3209-E. SCE filed a supplement to Advice 3209-E to correct the
locations of two projects on May 28, 2015. On July 14, 2015, the Commission
issued Draft Resolution E-4726 approving SCE’s 2014 RPS solicitation shortlist
with modifications. On September 3, 2015, SCE filed a second supplemental
advice filing to Advice 3209-E to correct its valuation analysis and results. On
September 17, 2015, the Commission adopted Resolution E-4726 with no
substantive changes to the earlier version. As ordered by Resolution E-4726,
SCE filed a Tier 1 Advice Letter on September 28, 2015 re-evaluating proposals
from its 2014 solicitation that were interconnected to the Imperial Irrigation
15
Renewable Premium is calculated by subtracting benefits from costs. NMV is
calculated by subtracting costs from benefits. The corresponding ranking results are
identical, with numerical values only different by sign (positive or negative). SCE
generally refers to the NMV throughout the remainder of this Advice Letter.
ADVICE 3300-E
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District’s electrical system such that the differences between the CAISO Tariff
and Imperial Irrigation District Open Access Transmission Tariff were
considered.16
Using SCE’s LCBF methodology, the SEGS Projects compared favorably to
other proposals received in the 2014 RPS RFP, as well as other procurement
options available to SCE. In particular, the SEGS Projects have a number of
qualitative attributes that demonstrate that the project is a “best fit” under SCE’s
LCBF evaluation criteria. For instance, the SEGS Contracts will help SCE to
maintain a balanced renewables portfolio by enhancing resource diversity and
manage the variability in the performance of its renewables portfolio with
competitively priced, existing facilities. Additionally, since the SEGS Projects are
already online, there is no need to discount its expected deliveries with a riskadjusted success rate. Consequently, SCE will have more certainty regarding its
overall portfolio. Finally, the SEGS Contract’s viability and delivery profile may
also help to decrease SCE’s need to procure additional renewable resources to
account for the risk of new project delays or failures and other risks that may
prevent SCE from meeting RPS goals, as there is greater certainty around the
SEGS Contracts expected annual energy deliveries.
Additional information on the LCBF evaluation of the SEGS Contracts is included
in Appendix A.
C.
Compliance With Standard Terms and Conditions
In D.04-06-014, the Commission established a number of “modifiable” and “nonmodifiable” standard terms and conditions to be used by retail sellers when
contracting for RPS-eligible resources.17 In D.07-11-025, the Commission
reduced the number of non-modifiable terms to the following four terms: (1)
“CPUC Approval;” (2) “RECs and Green Attributes;” (3) “Eligibility;” and (4)
“Applicable Law.”18 The remaining non-modifiable terms were converted to
modifiable terms.19 In D.10-03-021, as modified by D.11-01-025, the
Commission added two new non-modifiable standard terms and conditions for
both bundled contracts and REC-only contracts: (1) “Transfer of Renewable
Energy Credits;” and (2) “Tracking of RECs in WREGIS.”20 The Commission
also added a new version of the non-modifiable “CPUC Approval” standard term
and condition for REC-only contracts, and held that the non-modifiable
16
17
18
19
20
See Advice 3278-E.
D.04-06-014 at 20 (Ordering Paragraph 1), Appendix A.
D.07-11-025 at 33 (Ordering Paragraph 1.a).
Id. at 34 (Ordering Paragraph 1.b). Subsequently, in D.08-04-009, the Commission
compiled the standard terms and conditions in one document and deleted the
modifiable standard term and condition on supplemental energy payments.
D.11-01-025 at 46 (Ordering Paragraph 4.P).
ADVICE 3300-E
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“Applicable Law” standard term and condition also applies to REC-only
contracts.21 In D.13-11-024, the Commission updated the non-modifiable “RECs
and Green Attributes” term to a modifiable “Bioenergy Transactions” term.22
The SEGS Contracts include all non-modifiable standard terms and conditions
for bundled contracts without change as indicated in the table below.
NON-MODIFIABLE
TERM
CONTRACT SECTION
NUMBER
CONTRACT PAGE
NUMBER
STC 1: CPUC Approval
2.01(a); Exhibit A
6; Exhibit A
pg. 4-5
STC 6: Eligibility
10.02(b)
58
STC 17: Applicable Law
10.07
65
STC REC 1: Transfer of RECs
10.02(c)
58
STC REC 2: WREGIS Tracking of
RECs
10.02(e)
59
A comparison of the SEGS Contracts against SCE’s 2014 Pro Forma Renewable
Power Purchase and Sale Agreement is included as Appendix E.
D.
Portfolio Content Category Claim and Upfront Showing
In D.11-12-052, the Commission found that “[a] retail seller claiming that
procurement for compliance with the California renewables portfolio standard
from a procurement contract or ownership agreement signed . . . on or after June
1, 2010 counts in the portfolio content category described in Pub. Util. Code §
399.16(b)(1), must provide information to the Director of Energy Division
sufficient to demonstrate that the generation facility from which the electricity is
procured is certified as eligible for the California renewables portfolio standard.”23
Additionally, retail sellers claiming procurement counts as a Category 1 product
must provide information to the Energy Division Director sufficient to demonstrate
that the generating facility from which the electricity is procured meets the
statutory definition of Category 1 products set forth in Public Utilities Code
Section 399.16(b)(1).24 One way to make this demonstration is to show that the
21
22
23
24
Id. at 47-48 (Ordering Paragraph 4.Q).
D.13-11-024 at 24-25, 70 (Ordering Paragraph 6).
D.11-12-052 at 75-76 (Ordering Paragraph 1).
Id.
ADVICE 3300-E
(U 338-E)
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October 28, 2015
facility “has its first point of interconnection to the Western Electricity
Coordinating Council transmission grid within the metered boundaries of a
California balancing authority area.”25 Another way is to show “the generation
from that facility is scheduled into a California balancing authority pursuant to a
dynamic transfer agreement between the balancing authority where the
generation facility is located and the California balancing authority into which the
generation is scheduled.”26 “The retail seller must also demonstrate that the
renewable energy credits originally associated with the electricity have not been
unbundled and transferred to another owner, and that all other requirements for
procurement for compliance with the California renewables portfolio standard are
met by the procurement.”27
Furthermore, D.11-12-052 provides that the utilities, in seeking approval of
contracts for procurement, should enable the Commission to evaluate the
following: “the claimed portfolio content category of the proposed procurement;
the risks that the procurement will not ultimately be classified in the claimed
portfolio content category; the value to ratepayers of the procurement as
proposed and the value to ratepayers if the procurement is not ultimately
classified in the claimed portfolio content category.”28
Pursuant to the provisions in the SEGS Contracts, SCE will procure energy,
capacity, and associated renewable energy attributes generated from eligible
renewable resources with a first point of interconnection within the CAISO. In
addition, per the contracts, the SEGS Projects must obtain and keep current
CEC certification as ERRs29 and designation as “Multifuel Facilities,” and perform
all actions necessary to effectuate the transfer of RECs to SCE in the Western
Renewable Energy Generation Information System (“WREGIS”). The RECs
associated with the electricity from the SEGS Projects are yet to be delivered and
therefore have not been unbundled or transferred to another owner. Such RECs
will be transferred to SCE pursuant to the terms of the SEGS Contracts.
Accordingly, this is a Category 1 transaction pursuant to Public Utilities Code
Section 399.16(b)(1) and D.11-12-052.30 SCE has not identified a risk that the
SEGS Projects will fail to deliver Category 1 RECs.
25
26
27
28
29
30
Id. at 76 (Ordering Paragraph 1).
Id.
Id.
Id. at 80 (Ordering Paragraph 9).
The projects must qualify and be certified by the CEC as an ERR as such term is
defined in Public Utilities Code Section 399.12(e).
D.11-12-052 at 75-76 (Ordering Paragraph 1).
ADVICE 3300-E
(U 338-E)
- 16 -
Forecast of Portfolio Balance
Requirements31
October 28, 2015
Compliance Compliance
Period 2
Period 3
(2014-2016) (2017-2020)
GWh
GWh
PCC 1 Balance Requirement
CP 2 = 65% of RECs applied to procurement quantity
requirement
CP 3 = 75% of RECs applied to procurement quantity
requirement
Quantity of PCC 1 RECs32
(under contract, not including
proposed contract)
Quantity of PCC 1 RECs from
proposed contract
Quantity of PCC 2 RECs
Quantity of PCC 2 RECs from
proposed contract (under contract,
not including proposed contract)
9,414
50,963
0
724
0
0
0
0
PCC 3 Balance Limitation
CP 2 = 15% of RECs applied to procurement quantity
requirement
CP 3 = 10% of RECs applied to procurement quantity
requirement
Quantity of PCC 3 RECs
(under contract, not including
proposed contract)
Quantity of PCC 3 RECs from
proposed contract
31
32
0
0
0
0
SCE’s forecast assumes a 100% success rate for projects in development that are
not yet online.
The “Quantity of PCC 1 RECs (under contract, not including proposed contract)”
represents the total forecasted energy deliveries for all executed RPS-eligible
contracts, including 11 other executed contracts from SCE’s 2014 RPS RFP
solicitation, minus the forecasted energy deliveries from the SEGS Contracts.
ADVICE 3300-E
(U 338-E)
E.
- 17 -
October 28, 2015
Long-Term Contracting Requirement
In D.12-06-038, the Commission held that, “[i]n order to count procurement from
contracts of less than 10 years duration signed after June 1, 2010 for compliance
with the California renewables portfolio standard in a compliance period, a retail
seller . . . must sign in the compliance period in which the short term contract is
signed, contracts of at least 10 years in duration with expected generation equal
to at least 0.25 percent of its retail sales for the immediately prior compliance
period.”33 Since there was not a compliance period prior to the 2011-2013
compliance period, the requirement is 0.25 percent of 2010 retail sales for that
compliance period.34
The SEGS Contracts are 10-year contracts. Therefore, the long term contracting
requirement does not apply.
F.
Interim Emissions Performance Standard
The California Legislature passed Senate Bill (“SB”) 1368 on August 31, 2006,
and Governor Schwarzenegger signed the bill into law on September 29, 2006.
Section 2 of SB 1368 added Public Utilities Code Section 8341(a), which
provides, “No load-serving entity or local publicly owned electric utility may enter
into a long-term financial commitment unless any baseload generation supplied
under the long-term financial commitment complies with the greenhouse gases
emission performance standard established by the commission, pursuant to
subdivision (d), for a load-serving entity. . . .”
In order to institute the provisions of SB 1368, the Commission instituted
Rulemaking 06-04-009. That proceeding resulted in the establishment of a
greenhouse gas (“GHG”) emissions performance standard (“EPS”) for carbon
dioxide (“CO2”). In D.07-01-039, the Commission noted, “SB 1368 establishes a
minimum performance requirement for any long-term financial commitment for
baseload generation that will be supplying power to California ratepayers. The
new law establishes that the GHG emissions rates for these facilities must be no
higher than the GHG emissions rate of a combined-cycle gas turbine (‘CCGT’)
powerplant.”35 The decision further explains:
SB 1368 describes what types of generation and
financial commitments will be subject to the EPS
(“covered procurements”). Under SB 1368, the EPS
applies to “baseload generation,” but the requirement
to comply with it is triggered only if there is a “long33
34
35
D.12-06-038 at 98 (Ordering Paragraph 15).
Id. at 98 (Ordering Paragraph 16).
D.07-01-039 at 2-3.
ADVICE 3300-E
(U 338-E)
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October 28, 2015
term financial commitment” by an LSE. The statute
defines baseload generation as “electricity generation
from a powerplant that is designed and intended to
provide electricity at an annualized plant capacity
factor of at least 60%.” … For baseload generation
procured under contract, there is a long-term
commitment when the LSE enters into “a new or
renewed contract with a term of five or more years.”36
Pursuant to D.07-01-039, solar thermal – trough generating facilities are deemed
EPS-compliant.37 The SEGS Projects are solar thermal – trough facilities and
therefore meet this requirement.
G.
PRG Participation
SCE’s PRG was formed on or around September 10, 2002. Participants include
representatives from various divisions within the Commission, the Office of
Ratepayer Advocates, The Utility Reform Network, California Utility Employees,
the Union of Concerned Scientists, Sierra Club, and the California Department of
Water Resources.
SCE consulted with its PRG during each milestone of the 2014 RPS solicitation
process. Among other things, SCE informed the PRG of the initial results of its
RFP, explained the evaluation process, and updated the PRG periodically
concerning the status of contract formation. On March 11, 2015, SCE advised
the PRG of its proposed shortlist of proposals for its 2014 RPS solicitation. On
July 1, 2015, SCE briefed the PRG on the proposed execution of the SEGS
Contracts.
H.
IE
The IE for the 2014 RPS solicitation was Merrimack Energy Group, Inc. The IE
joined and contributed to a number of conference calls and negotiation sessions.
In addition, the IE reviewed email traffic, the SEGS Contracts, and other
documents exchanged by the parties. The IE also participated in the PRG
review. The IE Report is included as Appendix C.
36
37
Id. at 4.
Id. at 269 (Conclusion of Law 35).
ADVICE 3300-E
(U 338-E)
III.
- 19 -
October 28, 2015
PROJECT DEVELOPMENT STATUS
SEGS III, IV, and V have been operating since January 26, 1987, January 20,
1987, and January 1, 1988, respectively, and are currently commercially
operational.
IV.
CONTINGENCIES AND MILESTONES
The SEGS Projects are currently in commercial operation. The term of the three
SEGS Contracts will commence on March 1, 2017 for SEGS III and SEGS IV,
and February 1, 2018 for SEGS V. Because the SEGS Projects are existing
facilities, the SEGS Contracts do not include development milestones as would
be found in a contract for a new-build facility.
V.
SAFETY CONSIDERATIONS
SCE is strongly committed to safety in all aspects of its business. Renewable
sellers are responsible for the safe construction and operation of their generating
facilities and compliance with all applicable safety regulations. SCE has taken
several steps to address those issues over which it has the most visibility and
control – the delivery of renewable electricity products to SCE in a reliable, safe,
and operationally sound manner. SCE’s 2014 Pro Forma Renewable Power
Purchase and Sale Agreement provides that the seller must operate the
generating facility in accordance with “Prudent Electrical Practices.”38 Further,
these provisions specifically require that all sellers take reasonable steps to
ensure that:
(a)
38
Equipment, materials, resources, and supplies, including spare
parts inventories, are available to meet the Generating Facility’s
needs;
Section 3.12(a) of SCE’s 2014 Pro Forma Renewable Power Purchase and Sale
Agreement. See also Exhibit A for the definition of “Prudent Electrical Practices.”
Prudent Electrical Practices means “those practices, methods and acts that would be
implemented and followed by prudent operators of electric generating facilities in the
Western United States, similar to the Generating Facility, during the relevant time
period, which practices, methods and acts, in the exercise of prudent and
responsible professional judgment in the light of the facts known at the time a
decision was made, could reasonably have been expected to accomplish the desired
result consistent with good business practices, reliability and safety.” Prudent
Electrical Practices includes, “at a minimum, those professionally responsible
practices, methods and acts described in the preceding sentence that comply with
the manufacturer’s warranties, restrictions in this Agreement, and the requirement of
Governmental Authorities, WECC standards, the CAISO and Applicable Laws....”
ADVICE 3300-E
(U 338-E)
- 20 -
October 28, 2015
(b)
Sufficient Operating personnel are available at all times and are
adequately experienced and trained and licensed as necessary to
Operate the Generating Facility properly and efficiently, and are
capable of responding to reasonably foreseeable emergency
conditions at the Generating Facility and Emergencies whether
caused by events on or off the Site;
(c)
Preventive, routine, and non-routine maintenance and repairs are
performed on a basis that ensures reliable, long term and safe
Operation of the Generating Facility, and are performed by
knowledgeable, trained, and experienced personnel utilizing proper
equipment and tools;
(d)
Appropriate monitoring and testing are performed to ensure
equipment is functioning as designed;
(e)
Equipment is not Operated in a reckless manner, in violation of
manufacturer’s guidelines or in a manner unsafe to workers, the
general public, or the Transmission Provider’s electric system or
contrary to environmental laws, permits or regulations or without
regard to defined limitations such as, flood conditions, safety
inspection requirements, operating voltage, current, volt ampere
reactive (VAR) loading, frequency, rotational speed, polarity,
synchronization, and control system limits; and
(f)
Equipment and components are designed and manufactured to
meet or exceed the standard of durability that is generally used for
electric energy generating facilities operating in the Western United
States and will function properly over the full range of ambient
temperature and weather conditions reasonably expected to occur
at the Site and under both normal and emergency conditions.39
Consistent with SCE’s focus on safety, SCE’s 2014 Pro Forma Renewable
Power Purchase and Sale Agreement also includes a provision providing that,
prior to commencement of any construction activities on the project site, the
seller must provide to SCE a report from an independent engineer certifying that
the seller has a written plan for the safe construction and operation of the
generating facility in accordance with Prudent Electrical Practices.40
39
40
Definition of “Prudent Electrical Practices” and capitalized terms set forth in (a)-(f)
have the meaning set forth in Exhibit A of SCE’s 2014 Pro Forma Renewable Power
Purchase and Sale Agreement.
Section 3.11(e) of SCE’s 2014 Pro Forma Renewable Power Purchase and Sale
Agreement.
ADVICE 3300-E
(U 338-E)
- 21 -
October 28, 2015
The SEGS Contracts include all of these provisions in Section 3.11(c) and in the
definition of “Prudent Electrical Practices” in Appendix A.
VI.
REQUEST FOR COMMISSION APPROVAL
The terms of the SEGS Contracts are conditioned on the occurrence of final
“CPUC Approval,” as it is described in the SEGS Contracts. In order to satisfy
that condition with respect to the SEGS Contracts, SCE requests that the
Commission issue a resolution no later than July 28, 2016 containing:
1. Approval of the SEGS Contracts in their entirety;
2. A finding that the SEGS Contracts are consistent with SCE’s 2014 RPS
Procurement Plan;
3. A finding that the SEGS Contracts are compliant with the Emissions
Performance Standard;
4. A finding that any procurement pursuant to the SEGS Contracts is
procurement from an eligible renewable energy resource for purposes of
determining SCE’s compliance with any obligation that it may have to
procure eligible renewable energy resources pursuant to the California
Renewables Portfolio Standard (Public Utilities Code Section 399.11 et
seq.), Decision 03-06-071, or other applicable law;
5. A finding that the SEGS Contracts, and SCE’s entry into them, are
reasonable and prudent for all purposes, including, but not limited to,
recovery in rates of payments made pursuant to the SEGS Contracts and
administrative costs associated with the SEGS Contracts, subject only to
further review with respect to the reasonableness of SCE’s administration
of the SEGS Contracts; and
6. Any other and further relief as the Commission finds just and reasonable.
VII.
TIER DESIGNATION
Pursuant to GO 96-B, Energy Industry Rule 5.3, SCE submits this Advice Letter
with a Tier 3 designation (effective after Commission approval).
VIII.
EFFECTIVE DATE
This Advice Letter will become effective upon Commission approval.
IX.
NOTICE
Anyone wishing to protest this Advice Letter may do so by letter via U.S. Mail,
facsimile, or electronically, any of which must be received by the Energy Division
ADVICE 3300-E
(U 338-E)
- 22 -
October 28, 2015
and SCE no later than 20 days after the date of this advice letter. Protests
should be submitted to:
CPUC, Energy Division
Attention: Tariff Unit
505 Van Ness Avenue
San Francisco, California 94102
E-mail: [email protected]
Copies should also be mailed to the attention of the Director, Energy Division,
Room 4004 (same address as above).
In addition, protests and other correspondence regarding this advice letter should
also be sent by letter and transmitted via facsimile or electronically to the
attention of:
Russell G. Worden
Managing Director, State Regulatory Operations
Southern California Edison Company
8631 Rush Street
Rosemead, California 91770
Facsimile: (626) 302-4829
E-mail: [email protected]
Michael R. Hoover
Director, State Regulatory Affairs
Southern California Edison Company
c/o Karyn Gansecki
601 Van Ness Avenue, Suite 2030
San Francisco, California 94102
Facsimile: (415) 929-5544
E-mail: [email protected]
With a copy to:
Cathy Karlstad
Senior Attorney
Southern California Edison Company
2244 Walnut Grove Avenue, 3rd Floor
Rosemead, CA 91770
Facsimile: (626) 302-6962
E-mail: [email protected]
ADVICE 3300-E
(U 338-E)
- 23 -
October 28, 2015
There are no restrictions on who may file a protest, but the protest shall set forth
specifically the grounds upon which it is based and must be received by the
deadline shown above.
In accordance with Section 4 of GO 96-B, SCE is furnishing copies of this Advice
Letter to the interested parties shown on the attached R.15-02-020 and GO 96-B
service lists. Address change requests to the GO 96-B service list should be
directed to [email protected] or (626) 302-3719. For changes to
any other service list, please contact the Commission’s Process Office at (415)
703-2021 or [email protected].
Further, in accordance with Public Utilities Code Section 491, notice to the public
is hereby given by filing and keeping the Advice Letter at SCE’s corporate
headquarters. To view other SCE advice letters filed with the Commission, log
on to SCE’s web site at https://www.sce.com/wps/portal/home/regulatory/adviceletters.
All questions concerning this Advice Letter should be directed to Katie Sloan at
(626) 302-6842 or by electronic mail at [email protected].
Southern California Edison Company
/s/ Russell G. Worden
Russell G. Worden
RGW:cl/ck:cm
Enclosures
CALIFORNIA PUBLIC UTILITIES COMMISSION
ADVICE LETTER FILING SUMMARY
ENERGY UTILITY
MUST BE COMPLETED BY UTILITY (Attach additional pages as needed)
Company name/CPUC Utility No.: Southern California Edison Company (U 338-E)
Utility type:
Contact Person: Darrah Morgan
 ELC
 GAS
 PLC
 HEAT
Phone #: (626) 302-2086
 WATER
E-mail: [email protected]
E-mail Disposition Notice to: [email protected]
EXPLANATION OF UTILITY TYPE
ELC = Electric
PLC = Pipeline
GAS = Gas
HEAT = Heat
Advice Letter (AL) #:
Subject of AL:
(Date Filed/ Received Stamp by CPUC)
WATER = Water
3300-E
Tier Designation:
3
Submission of the SEGS III, IV, and V Contracts for Procurement of Renewable Energy From
SCE’s 2014 Renewables Portfolio Standard Solicitation
Keywords (choose from CPUC listing):
Compliance, Agreements, Procurement
AL filing type:  Monthly  Quarterly  Annual  One-Time  Other
If AL filed in compliance with a Commission order, indicate relevant Decision/Resolution #:
Does AL replace a withdrawn or rejected AL? If so, identify the prior AL:
Summarize differences between the AL and the prior withdrawn or rejected AL:
Confidential treatment requested? Yes  No See Appendix H
If yes, specification of confidential information:
Confidential information will be made available to appropriate parties who execute a nondisclosure agreement.
Name and contact information to request nondisclosure agreement/access to confidential information:
Cathy Karlstad, Law Department, (626) 302-1096 or [email protected]
Resolution Required? Yes No
Requested effective date:
Upon Commission
Approval
No. of tariff sheets:
-0-
Estimated system annual revenue effect: (%):
Estimated system average rate effect (%):
When rates are affected by AL, include attachment in AL showing average rate effects on customer classes
(residential, small commercial, large C/I, agricultural, lighting).
Tariff schedules affected:
None
Service affected and changes proposed1:
Pending advice letters that revise the same tariff sheets:
1
Discuss in AL if more space is needed.
None
Protests and all other correspondence regarding this AL are due no later than 20 days after the date of
this filing, unless otherwise authorized by the Commission, and shall be sent to:
CPUC, Energy Division
Attention: Tariff Unit
505 Van Ness Avenue
San Francisco, California 94102
E-mail: [email protected]
Russell G. Worden
Managing Director, State Regulatory Operations
Southern California Edison Company
8631 Rush Street
Rosemead, California 91770
Facsimile: (626) 302-4829
E-mail: [email protected]
Michael R. Hoover
Director, State Regulatory Affairs
c/o Karyn Gansecki
Southern California Edison Company
601 Van Ness Avenue, Suite 2030
San Francisco, California 94102
Facsimile: (415) 929-5544
E-mail: [email protected]
With a copy to:
Cathy Karlstad, Senior Attorney
Southern California Edison Company
2244 Walnut Grove Avenue, 3rd Floor
Rosemead, CA 91770
Facsimile: (626) 302-6962
E-mail: [email protected]
CONFIDENTIAL Appendix A
Consistency with Commission Decisions & Rules and Project Development Status
Confidential Protected Materials – Public Disclosure Prohibited
CONFIDENTIAL Appendix B
2014 Solicitation Overview
Confidential Protected Materials – Public Disclosure Prohibited
CONFIDENTIAL Appendix C
Independent Evaluator Report
Confidential Protected Materials – Public Disclosure Prohibited
PUBLIC Appendix C
Independent Evaluator Report
Southern California Edison Company
2014 Renewable Resource Solicitation
Report of the Independent Evaluator
Review of Power Purchase Agreements with
Luz Solar Partners LTD for SEGS III, IV, and V
October, 2015
Prepared by
Merrimack Energy Group, Inc.
Merrimack
M
Energy
And
New Energy Opportunities, Inc.
PUBLIC VERSION
Table of Contents
Executive Summary …………………………………………………………………….. 2
I. 2014 Renewable RFP Overview……………….…………………….……….……..10
II. Role of the Independent Evaluator……………………..………………..……….....16
III. Adequacy of Outreach to Potential Sellers…….. …………………………………..23
IV. Fairness and Appropriateness of RPS Bid Evaluation and Selection Methodology. 29
V. Administration of the Bid Evaluation Process ………………………………………50
VI. Reasonableness of the Evaluation, Selection and Contract Negotiation Process..… 63
VII. The Luz Solar Partner PPAs and the Fairness of the Contract Negotiations…..…...67
VIII. Do the Luz Solar Partners PPAs Merit Commission Approval?..............................80
Appendix A: SCE’s Least Cost Best Fit Evaluation Methodology
Appendix B: Time of Delivery Periods and Product Payment Allocation Factors
Appendix C: SCE 2014 RPS RFP Proposal List and Summary
Appendix D: SCE Shortlisted Proposals – 2014 RPS RFP
Appendix E: SCE Final Evaluation
Merrimack Energy Group, Inc.
1
Executive Summary
Effective July 30, 2015, Southern California Edison Company (“SCE”) executed three
power purchase agreements (“PPA”) with Luz Solar Partners Ltd. (“Luz Solar Partners”)
for the purchase of all the electric energy, capacity, Resource Adequacy (“RA”) benefits,
and Green Attributes produced by the existing SEGS III, SEGS IV and SEGS V units
under 10-year contracts.1 SEGS units III, IV, and V are each 30 MW solar thermal
facilities located in Boron, California near Kramer Junction. SEGS III and IV were
completed in 1987 and SEGS V was completed in 1988. All units have been delivering
power to SCE since their Commercial Operation Dates (“COD”). The delivery point for
all three units is the Kramer Junction Substation.
The PPAs were executed by SCE pursuant to the company’s 2014 Request for Proposals
from Eligible Renewable Energy Resource Suppliers for Renewable Products (“2014
Renewable RFP”). SCE launched the 2014 Renewable RFP on December 18, 2014, and
received proposals on February 2, 2015. SCE expects to execute a total of
including 90 MW of energy, Contract
Capacity and Green Attributes purchased under the Luz Solar Partners PPAs for SEGS
units III, IV, and V.2
Through the 2014 Renewable RFP, SCE solicited Proposals from bidders (“Seller” or
“Sellers”) to supply either a Bundled Energy Product (product qualifying as Portfolio
Content Category 1 product) or REC Product (Product qualifying as Portfolio Content
Category 3) from Eligible Renewable Energy Resources (“ERR” or “ERR Generating
Facility”). Products qualifying as Portfolio Content Category 13 include all electric
energy produced by an ERR as well as all attributes, including all Green Attributes, all
Capacity Attributes, and all Resource Adequacy Benefits generated by, associated with or
attributable to the output of the ERR Generating Facility. Products qualifying as Category
3 encompass only Renewable Energy Credits, all associated Green Attributes, and
Western Renewable Energy Generation Information System (“WREGIS”) certificates
evidencing the authenticity of the REC product.4
1
The proposals for the SEGS projects were submitted into SCE’s 2014 RPS RFP by NextEra Energy
Resources, an owner of Luz Solar Partners and operator of the SEGS facilities.
2
Capitalized terms when used with reference to the Luz Solar Partners PPAs and not otherwise defined
herein are as defined in the Luz Solar Partners PPAs.
3
The first portfolio content category (“Category 1”) is delineated in the California Public Utilities
Commission’s Decision Implementing Portfolio Content Categories for the Renewables Portfolio Standard
Program, D.11-12-052 (2011). It consists of products from renewable energy generators: with a first point
of interconnection to the Western Electric Coordinating Council transmission system within the boundaries
of a California Balancing Authority Area (“CBA”); or with a first point of interconnection with an
electricity distribution system used to serve end users within the boundaries of a CBA; or where the
renewable generation is scheduled into a CBA without substituting electricity from another source; or
where the generation from the renewable facility is dynamically transferred to a CBA.
4
Category 3 products are generally unbundled RECs and are as defined in Public Utilities Code Section
399.16(b)(3) and D.11-12-052.
Merrimack Energy Group, Inc.
2
Pursuant to the 2014 Renewable RFP, SCE received a large number of proposals from
renewable energy developers, reviewed and evaluated the proposals relative to the
eligibility and conformance requirements listed in the Procurement Protocol document
for the solicitation, evaluated and ranked the proposals, and determined which of those
proposals to include on a short list for potential negotiations and contracting.
Table ES-1 provides a short description
of the projects for which contracts have been or are expected to be executed.
Tables ES-1: Contracts from 2014 Renewable Energy Solicitation
Term
(Years)
Contract
Capacity
(MW)5
Annual
Deliveries
(GWh)
New
Forecasted
Commercial
Operation
Date
1/1/2017
20
100.815
283
New
11/1/2016
20
131.2
366
Seller Parent
Company
Project
Name
Type
Vintage
Sempra U.S.
Gas & Power
Mesquite
Solar 2
Solar PV
Blythe
Solar II
Solar PV
NextEra
Energy
Resources6
5
Contract Capacity amounts are as set forth in Section 1.01(h) of each PPA.
Merrimack Energy Group, Inc.
3
Wind
New
12/1/2016
20
142.6
604
Wind
New
12/1/2016
20
181.7
769
Solar PV
New
4/1/2017
15
186.966
555
Wind
New
9/1/2017
15
132
381
Solar
Thermal
Existing
3/1/2017
10
30
67
SEGS IV
Solar
Thermal
Existing
3/1/2017
10
30
69
SEGS V
Solar
Thermal
Existing
2/1/2018
10
30
68
TKO
(South
Bear
Creek)
Small Hydro
Existing
1/15/2016
15
2.834
10
Broadview
Energy KW,
LLC7
Broadview
Energy JN,
LLC
Recurrent
Energy LLC8
Broadview
Energy
KW, LLC
Broadview
Energy JN,
LLC
RE
Garland
Iberdrola S.A
Tule Wind
Project
SEGS III
NextEra
Energy
Resources
NextEra
Energy
Resources
NextEra
Energy
Resources
Enel Green
Power
Merrimack Energy Group, Inc.
4
Calpine
Corporation
Geysers
Geothermal
Existing
1/1/2018
10
50
438
The SEGS III, IV, and V units are all existing 30 MW solar thermal facilities located in
Boron, California. In total, the three units are expected to deliver approximately 205
GWh/year to SCE and 741.5 GWh during Compliance Period 3. The date for
commencement of deliveries under the PPAs is March 1, 2017 for SEGS III and IV and
February 1, 2018 for SEGS V. The delivery term under each PPA is 10 years.
Prior to the launch of the RFP, SCE retained Merrimack Energy Group, Inc. (“Merrimack
Energy”) as the Independent Evaluator (“IE”) for the 2014 Renewable RFP in accordance
with regulatory requirements of the California Public Utilities Commission (“CPUC” or
“Commission”).9 Following the receipt and evaluation of proposals and selection of the
shortlist, Merrimack Energy submitted its’ Report on the Bid Evaluation and Short List
Selection Process and Results (“IE Short List Report”), which was filed with SCE’s
advice letter seeking approval of the short list.10 The Imperial Irrigation District (“IID”)
filed a protest to SCE’s short list, primarily objecting to SCE’s use of transmission adders
for projects interconnecting with IID with network upgrade costs, to which SCE filed a
reply supporting its short list. On April 29, 2015, the Energy Division suspended a
decision on the advice letter for up to 120 days effective May 23, 2015 in order to allow
time for additional staff review.
On September 18, 2015, the Commission issued
Resolution E-4726 and directed SCE to reassess its evaluation of IID-interconnected bid
projects in this solicitation, specifically to consider the difference between the
reimbursement method used by the CAISO – a repayment with interest on network
upgrade costs paid by a generator – and the method used by IID – a credit of network
upgrade costs to transmission costs incurred by the IID generator.11
As addressed in the IE Short List Report, the IE is required to conduct a range of
activities to review, assess, and scrutinize SCE’s processes in implementing its
solicitation process. Generally, Merrimack Energy found that the short-listing decisions
were reasonable based on the 2014 Renewable RFP requirements and evaluation criteria
set forth in SCE’s Procurement Protocol.12
The primary purpose of this report is (1) to describe and assess the fairness of the RFP
process following SCE’s short listing decisions, which included a three-month period
during which SCE and short listed bidders negotiated contract terms and conditions,
conducted evaluations of any updated offers, and executed PPAs; and (2) to describe,
with specificity, the fairness of the contract negotiation process with respect to the Luz
9
New Energy Opportunities, Inc. is serving as a subcontractor to Merrimack Energy in this engagement.
Advice Letter 3209-E, dated April 23, 2015.
11
On September 28, 2015, SCE filed a Tier 1 Advice Letter re-evaluating proposals from its 2014
solicitation that were interconnected to the Imperial Irrigation District’s electrical system such that the
differences between the CAISO Tariff and the Imperial Irrigation District Open Access Transmission Tariff
were considered.
12
The Procurement Protocol is a public document describing the renewable energy products being sought,
the 2014 Renewable RFP submission requirements, and SCE’s preferences and evaluation criteria.
10
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Solar Partners PPAs, the price, economic ranking, and other attributes of the Luz Solar
Partners PPAs and project, and whether the Luz Solar Partners SEGS III PPA, SEGS IV
PPA and SEGS V PPA merit Commission approval. In addition, this report includes an
assessment of the entire RFP process, including a description of IE activities and
assessment of SCE’s process from the IE Short List Report to final selection. Key
findings are outlined in this executive summary.
SCE’s outreach activities, which included contacting a large number of prospective
Sellers, holding a 2014 RPS Solicitation Request for Proposals Conference via Webex for
prospective Sellers, and disseminating substantial information about the RFP on its
website or the Accion Power website, were effective, as evidenced by the robust response
to the RFP in terms of number of proposals, types of resources proposed, initial delivery
dates, quality of the proposals submitted and importantly, maturity of the proposals
submitted.
SCE’s approach adopted for this RFP was to apply fairly strict threshold requirements,
notably, that Sellers had to have a Phase II Interconnection Study or equivalent in order
to participate. Although the number of proposals responding to this RFP was lower than
recent RPS solicitations, including the 2013 Renewable RFP, the response was still very
competitive with a more balanced combination of existing and new projects as well as
more mature and viable projects competing.
SCE’s project team was thorough in conducting its due diligence review to determine if
the proposals received conformed to the completeness and eligibility requirements of the
RFP and SCE worked diligently with Sellers to remedy any curable deficiencies.
SCE’s Least Cost Best Fit (“LCBF”) evaluation methodology was generally implemented
in a consistent manner and was effective in assessing a range of projects, technologies,
contract terms and product sizes in a fair, consistent, and technology neutral manner.
Under this approach, once proposals are received, SCE begins an initial review for
completeness and conformity with the Procurement Protocol. After or during this review
and assessment, SCE performs a quantitative assessment of each proposal individually
and subsequently ranks them based on the Proposal’s benefit and cost relationship. The
result of the quantitative analysis is a merit-order ranking of all complete and conforming
Proposals’ Net Market Value (previously referred to as Renewable Premiums)13 that help
define the preliminary shortlist. Based on this analysis and qualitative considerations, a
short-list is selected.
13
SCE had previously referred to its evaluation and ranking metric as Renewable Premium, which was
essentially costs minus benefits. In recent solicitations, a number of projects were evaluated with a negative
Renewable Premium value, indicating that the cost associated with the project was lower than the benefits
provided. For this solicitation, SCE transitioned to a Net Market Value metric which is essentially project
benefits minus project costs. As a result, under this metric, the best or highest ranked projects will have a
positive value instead of a negative value, as under the Renewable Premium metric.
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The IE has concluded that the proposal evaluation process was fairly administered and
was a thorough, consistent, and comprehensive process. Furthermore, the flexibility
included in the final selection and the portfolio approach used by SCE to inform the
ultimate selection served to lower expected gross costs for customers relative to a pure
rank order selection process (based on expected net costs taking into consideration
forecasted market values for energy and capacity).16
The methodology and proposed Short List selection were vetted with SCE’s Procurement
Review Group (“PRG”) prior to final selection.
14
Net Market Value is calculated by subtracting costs from benefits. Benefits are comprised of separate
capacity, energy, curtailment (if applicable), and congestion components (congestion reduction if
applicable). Costs include the contract payments, debt equivalence, congestion cost, renewable integration
cost adder, and, if applicable, transmission network upgrade costs. SCE discounts the annual benefit and
cost streams to a common base year. The result of the quantitative analysis is a merit order ranking of all
complete and conforming offers by Net Market Value, which is the foundation upon which a series of
alternative shortlist portfolios is established
Section IV of this report provides a detailed description of the evaluation methodology and the
adjustments made by SCE that led to lower expected gross customer costs
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In terms of the short-list selection process, SCE exercised discretion, in several contexts,
1. In the short-listing process, SCE included a quantitative assessment of network
upgrade costs of projects interconnecting with IID (Alternative Net Market Value).
Prior to the 2013 RPS solicitation, SCE had not included reimbursable network
upgrade costs from balancing authorities other than the CAISO in its RPS evaluation
process as transmission adders for the reason that under existing CAISO tariffs IID
customers and not California investor-owned utility customers will ultimately pay for
such transmission upgrades.19 SCE’s management determined that it imposed a risk
on SCE’s customers not to include the cost of such upgrades in its evaluation due to
the possibility that, as IID network upgrade costs increase to help support renewable
projects to meet California’s RPS obligations, the costs may ultimately be charged to
CAISO and the California investor-owned utilities and their customers. In addition,
SCE also indicated that it believed that treating projects interconnecting to any
18
19
The Procurement Documents do not address this issue specifically.
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California balancing authority in the same manner put competing projects on a level
playing field and take into account costs that would be incurred by California
customers generally. While SCE characterized this treatment of non-CAISO
California balancing authority network upgrade costs as a “qualitative” consideration,
SCE applied the network upgrade costs quantitatively in what it referred to as the
“Alternative Renewable Premium” metric.
IID had protested SCE’s treatment of network
upgrade costs in the context of SCE’s 2013 RPS advice letters, and the Commission
approved all of SCE’s advice letters. Recently, in a Resolution E-4726, the
Commission directed SCE to reassess its evaluation of IID-interconnected bid
projects in this solicitation, specifically to consider the difference between the
reimbursement method used by the CAISO—a repayment with interest on network
upgrade costs paid by a generator—and the method used by IID—a credit of network
upgrade costs to transmission costs incurred by the IID generator.20
2.
While several of
these factors are included in the description of SCE’s Least-Cost Best-Fit (LCBF)
methodology
some of the other factors used
in decision making were not explicitly addressed in SCE’s LCBF methodology and
therefore not directly communicated to bidders. If SCE wishes to use a similar
approach (or a modified approach) in the next RPS solicitation, Merrimack Energy
recommends that it amend its articulated LCBF methodology to reflect more closely
how it intends to conduct its evaluation and selection process.21 This should assist
bidders in developing offers that will better address SCE’s objectives. It will also
facilitate Commission review of SCE’s proposed evaluation methodology. For
purposes of the 2014 RPS solicitation, Merrimack Energy generally found SCE’s
approach to be reasonable.
SCE utilized a “one-step” process to solicit offers and negotiate PPAs in the 2014 RPS
solicitation as opposed to the “two-step” process used in the 2013 RPS RFP.
20
On September 28, 2015, SCE filed a Tier 1 Advice Letter re-evaluating proposals from its 2014
solicitation that were interconnected to the Imperial Irrigation District’s electrical system such that the
differences between the CAISO Tariff and the Imperial Irrigation District Open Access Transmission Tariff
were considered.
21
Merrimack Energy also suggests that SCE clarify the measures it desires to use to assess “lower cost,”
whether, for example, the focus should be on levelized cost per MWh, present value costs, nominal costs or
some combination of the foregoing and the relationship with contract term length.
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In turn, the pricing of these projects likely
reflected the higher level of ITC—30% compared to 10%--available under current law
for pre-2017 in-service dates. In the context of these contract negotiations, SCE used
opportunities presented when bidders offered changes from their original bids, such as
earlier or later start dates, to obtain contract concessions, usually in the form of lower
prices. SCE decided to execute contracts with all shortlisted counterparties with which it
could reach agreement on a PPA. The particular start dates, term length, and pricing
tended to reflect SCE’s priorities for earlier start dates, and more Compliance Period 3
MWs, lower gross costs, and shorter contract term lengths.
In the IE’s
opinion, this was a reasonable exercise of business judgment by SCE consistent with the
LCBF qualitative considerations of
Overall, it is the IE’s assessment that SCE reasonably designed and fairly implemented
the 2014 Renewable RFP and appropriately selected the Luz Solar Partners SEGS III, IV,
and V solar thermal project proposals. The SEGS III, IV and V projects have a high
ranking in terms of project viability since they are existing projects, the PPA was fairly
negotiated, and, in the IE’s opinion, the Luz Solar Partners PPAs for SEGS III, IV, and V
merit Commission approval given their value relative to overall renewable portfolio
diversity.
I. 2014 Renewable Request for Proposals (“RFP”) Overview
On December 18, 2014, Southern California Edison Company (“SCE”) issued its 2014
Renewable RFP. SCE solicited proposals from Bidders (“Sellers”) to supply either
Bundled Energy Product or REC Product from Eligible Renewable Energy Resources
sufficient to permit SCE to execute renewable power purchase and sale agreements
(“PPAs”) in substantially the form as SCE’s Pro Forma Renewable Power Purchase and
Sale Agreement (“Pro Forma PPA”) or the Pro Forma Master Renewable Energy Credit
Purchase Agreement (“Pro Forma REC Purchase Agreement”), as applicable, both posted
on the Accion Power’s RPS Proposal Website.
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Through the 2014 Renewable RFP solicitation, SCE sought Proposals for product
qualifying as Portfolio Content Category 1 (“Category 1”) or REC Product qualifying as
Portfolio Content Category 3 (“Category 3”). Category 1 includes all electric energy
produced by an ERR Generating Facility throughout the term of the Final Agreement, net
of Station Use; all Green Attributes; all Capacity Attributes, if any; and all Resource
Adequacy Benefits, if any; generated by, associated with, or attributable to the output of
the ERR Generating Facility.22 Category 3 encompasses only Renewable Energy Credits
(“RECs”), all associated Green Attributes, and Western Renewable Energy Generation
Information System (“WREGIS”) certificates evidencing the authenticity of the REC
Product. REC Product does not include the energy generated as part of the creation of the
RECs. All REC Product transactions must be for period of 10 years or more.
The basic solicitation requirements and conditions are set forth in the 2014 Renewable
RFP Procurement Protocol. These include:
1. SCE will only consider Proposals to purchase Bundled Energy Product or REC
Product from ERR Generating Facilities with commercial operation dates (the
“COD”) or initial delivery dates to SCE on January 1, 2016 or later;
2. SCE will consider proposals to purchase REC Product from new or existing ERR
Generating Facilities;
3. SCE will consider Proposals from Sellers with ERR Generating Facilities that are
located outside the State of California but only if they can deliver Product that
qualifies as Category 1 or Category 3.23 SCE will not consider Proposals to
deliver any Portfolio Content Category 2 products, such as firmed and shaped
product;
4. SCE is only soliciting Bundled Energy Product or REC Product from ERR
Generating Facilities which possess: (1) a completed Phase II Interconnection
Study or equivalent, (2) a signed Interconnection Agreement, or (3) an equivalent
or better interconnection study, agreement, process, or exemption. Further, the
interconnection arrangements must support the ERR Generating Facility’s
forecasted COD. Should Seller’s interconnection arrangement indicate an
interconnection date later than the ERR Generating Facility’s forecasted COD, the
proposal will not be given further consideration;
22
Capitalized terms in this report are as defined in the Procurement Protocol, unless otherwise specified or
where terms pertain to the Luz Solar Partner PPAs for SEGS III, IV, and V (and are defined in the PPAs).
23
Category 1 projects are those: with a first point of interconnection to the Western Electric Coordinating
Council transmission system within the boundaries of a California Balancing Authority Area; or with a first
point of interconnection with an electricity distribution system used to serve end users within the
boundaries of a CBA; or where the renewable generation is scheduled into a CBA without substituting
electricity from another source; or where the generation from the renewable facility is dynamically
transferred to a CBA. Category 3 Products primarily involve REC-only products.
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5. Seller may propose any term length equal to or greater than 10 years. If a Seller
submits a long-term Proposal with a term length of more than 20 years, the Seller
shall also submit an alternative Proposal with a 20 year term;
6. SCE will accept mutually inclusive proposals (i.e. “package deals” or any similar
requirements by Seller that an individual proposal may only be selected by SCE if
other specific Proposals are also selected). Seller must clearly identify all
Proposals with a mutual-inclusive limitation. Seller must clearly identify the
discount to the individual Proposal or aggregate Product Price, if any, associated
with any package deal;
7. SCE will accept mutually-exclusive proposals (e.g., flat vs escalating pricing for
the same ERR Generating Facility or 15-year vs 20-year term for the same ERR
Generating Facility). Seller must clearly identify all Proposals with a mutualexclusivity limitation;
8. Proposals for Bundled Energy Product or REC Product delivered from ERR
Generating Facilities with Contract Capacity of 500 kW or greater are eligible to
participate in this RPS solicitation;
9. Seller’s Proposal must demonstrate Site Control or the Proposal will not be given
further consideration. SCE intends that the definition of “Site” and “Site Control”
not only mean the land upon which the ERR Generating Facility is expected to be
located, but also encompass any rights-of-way or other real property rights (e.g.
land on which Seller’s generation tie line between the ERR Generating Facility
and the Interconnection Point shall be constructed) necessary for Seller to be able
to deliver the Product to SCE;
10. For Bundled Energy Product, Seller’s generating facility must be a new, existing
or repowered generating facility that is an ERR;
11. Sellers must submit Product pricing for Proposals based on the inclusion of zero
(0) or fifty (50) hours per year of unpaid curtailment as further outlined in this
Protocol;
12. SCE will consider Proposals with energy storage. Sellers should include a
description as well as the operating parameters of the proposed storage facility in
the Proposal Structure Letter;
13. Through the RPS solicitation, SCE continues to solicit ERR Generating Facilities
in the Western Los Angeles sub-area of the Los Angeles basin local reliability
area (“Western LA Basin sub-area”) to meet local capacity requirements (“LCR”)
and specifically, resources that are interconnected to SCE’s distribution system in
the Johanna and Santiago sub-station area to meet SCE’s Preferred Resource Pilot
(“PRP”) goals, which may also be met by ERR Generating Facilities;
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14. SCE encourages Women-Owned, Minority-Owned, and Service Disabled
Veteran-Owned Business Enterprises (“WMDVBE”) to participate in the RFP;
15. SCE will only consider Proposals that are substantially complete and include all
of the applicable information, representations, warranties, and covenants as set
forth in the Form of Seller’s Proposal;
16. The primary method for exchange of information or documents concerning this
RPS solicitation, including any such exchange concerning the preparation or
submission of Proposals to SCE, will be via the RPS Proposal Website.
SCE evaluates and ranks Proposals based on Least-Cost Best-Fit principles in accordance
with criteria set forth by the CPUC in D.03-06-071 and D.04-07-029 (“LCBF
Decisions”), and D.14-11-042. The LCBF analysis evaluates both quantitative and
qualitative aspects of each Proposal to estimate its value to SCE’s customers and its
relative value in comparison to other Proposals. SCE’s LCBF methodology will be
discussed in detail in Section IV of this Report and Appendix A.
SCE followed a multi-step approach designed to result in shortlist selection as described
in the Procurement Protocol. In this process, once Proposals are received, SCE begins an
initial review for completeness and conformity with the Procurement Protocol. The
review includes an initial screen for required submission criteria such as, for Bundled
Energy Product, a conforming delivery point, commercial on-line date during 2016 or
later, a valid interconnection study, minimum project size, and the submission of all
required Proposal package elements. Sellers Proposals that are substantially complete but
lacking required information are allowed a reasonable cure period to remedy any
deficiencies.
Following this check for conformity, SCE conducts an additional review to determine the
reasonableness of Proposal parameters such as generation profiles and capacity factors.
SCE works directly with Sellers to resolve any issues and ensure the data is ready for
evaluation. Through the Accion Power Website the IE is copied on any communications
between SCE and the Sellers.
After this review, SCE performs a quantitative assessment of each Proposal individually
and subsequently ranks them based on the Proposal’s benefit and cost relationship. The
total benefits and costs are used to calculate the Net Market Value for each complete and
conforming Proposal. Benefits are comprised of separate capacity and energy
components, congestion and curtailments benefits, while costs include the contract
payments, debt equivalence, integration cost, congestion cost, and transmission cost.
SCE discounts the monthly benefit and cost streams to a common base date. The result of
the quantitative analysis is a merit-order ranking of all complete and conforming
proposal’s Net Market Values that assist in defining the Short-List.
Following the quantitative analysis SCE conducts a qualitative assessment, including use
of the Project Viability Calculator for the most competitive Proposals. This analysis
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utilizes the Project Viability Calculator to assess certain factors including the experience
of the company/development team, technology, and development milestones. Additional
attributes such as transmission area/cluster, generating facility location, seller
concentration, project size, dispatchability, and contribution to other program goals are
also considered in the qualitative analysis. These qualitative attributes are then considered
to either eliminate non-viable Proposals or Proposals with other qualitative attributes or
add Projects with high viability to the final short-list of Proposals, or to determine tiebreakers, if any.
Following its analysis, SCE consults with its PRG regarding the proposed Short-List and
specific evaluation criteria. SCE then develops a final Short-List and negotiates with the
Short-Listed Sellers after notification of Short-Listing.
Whether a Proposal selected through this process results in an executed contract depends
on the outcome of negotiations between SCE and the Seller. SCE executes contracts and
then submits them to the Commission for approval through advice letter filings.
SCE’s 2014 RPS RFP includes several changes from the company’s previous RPS
solicitations, including the following:





SCE continued to require a Phase II Interconnection Study for projects (or an
equivalent of more advanced interconnection study or exemption) as it did in the
2013 RPS solicitation;
In addition to soliciting long-term Category 1 products, SCE sought proposals for
long-term Category 3 unbundled REC transactions;
Utilizing a one-step solicitation process rather than the two-step process used in
the 2013 RPS solicitation (in the 2013 RPS solicitation, short-listed bidders were
required to negotiate PPAs before they submitted best and final offers, but in the
2014 RPS solicitation, SCE negotiated PPAs with short-listed bidders without a
second bid submission process);
SCE required bidders to propose pricing based on two economic curtailment
scenarios, both without the banked curtailment and “pay-back” provisions. The
Procurement Protocol requires sellers proposing Category 1 products to provide
two bids based on different curtailment protocols:
o Option 1: Sellers offer pricing based on SCE having the right to issue
unpaid curtailment orders for up to 50 hours per year. Any Curtailment
Order (as defined in Section 3.12(g)(iii) of the 2014 Pro Forma PPA) in
excess of the 50 hours multiplied by the applicable contract capacity
would be paid at the contract price;
o Option 2: Sellers offer pricing based on SCE having to pay the contract
price for all Curtailment Orders.
SCE evaluated both bids and selected the bid that represents the best value to
SCE’s customers.
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Some of these and other matters are addressed in the Commission’s decision adopting
2014 RPS procurement plans.24 In that decision, the Commission made the following
directives that pertain to SCE’s 2014 RPS RFP:











The Commission approved SCE’s proposal to use CAISO’s 10-year forecast of
import capability from IID in lieu of the previously ordered 1,400 MW capability
assumption;
SCE’s proposal to change the minimum size requirement for a RPS bid from 1.5
MW to 500 kW was approved;
SCE’s proposal to use one set of TOD factors rather than two based on
interconnection deliverability status, as was used in its 2013 RPS solicitation, was
approved;
The Commission approved SCE’s proposal to include in its Pro Forma PPA a
provision that gave SCE the right to approve material project design changes in its
sole discretion;
The Commission denied SCE’s request to remove Pro Forma PPA language that
provided (in the 2013 Pro Forma PPA) that in the event federal tax credits expire
before the project goes into operation the commercial operation date milestone
could be extended or the Seller would have the right to terminate the PPA;
A request to reinstate shortlist exclusivity (used prior to the 2013 RPS RFP) was
denied;
SCE’s proposal to reduce its payment obligations for excessive deliveries in its
Pro Forma PPA was approved;
SCE’s approach in requiring bidders to submit bids with two different economic
curtailment treatments (previously described) was approved;
The IOUs were required to incorporate a requirement for bidders that projects, at
a minimum, have a “project deemed complete” or equivalent status with respect
to their major land use permit application;
With respect to resource adequacy (“RA”) value in the quantitative evaluation, the
IOUs were directed to report (a) their RA price curves and (b) their bid rankings
based on Net Qualifying Capacities (“NQCs”) based on use of the existing
exceedance methodology (which would be used for evaluation purposes) and
effective load carrying capability (“ELCC”) capacity methodology;25
The Commission directed for purposes of the 2014 RPS solicitations that the
IOUs use an interim Renewable Integration Cost Adder (“RICA”), consisting of:
o A variable component: $3/MWh for solar and $4/MWh for wind; and
o A fixed component calculated by each IOU.
These solicitation elements were incorporated by SCE in its RPS Protocol, Pro Forma
PPA, and/or its evaluation process, as applicable.
24
D.14-11-042 (Nov. 24, 2014).
SCE did not utilize an ELCC methodology to calculate RA value in this solicitation. Based on
discussions with SCE, it is our understanding that SCE completed an alternative Net Market Value
calculation using ELCC for informational purposes and intends to provide the results of its assessment of
the offers from the solicitation using an ELCC methodology with its Short-List Report.
25
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II. Role of the Independent Evaluator
A. Regulatory Requirements for the Independent Evaluator
The requirements for participation by an IE in utility solicitations are outlined in
Decisions (“D”).04-12-048 (Findings of Fact 94-95, Ordering Paragraph 28), D.06-05039 (Finding of Fact 20, Conclusion of Law 3, Ordering Paragraph 8) of the CPUC,
D.09-06-050 and D.10-07-042.
The role of the IEs in California IOU procurement processes has evolved over the past
ten years. In D.04-12-048 (December 16, 2004), the CPUC required the use of an IE by
investor-owned utilities (“IOUs”) in resource solicitations where there is an affiliated
bidder or bidders, or where the utility proposed to build a project or where a bidder
proposed to sell a project or build a project under a turnkey contract that would ultimately
be owned by a utility. The CPUC generally endorsed the guidelines issued by the Federal
Energy Regulatory Commission (“FERC”) for independent evaluation where an affiliate
of the purchaser is a bidder in a competitive solicitation, but stated that the role of the IE
would not be to make binding decisions on behalf of the utilities or administer the entire
process.26 Instead, the IE would be consulted by the IOU, along with the Procurement
Review Group (“PRG”) on the design, administration, and evaluation aspects of the
Request for Proposals. The Decision identifies the technical expertise and experience of
the IE with regard to industry contracts, quantitative evaluation methodologies, power
market derivatives, and other aspects of power project development. From a process
standpoint, the IOU could contract directly with the IE, in consultation with its PRG, but
the IE would coordinate with the Energy Division.
In D.06-05-039 (May 25, 2006), the CPUC required each IOU to employ an IE regarding
all RFPs issued pursuant to the RPS, regardless of whether there were any utility-owned
or affiliate-owned projects under consideration. This was extended to any long-term
contract for new generation in D.06-07-029 (July 21, 2006). In addition, the CPUC
directed the IE for each RFP to provide separate reports (a preliminary report with the
shortlist and final reports with IOU advice letters to approve contracts) on the entire bid,
solicitation, evaluation and selection process, with the reports submitted to the utility,
PRG, and CPUC and made available to the public (subject to confidential treatment of
protected information). The IE would also make periodic presentations regarding its
findings to the utility and the utility’s PRG consistent with preserving the independence
of the IE by ensuring free and unfettered communication between the IE and the CPUC’s
Energy Division, and an open, fair, and transparent process that the PRG could confirm.
In 2007, the use of an IE was required for any competitive solicitation seeking products
for a term of more than three months in D.07-12-052 (December 21, 2007). Also, the
process for retaining IEs was modified substantially, with IOUs developing a pool of
26
Decision 04-12-048 at 129-37. The FERC guidelines are set forth in Ameren Energy Generating
Company, 108 FERC ¶ 61,081 (June 29, 2004).
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qualified IEs subject to feedback and any recommendations from the IOU’s PRG and the
Energy Division, an internal review process for IE candidates, and final approval of IEs
by the Energy Division.
In 2008, in D.08-11-008, the CPUC changed the minimum term requirements from three
months to two years, and reiterated that an IE must be utilized whenever an affiliate or
utility bidder participates in the RFO, regardless of contract duration.
In D.09-06-050 issued on June 18, 2009 in Rulemaking 08-08-009, Order Instituting
Rulemaking to Continue Implementation and Administration of California Renewable
Portfolio Standard Program, the CPUC required that bilateral contracts should be
reviewed according to the same processes and standards as contracts that come through a
solicitation. This includes review by the utility’s PRG and its IE, including a report filed
by the IE.
In D.10-07-042 issued on July 29, 2010, the Commission reaffirmed the role of the IE
and required the Energy Division to revise the IE Template to ensure that the IEs focus
on their core responsibility of evaluating whether an IOU conducted a well-designed, fair,
and transparent RFO for the purpose of obtaining the lowest market prices for ratepayers,
taking into account many factors (e.g. project viability, transmission access, etc.).
This IE report is submitted in conformance with the above requirements and is generally
consistent with the requirements outlined in the CPUC’s 2014 RPS Solicitation Shortlist
Report Template.
B. Description of Key IE Roles
In compliance with the CPUC requirements identified above, SCE retained Merrimack
Energy in early December 2014 to serve as IE for SCE’s 2014 RPS solicitation.27
Merrimack Energy was retained to provide an independent evaluation of SCE’s bid
evaluation methodology and selection process and to provide SCE, SCE’s PRG, and the
Energy Division with periodic presentations, findings and other reports as requested. The
objective of the role of the IE is to ensure that the solicitation process is undertaken in a
fair, consistent, unbiased and objective manner and that the best resources are selected
and acquired consistent with the solicitation requirements and criteria. In addition, the IE
is required to ensure that no SCE affiliate has an undue advantage over non-affiliates in
the solicitation. The IE will be required to make a determination as to whether SCE’s
final selection was fair and free from anti-competitive behavior, and was not unfairly
influenced by any affiliate relationships.28
In addition to the requirements identified in CPUC Orders, the Purchase Order between
Merrimack Energy and SCE identifies the responsibilities and tasks to be performed by
the IE. These include the following responsibilities and tasks:
27
28
Merrimack Energy also served as IE for SCE’s 2013 RPS solicitation.
SCE did not receive any offers from affiliates.
Merrimack Energy Group, Inc.
17

Assist in the development and review of SCE’s existing RFO and RFP protocols
and design of the solicitation processes;

Monitor the RFO or RFP solicitation process, energy auction, or bilateral
negotiation to ensure that all bidders, if applicable, or counterparties, receive
access to relevant communications in a non-discriminatory manner;

Monitor the RFO or RFP solicitation process, energy auction, or bilateral
negotiations and promptly submit recommendations to SCE management to
ensure that no bidder has an information advantage provided by SCE;

Provide recommendations concerning the precise definition of products sought
and price and non-price evaluation criteria, so that all aspects of the products are
clearly understood and all bidders may effectively respond to the solicitation;

Review the comprehensive quantitative and qualitative bid evaluation criteria and
methodologies and assess whether these are applied to all bids in a fair and nondiscriminatory manner;

Promptly submit to SCE management any recommendations consistent with the
objectives of ensuring a competitive and fair process, and to ensure that the
overall scope of the RFO or RFP process is not unnecessarily broad or too
narrow;

Assess whether SCE’s final selection was fair and was not unduly influenced by
affiliate relationships;

Provide periodic presentations as requested to SCE management and to the PRG
concerning the IE’s findings;

Provide final written assessment on whether the solicitation or auction process
was competitive and fair and whether any bidder received material information
that gave them a competitive advantage or disadvantage relative to other bidders;

Report on the outcome of the RFP to the CPUC using the appropriate CPUC
Independent Evaluator Report Template.
With regard to the role of the IE, Merrimack Energy views that one of the primary roles
is to independently evaluate and “challenge” the results of the utility’s evaluation and
selection process. Our objective is to ensure that the utility evaluation team can prove that
the results of their evaluation are accurate, reasonable and consistent. This role generally
involves a detailed review and assessment of the evaluation process and the results of the
quantitative and qualitative analysis.
Merrimack Energy Group, Inc.
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This report on the RPS solicitation process provides an assessment of SCE’s 2014
Renewable RFP solicitation from issuance of the RFP through selection of the short list
and contract negotiations with short-listed parties. It is organized based on the 2014 RPS
Solicitation Shortlist Report Template provided by the CPUC’s Energy Division. This
report addresses Merrimack Energy’s assessment and conclusions with regard to the
following questions:
1. Did SCE do adequate outreach to participants and was the solicitation robust?
2. Was SCE’s Least-Cost Best-Fit methodology designed such that offers were fairly
evaluated?
3. Was SCE’s LCBF offer evaluation process fairly administered?
4. Did SCE fairly negotiate the terms and conditions of contracts with shortlisted
bidders?
5. Did SCE make reasonable and consistent choices regarding which bids were
short-listed and which offers were awarded contracts?
6. With regard to the Luz Solar Partners PPAs for SEGS III, IV, and V, (a) did SCE
fairly and reasonably negotiate the contract, (b) did SCE fairly and reasonably
evaluate and select the SEGS III, IV, and V offers, and (c) do the Luz Solar
Partners PPAs for SEGS III, IV, and V merit Commission approval?
C. Description of IE Oversight Activities
In performing its oversight role, the IE participated in and undertook a number of
activities in connection with SCE’s outreach activities, implementation of its evaluation
criteria, evaluation methodology, bid evaluation and short-list selection process,
monitoring contract negotiations with short-listed bidders, and assessment of the contract
provisions for the projects/contracts for which Commission approval is sought.
Merrimack Energy was retained by SCE approximately two weeks prior to the issuance
of the RPS RFP. Provided below is a description of the IE activities before receipt of
proposals on February 2, 2015, IE activities associated with the receipt, evaluation, and
selection of proposals for purposes of selecting the shortlist, and IE activities subsequent
to short-list selection up through execution of the final PPAs.
IE Activities Prior to Receipt of Proposals
Prior to SCE’s receipt of proposals, Merrimack Energy:

Reviewed SCE’s Procurement Plan filing, including the LCBF methodology, and
prepared several clarification questions and comments on the proposed
methodology for discussion with SCE. The IE and SCE held conference calls to
discuss the details of the implementation of the methodology, notably revisions to
Merrimack Energy Group, Inc.
19
the process from the 2013 RPS RFP. Discussion items identified by the IE
included:
o The methodology for the inclusion of integration costs in the evaluation
process, notably the fixed cost portion of integration costs;
o Overall criteria to be applied for bid evaluation and selection from both a
quantitative and qualitative perspective;
o Expected availability of the forward curves for energy and capacity for
evaluation purposes;
o The expected evaluation approach for accounting for the two pricing
offers required from participants (i.e. one price with 50 hours of
curtailment and the other assuming SCE pays for all SCE instructed
curtailment);
o Process and timing for completing the Project Viability Calculator,
particularly with regard to the number of Proposals evaluated;
o Methodology for determining the congestion cost adders and comparison
to the 2013 RPS RFP process;
o Proposed approach for treating network upgrade costs for California
projects not interconnecting to the CAISO in the evaluation;
o Basis for using a one-step evaluation and selection process for this
solicitation as opposed to the two-step process used on other solicitations;
o Methodology for evaluating projects with delivery points outside the
CAISO;
o How SCE will take into consideration the viability of solar projects in
light of the 12/31/2016 end date (date for solar projects to be placed in
service) for the 30% federal Investment Tax Credit under current law;
o The application of other qualitative criteria such as seller concentration.





Participated in weekly meetings of the RPS project team to discuss the status of
the procurement process;
Attended SCE’s 2014 RPS Solicitation Request for Proposal Conference webinar
on January 12, 2015;29
Reviewed Form of Sellers Proposal submittal requirements prior to posting on the
Accion Power website;
Reviewed the Accion Power website and held several discussions with Accion
Power personnel to review website operations and applications in light of changes
made to the website over the past year and to better understand how the IE could
use the website to conduct an independent assessment of the proposals received;
Participated in a meeting with the PRG on December 18, 2014 where SCE
discussed the proposed launch of the 2014 RPS solicitation.
IE Activities After Receipt of Proposals
29
The Bidders Conference was originally intended to be both an in-person and call-in Conference.
However, due to lack of interest on the part of Participants to attend in person SCE decided to conduct the
Bidders Conference as a webinar only.
Merrimack Energy Group, Inc.
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After receipt of proposals, Merrimack Energy:

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
Prepared several reports using the Accion Power website function to provide high
level summaries for each proposal. The IE prepared two primary reports
including:
o High level summary of the project (i.e. Bidder, Project name, technology,
size (MW), location, COD, contract term, pricing);
o Interconnection/location-specific information for each project;
Sorted pricing summary spreadsheet to develop preliminary ranking of proposals
by price;
Developed a detailed summary of the offers by counterparty and bid number;
Compared proposal compilation developed by the IE to SCE’s list of proposals to
ensure all proposals were accounted for by the IE and SCE. The Company and IE
developed the same list of participants and total number of proposals;
Participated in calls with SCE’s project team to discuss the status of proposal
conformance with the minimum eligibility requirements of the RFP;
Participated in several discussions and meetings of SCE’s project team to discuss
a range of issues including the conformance of individual proposals and processes
for addressing specific proposals, discussions about SCE’s procurement strategy
in light of an estimated increase in RPS needs to meet Compliance Period 3
requirements with more certainty, and discussions of revisions to the evaluation
and selection criteria to allow for a more balanced selection of offers;30
Reviewed SCE’s preliminary evaluation results and tested the reasonableness of
the evaluation results based on project pricing, location, transmission cost, and
other factors; raised issues with SCE if results appeared to be inconsistent with
the expected results based on project pricing, associated costs, and generation
profile;
Reviewed the emails exchanged between SCE and Sellers regarding any missing
information, or requests by SCE for Sellers to clarify proposal information or to
explain the basis for information;
Reviewed SCE’s proposed shortlist and provided comments on the list overall as
well as specific projects included or not included;
Conducted an independent assessment of the shortlisted proposals and others
proximate to the shortlist with respect to the Project Viability Calculator based on
the information submitted by Sellers;
Participated in meetings at SCE’s offices to discuss the ranking and economic
considerations of several portfolios as the basis for selecting the proposed shortlist
including internal project team meetings and pre-reads with SCE program area
management; participated in epRMC31 meeting with senior management, and the
PRG meeting of March 11, 2015 at which SCE discussed its short list selection.
30
SCE held an Advisory Team Meeting (attended by the IE) on February 19, 2015 to discuss SCE’s
updated forecasted RPS position based on the Compliance Period 3 mandate based on assessments of its
current position. The updated analysis led SCE to reconsider its 2014 RPS solicitation procurement targets
and strategy for procurement and short list recommendations associated with the 2014 RPS RFP.
31
Energy Procurement Risk Management Committee.
Merrimack Energy Group, Inc.
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The IE provided input and comments at all meetings, including observations
based on the solicitation results;
IE Activities Following Shortlisting Through Negotiations and Execution of PPAs
After selection of the short list, Merrimack Energy:

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Prepared a report on the Short-List evaluation and selection process, which SCE
filed with its Advice Letter with respect to SCE’s short-list for this RPS
solicitation;
Monitored contract negotiations between SCE and the short-listed counterparties;
Attended weekly SCE staff meetings (by teleconference) regarding the progress
of negotiations and other issues pertaining to contract provisions, including issues
common to several contract negotiations as well as issues specific to individual
projects;
Monitored and reviewed emails and other documents exchanged between SCE
and the counterparties during the contract negotiation process;
Reviewed any updates to the evaluation results for specific offers based on
revisions to project pricing;32
Participated in pre-reads, epRMC meetings, and PRG meetings regarding
selection and approval of contracts with short listed counterparties.
D. Any other relevant information or observations
Following final selection of the PPAs in this solicitation, SCE discovered an error in the
model used to calculate energy costs and Net Market Value.33 Specifically, the Time of
Delivery (“TOD”) periods used in the adjustments of bid prices were incorrect. While
SCE planned to use new TOD periods and Product Payment Allocation factors for the
2014 RPS RFP, as shown in Appendix B, hereto, it used the correct Product Payment
Allocation factors for the 2014 RPS RFP but used the TOD periods from SCE’s 2013
RPS solicitation (also shown in Appendix B). SCE reran its evaluation using the correct
2014 RPS RFP TOD periods for both its evaluation of bids leading up to its shortlisting
and its evaluation of the final PPAs it had negotiated.
In addition, SCE identified two other errors:
 For those proposals that had a RA guaranty date that was different from the
forecasted Commercial Operation Date (other than Energy Only proposals), SCE
provided RA value for the full delivery term rather than only for the period
following the RA guaranty date:
 For all of the proposals, SCE did not include in its evaluation the last delivery
month.
32
For example, some bidders provided reduced prices in exchange for an earlier contract start date for their
projects.
33
The error was caught by SCE in preparing for the RAM 6 RFO.
Merrimack Energy Group, Inc.
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SCE’s revised evaluation takes into account the impact of the RA guaranty date. SCE did
not reevaluate all of the offers due to the last month being cut off in its analysis. SCE
decided not to redo the evaluation to take into consideration the cut-off last month due to
the considerable time it would take and the de minimus impact it would likely have on the
results, a matter in which the IE concurs.
The IE reviewed SCE’s reevaluation of the proposals leading up to its shortlist as well as
its reevaluation of the
In addition,
Merrimack Energy prepared and submitted an amendment to its IE shortlist report and an
amended IE report in connection with the Mesquite PPA.
III. Did SCE Do Adequate Outreach to Bidders and Was the Solicitation
Robust?
For its 2014 RPS solicitation, SCE initially sought to meet an RPS solicitation goal of
approximately
.34 This section of the report assesses SCE’s process for conducting outreach to
potential bidders in an attempt to encourage robust competition and whether the
processes used by SCE were successful in meeting the company’s objectives.
A. Were Notifications/Announcements of the Solicitation Adequately Distributed?
Outreach activities are important to the success of a competitive solicitation process.
SCE’s outreach efforts targeted a large number of potential Sellers based on contacts
from previous solicitations and business relationships developed since then. SCE
prepared a detailed list of potential Sellers with approximately 2,300 contacts that served
as the database for Seller contact and outreach. SCE sent emails to all potential Sellers on
this list informing them of the 2014 RPS RFP process and the issuance of the
Procurement Protocol. SCE did not issue a press release or contact industry trade
publications announcing its 2014 RPS RFP.
34
SCE revised its RPS requirements after undertaking an assessment of recent experience with existing
renewable projects and the success rates of projects not yet on line. SCE also undertook a probabilistic
assessment of the likelihood of meeting various solicitation goals for RPS, including scenarios in which the
RPS target would be increased to 50%.
Merrimack Energy Group, Inc.
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B. Were the Solicitation Materials Clear and Concise to Ensure That the
Information Required by the Utility to Conduct its Evaluation Was Provided by the
Bidders? Provide Suggestions for Improvements for Subsequent Solicitations.
The IE had the opportunity to review the solicitation documents and related materials and
was very familiar with the documents, information required from participants, and offer
forms and similar documents based on our experience in serving as IE for the 2013 RPS
solicitation. Similar to the 2013 RPS solicitation, SCE required Sellers to post their
proposal documents on a website, designed by Accion Power, for this solicitation.35 All
submissions by Sellers as well as written communications between the Seller and SCE
took place via the Accion Power website and therefore Sellers were required to
understand how to use the website to allow for proposal submission. In addition, the
Accion Power website includes a tab which provides a tutorial for Sellers regarding
access to and use of the website and for this solicitation included video instructions for
the Participants. Based on receipt of proposals and review of the submittals, it was clear
that the majority of Sellers were able to successfully navigate and utilize the website
effectively during the solicitation process.36
All of SCE’s RFP documents were posted on the Accion Power website. The eligibility
requirements of Sellers and the documents that Sellers are required to submit with their
proposals were clearly identified in the Procurement Protocol and on the Accion website.
In addition, the Procurement Protocol identifies the documents required of Sellers,
provides a description of the evaluation and selection process, and contains a schedule for
the solicitation. The Accion website has a tab entitled Program Documents which
includes the Procurement Protocol, Form of Sellers Proposal, CPUC Decisions, Bidders
Conference materials and Proposal Form worksheet. The Form of Seller’s Proposal,
which is included on the Accion Website, sets forth the documents and data that each
Seller must include in its proposal. This tab identified all the documents to be included in
the Bidders E-Binder when uploading documents to the website and also included a
check list for Sellers to review to ensure they included all the information requested.
Furthermore, the Accion Power website was set up to allow Sellers to upload their
proposal documents in consistent files to ensure all Sellers essentially submitted the exact
form proposal.
The following information was required from each Seller as part of its proposal package:
35
This was second RPS solicitation in which the Accion Power Website was used as the primary
mechanism to communicate with bidders. Accion Power also made some modifications to the website for
this solicitation to allow SCE to more effectively address issues associated with bid submission, review,
and evaluation. The major improvements to the website included: (1) enhanced and improved inclusive and
exclusive offer designations; (2) customization of the website administrative features for SCE’s use
including the ability to assign SCE contract managers to specific counterparties which allowed SCE to
respond to incoming messages from bidders more expeditiously; (3) created the interface and ability for
bidders to submit offers for Category 3 products.
36
A few Sellers were not able to successfully submit specific proposal offers because they were late in
posting the offers and were still trying to submit information at the closing date and time identified by SCE.
Merrimack Energy Group, Inc.
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
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Fully executed Proposal Structure Letter that provides a brief summary of the
proposal and project as well as an introduction to the entities that comprise the
Seller;
Fully executed Seller’s Acknowledgement Letter;
Fully executed Consent for Release of Interconnection Related Information;
Project Viability Calculator completed by the Seller;
Complete project generation profile;
Fully executed Team Development Experience Letter;
Fully executed Site Control Acknowledgement Letter;
Fully completed Short-Term Non-Disclosure Agreement;
Form of Letter of Credit for Short-List Deposit;
A copy of all the Generating Facility’s Interconnection studies;
A completed Geographic Information System file of the project boundaries and
associated gen-tie;
A copy of the letter from the lead land use permitting agency documenting that
the land use permit application for the project has been deemed complete to begin
the permitting review process.
Also, as previously noted, the Procurement Protocol document contained a number of
eligibility requirements or preferences of SCE that guided Sellers in the submission of
proposals. For the most part, Sellers conformed their proposals to these requirements or
preferences. Although there was a reasonable amount of communications between SCE
and the Sellers after submission of the proposals, most of the communications involved
clarifying questions from SCE about specific aspects of the proposals to cure or correct
inconsistencies between the Proposal Form and Proposal Structure letter or to ensure all
required information was provided. For the most part, Sellers were able to cure any
outstanding deficiencies or inconsistencies in their proposals in short order.
Merrimack Energy believes that the contents of SCE’s 2014 RPS RFP solicitation
protocol provided clear and comprehensible direction to Sellers on how to prepare and
submit a complete proposal package. In addition, the IE is of the view that the
information available in the Procurement Protocol and on the Accion Power website
provided Sellers with a substantial base of information to allow them to determine how
they could best compete in the RPS solicitation process. While a few Sellers were not
able to complete and successfully submit all the offers they had hoped to submit, the
problem with the failure to submit offers was attributed largely to Sellers attempting to
post offers at the last minute before the website shutdown. A few Sellers made errors in
filling out their submissions which led to non-acceptance of their offers at the deadline
for submitting offers as specified in the Protocol and on the Accion Power website.
Sellers who were not able to submit a complete proposal were not eligible once the time
limit on proposal submission was reached.
The Accion Power website was also used by SCE and the short-listed counterparties
during the contract negotiation process. The parties generally posted any contract turns
under the PPA tab of the project files for each short-listed counterparty. The IE was
notified via email whenever a document or email was posted to the website by either SCE
Merrimack Energy Group, Inc.
25
or a specific short-listed counterparty. The project number for each short-listed option
was included with the email, which allowed for a consistent record of activity for each
short-listed option.
Merrimack Energy’s observations regarding the solicitation documents, use of the
website, and other means of providing information to Sellers (i.e. Request for Proposals
Conference, Frequently Asked Questions, etc.) are provided below:

Overall, the Accion Power website was an effective tool for communicating with
Sellers and provided a repository of Seller proposal information which could be
easily accessed by the IE and SCE’s project team. The IE found the website to be
very effective for allowing the IE to prepare summary reports on each of the
proposals which the IE used to aid in the assessment of SCE’s evaluation and
selection process. In addition, based on the organization of offers on the website
by bid number in sequence, the IE was able to complete its bid summary
document in a limited amount of time compared to other solicitations;

Nearly all the proposals submitted were complete and conforming packages.
Although SCE spent a considerable amount of time reviewing the Proposals for
conformity and completeness, and following up with some detailed questions
about several offers, much of the communications with Sellers involved
clarification of the information provided. Clarifying questions regarding whether
offers were mutually exclusive or inclusive, about the generation profile, or
questions about the status of the interconnection process were common. SCE and
the Sellers were able to correct remaining deficiencies (where it was substantively
possible to do so) early on in the evaluation process;

There appeared to be fewer requests for information by SCE and a more seamless
use of the website by the Sellers for this RFP indicating that Sellers are becoming
more familiar with the website applications;

As noted in Section 1 of this report, SCE’s Procurement Protocol documents
identified a number of eligibility requirements and SCE preferences. The results
of the proposal submission process indicated that Sellers were well aware of these
requirements and satisfied them, with relatively few exceptions. For example,
SCE expressed an interest in receiving proposals with different contract term
lengths and indicated that if a Seller provided a proposal for a 25 year term it also
had to provide a proposal for a 20 year term. Most Sellers conformed to this
requirement as illustrated by the variety of contract terms submitted;

The Accion Power website was effective for allowing the IE to monitor and
organize the documents and information associated with the contract negotiation
process for each counterparty. Based on the large number of contracts initiated,
this aspect of the website proved to be efficient for organizing pertinent
information.
Merrimack Energy Group, Inc.
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Contrary to the approach taken for the 2013 RPS RFP, wherein SCE posted the Protocol
documents and other documents on its website as well as including the same documents
on the Accion Power website, for the 2014 solicitation SCE only included a link to the
Accion Power website and the solicitation schedule on its internal webpage for the 2014
RPS solicitation. The IE suggests that SCE continue to post publicly available documents
regarding the RPS RFP on its website including the Procurement Protocol, the public
version of the Company’s Renewable Procurement Plan, and applicable Commission
Decisions and Orders. The IE feels this will facilitate access to parties that have not
registered on the Accion Power website for this event but may be interested in competing
in future solicitations.
In addition to the program documents, the Accion Power website contained a list of
questions and answers related to the solicitation. The Accion Power website also included
an Announcement tab with latest information about the RFP, a solicitation schedule tab,
and a tutorial on the use of the website for bidders. The IE found the Accion Power
website easy to access and navigate.
C. Was a Bidder’s Conference Held or Other Forum Available for Communications
Regarding the Solicitation? Any Comments Regarding Information Provided or
Questions Received.
The 2014 Solicitation Request for Proposals Conference was held by SCE for prospective
Sellers on January 12, 2015. The agenda for the Request for Proposals Conference
included the following items:
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Overview if the solicitation process
Supplier Diversity
RPS Schedule
Description of the process, products, and eligibility criteria
Website and proposal requirements
Description of the Pro Forma Power Purchase Agreement
Proposal evaluation methodology and process
Interconnection issues
Q&A
The Request for Proposals Conference was originally scheduled to be an in-person
conference as well as a webex option. However, few prospective bidders indicated they
would attend in person and SCE decided to conduct the Conference as webex only. For
the 2013 RPS RFP, SCE held an in-person Request for Proposals Conference as well as
the opportunity for others to call into the Conference. The 2013 RFP Bidders Conference
was particularly well attended in person. The IE was surprised that there was so little
interest by the prospective bidders to attend the Conference in-person but perhaps an
indication that there would be no additional value to attend in-person rather than
participate via webex. We would suggest that SCE include questions on its survey of the
solicitation process with regard to bidder preference for webex conferences rather than
in-person conferences.
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D. Did the IOU’s Seek Adequate Feedback About the Bidding/Bid Evaluation
Process From All Bidders After the Solicitation Was Complete?
Similar to the 2013 RPS solicitation process SCE offered to talk with non-shortlisted
Sellers and answer reasonable questions about the solicitation process and the general
reasons why the Seller was not successful in being selected for the short-list. Several
bidders have requested de-brief calls with SCE. The IE has attended the calls with
Bidders. Bidders generally wanted to know the relationship between their prices and
those of the successful short-listed projects. SCE provided general direction but was not
specific with regard to the magnitude of the difference.
E. Provide Any Other Relevant Information or Observations Regarding Outreach
and Robustness of the Solicitation
The IE concludes that SCE conducted reasonable and sufficient outreach for this
solicitation. The level of interest in the solicitation and the participation in the process
indicate that SCE’s outreach was effective in generating a robust response. However, the
number of Sellers and projects was less than in the 2013 RPS solicitation, perhaps
reflecting the situation whereby the response to the 2013 RPS RFP was driven by the
interest of solar project developers to attempt to take advantage of the window for getting
a project in-service before the scheduled reduction of the federal Investment Tax Credit
from 30% to 10% for solar projects placed in service after December 31, 2016. For the
2013 RPS RFP, 81 unique solar PV projects were submitted with a total of 242 offers
compared to 25 unique solar PV projects submitted into the 2014 RPS RFP, as illustrated
below. Interestingly, the unique number of projects submitted for other technologies was
very similar between the 2013 and 2014 RPS solicitations.
As noted, the overall result of this outreach activity was still a robust response from
Sellers, even in light of the stricter threshold or minimum requirements established by
SCE, demonstrating the maturity of the renewable energy market in California. In
addition, it appears clear that the decline in the number of proposals from 2013 to 2014
was not due to any issues associated with the solicitation requirements but is likely due to
anticipated changes in the federal Investment Tax Credits for solar projects.
Proposals were received from a diverse set of Sellers including experienced wellfinanced Sellers as well as new market entrants, involving a variety of technologies,
including wind, solar (PV and solar thermal), geothermal, biomass, small-scale hydro and
Municipal Solid Waste. Information regarding the proposals including MW and GWh
quantities, types of resources bid, project location, pricing options, contract term, COD
date, vintage, and deliverability status is contained in Appendix B to this report.
Table 1 provides a summary, by technology, of the proposals and unique projects
submitted. As the table indicates, the response to the solicitation is dominated by solar
PV and wind projects, which accounted for over 60% of the total unique projects offered
Merrimack Energy Group, Inc.
28
and 80% of total capacity. Also, approximately 35% of the unique projects submitted
were existing projects.
Table 1: SCE’s RPS Proposals Received by Technology
Technology
Biomass
Geothermal
Wind
Solar PV
Solar Thermal
Small Hydro
MSW
Total
All Proposals
# of Proposals
43
16
43
105
9
1
1
Capacity (MW
Total)
520
321
2,356
2,909
450
3.1
20
Unique Projects37
218
6,579
83
14
7
27
25
8
1
1
The response indicates that the market is very mature and that establishing stricter
thresholds can be a reasonable and effective strategy to solicit more highly developed
projects, while still obtaining a very robust response from the market.
In conclusion, the robust response of the market to SCE’s 2014 Renewable RFP is
evidence that the outreach activities of SCE were effective and Sellers felt they had an
adequate opportunity to receive a contract from the process.
IV. Was the IOU’s LCBF Methodology Designed Such That Offers
Were Fairly Evaluated?
This section of the report identifies the principles used by the IE to evaluate SCE’s LCBF
evaluation methodology, including its strengths and weaknesses, and identifies how the
methodology was applied to the evaluation of the RPS proposals.
A. Identify the Principles the IE Used to Evaluate the IOU’s Offer Evaluation
Methodology
37
The number of unique projects identified by the IE differs slightly with regard to the number presented
by SCE in its shortlist presentation to the PRG on March 10, 2015. SCE’s total of 77 unique projects
reflects only the eligible projects, while the IE’s list includes the projects originally submitted.
Merrimack Energy Group, Inc.
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This section of the report addresses the principles and framework underlying Merrimack
Energy’s review of SCE’s methodology for Renewable Resource proposal evaluation and
selection. While the Energy Division has suggested a set of principles for evaluating the
process used by IOU’s for selecting Offers in competitive renewable solicitations,
Merrimack Energy has included several additional principles that we often apply in other
solicitations. These are included along with the Energy Division’s principles. Key areas
of inquiry by the IE and the underlying principles used by the IE to evaluate the
methodology include the following:

Were the procurement targets objectives, preferences, products solicited,
principles and objectives clearly defined in SCE’s 2014 RPS RFP and other
materials?

Were the bid evaluation and selection process and criteria reasonably
transparent such that bidders would have a reasonable indication as to how
they would be evaluated and selected?

Was SCE’s bid evaluation based on and consistent with the information
requested in the RFP to be submitted by bidders in their proposal documents?

Did the evaluation methodology reasonably identify the quantitative and
qualitative criteria and describe how they would be used to rank offers?

Were the bid evaluation criteria consistently applied to all bids?

Was the quantitative evaluation methodology reasonably consistent with
industry standards and did it adequately account for all reasonable costs and
benefits identified in the Procurement Protocol?

Did the evaluation methodology adequately treat all eligible resources and
technologies in a technology neutral manner?

Does the quantitative evaluation system allow for consistent evaluation of bids
of different sizes, in-service dates, and length of contract?

Did the bid evaluation criteria and evaluation process contain any undue or
unreasonable bias that might influence project ranking and selection results or
in any way favor affiliate bids?

Was the RFP clear and concise to ensure that the information required by SCE
to conduct its evaluation was provided by project sponsors?
B. Evaluation of the Strengths and Weaknesses of SCE’s Evaluation and
Shortlisting Methodology in This Solicitation
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As defined in the Shortlist Report Template, the following considerations should be
included in the IE’s overall review of the strengths and weaknesses of the IOU’s
methodology in this solicitation:
1. Evaluation of consistency with the RPS procurement plan, requested products,
and portfolio fit: Did the IOU adequately incorporate needs and preferences
stated and approved in the RPS procurement plan and protocol? For instance, did
the IOU account for contract start dates, contract lengths, and varying generation
amounts? Did the IOU adequately take into account a project’s characteristics
related to portfolio fit preferences?
2. Market valuation: Were individual criteria calculated consistent with the protocol
and Commission direction? In your opinion, were any costs or benefits that
should not have been included in the IOU’s LCBF calculation included (or vice
versa)? Why or why not (e.g. double-counting, poor approximation of
cost/benefit, inconsistent with the protocol, etc.)? Any recommendations for
improvement to the methodologies?
3. Evaluation of offers’ transmission costs: Were costs calculated consistent with
the protocol and Commission direction? Did the IOU weight the total cost of
transmission upgrades for a project against the relative value in resource adequacy
that the transmission upgrade will provide to each project? Any additional
information, observations, or recommendations regarding the IOU’s evaluation
methodology (e.g. capacity valuation, congestion cost adder, curtailment,
integration cost adder, etc.).
4. Evaluation of offers’ project viability: Did the IOU (or IE or developer)
reasonably measure the viability of each project in the offer evaluation process?
Did the IOU perform conformance checks related to the accuracy of the project’s
viability scores before the projects were included on the shortlist?
5. What future LCBF improvements would you recommend?
1. Evaluation of Consistency with RPS Procurement Plan, Requested
Products and Portfolio Fit
This section discusses whether SCE’s evaluation and selection process and methodology
is consistent with its final 2014 Renewable Energy Procurement Plan and Protocol
document. While SCE generally applied the LCBF methodology in a consistent manner
as outlined in the Protocol and the Procurement Plan, SCE did apply additional
components to the overall evaluation and selection methodology that were not readily
transparent to bidders and not addressed in the Protocol or Procurement Plan. The
revisions to SCE’s procurement strategy and the implications are described in this section
of the report.
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Some key objectives identified by SCE for the 2014 RPS solicitation were as follows:

As a guiding principle, meet SCE’s Compliance Period 3 obligation of 33%

Consider qualitative factors such as earlier commercial operation dates, a
portfolio of contract terms, project viability, and fuel diversity, among others.
As in previous solicitations, SCE applied its Net Market Value metric to rank order offers
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39
This table reflects the portfolio evaluation with the corrected evaluation results. Portfolios 2 and 3 are
identical in terms of projects to the original portfolios with the revised evaluation. Portfolio 1 was selected
based on the same criteria as the original portfolio. Below are the original summary results for the three
portfolios (before correction of the evaluation).
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While overall, the IE finds that the underlying methodology is generally consistent with
the approved plan, there were adjustments to the solicitation process that occurred during
the evaluation period which were not referenced in the RFP and were therefore not
transparent to bidders. The findings of the IE with regard to these and other issues are
discussed below.

While SCE provided information regarding its annual procurement target in
confidential information provided to the PRG, SCE did not communicate its
procurement target, or an approximate range of what it intended to procure, to
prospective Sellers in any public presentation or document associated with this
solicitation.

The solicitation Protocol clearly identifies the eligibility requirements, including
those eligibility requirements and criteria specified in the 2014 Renewable
Procurement Plan; among these are the requirements for a Phase II
interconnection study or better as well as the type of products required (i.e.
Category 1 and Category 3), the commercial operation date (i.e. January 1, 2016
or later), and eligible project sizes (greater than 500 kW).

SCE’s Renewable Energy Procurement Plan and Protocol requires that proposals
have a commercial operation date (or initial delivery date) of January 1, 2016 or
later. However, the documents do not specifically identify a preference for
projects that begin deliveries either at an earlier or at a later date.
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
The Protocol indicated that Sellers may propose any term length equal to or
greater than 10 years. Any Seller submitting a long-term proposal with a term
length greater than 20 years was also required to submit an alternative Proposal
with a 20 year term. While the Protocol clearly requires that a Seller who
submitted a proposal with a term greater than 20 years would also have to submit
a proposal for 20 years,

The solicitation accepts proposals from new projects and from existing operating
facilities (as long as such projects meet the eligibility requirements) and does not
state a specific preference for either type.41 SCE did receive proposals for both
new and existing projects and the evaluation methodology did not contain any
biases in the evaluation of one type of resource over another.

SCE’s evaluation methodology and process resulted in a short-list that contained
multiple technology types
in-service dates and project sizes.
the IE
found that there was no apparent bias toward any type of technology or project
size based on the evaluation methodology.
41
While the Project Viability Calculator yields higher viability scores for existing projects relative to new
projects, there is no bias because existing projects are generally more viable than projects under
development.
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
The 2014 Renewable Energy Procurement Plan and the Procurement Protocol
indicate that SCE seeks proposals that enable SCE to comply with its Resource
Adequacy Requirements. For the delivery of Bundled Energy Product, Seller must
bid an ERR Generating Facility based on an interconnection assuming either
Energy Only Deliverability Status (“EO”), or such proposals that include the
conferment by the CAISO of FCDS, Partial Capacity Deliverability Status
(“PCDS”) or Interim Deliverability Status (“IDS”) and a CAISO NQC
assignment. EO projects will be deemed to have an NQC of zero and, therefore,
cannot be considered to be a Resource Adequacy Resource. Importantly, SCE
illustrates that the valuation methodology will essentially reward Full Capacity
Deliverability Status interconnections by allocating a capacity value to the project
to reflect the RA benefit. Sellers essentially have to weigh whether the additional
cost to achieve Full Capacity Deliverability Status is worth the additional capacity
value attributed to the project.
The 2014 Renewable Energy Procurement Plan indicates that SCE will use the network
upgrade cost results from the Phase II study or Interconnection Agreement as the basis
for including reimbursable network upgrade costs in the analysis. The Phase II
interconnection requirements help to ensure that more viable projects are the ones
competing in the solicitation. At the same time, the availability of more refined and more
certain network upgrade cost enhances the accuracy of the evaluation process relative to a
methodology that attempts to use transmission adders or less certain cost information to
assess project economics. In summary, SCE’s evaluation methodology and evaluation
process and criteria are generally consistent with its 2014 Renewable Procurement Plan
and are generally consistent with the plans stated preferences, eligibility requirements,
evaluation criteria, and evaluation process.
As a result, the
basic LCBF components identified in the Protocol and Plan are still applicable for the
evaluation and selection.
However, there are a few “preferences” or information requirements that could lead to
more transparency to assist Sellers in structuring their proposals in future solicitations.
These are described in Section IV.C of this report, along with other suggestions for future
LCFB improvements.
2. Market Valuation
As a starting point for addressing the strengths and weaknesses of SCE’s market
valuation, this section of the report provides an overall description of SCE’s evaluation
methodology and criteria applicable to the 2014 Renewable Resources RFP. SCE
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evaluates and ranks proposals based on LCBF principles intended to comply with criteria
set forth by the CPUC in D.03-06-071 and D.04-07-029 (“LCBF Decisions”). The LCBF
methodology includes evaluation of both quantitative and qualitative aspects of each
proposal to estimate its value to SCE’s customers and relative value in comparison to
other proposals.
Bid Evaluation Methodology and Selection Process
SCE utilizes a multi-step bid evaluation and selection process from receipt of proposals
through final selection. Once proposals are received,42 SCE begins an initial screen for
completeness and conformity with the solicitation protocols and bidder requirements. The
review includes an initial screen for required submission criteria and eligibility
requirements such as a conforming delivery point, commercial on-line date in 2016 or
later, a valid Phase II interconnection study, minimum project size, and submission of
particular proposal package elements. Sellers lacking any of these will be allowed a
reasonable period to cure any deficiencies. Following this check for conformity, SCE will
conduct an additional review to determine the reasonableness of proposal parameters
such as generation profiles and capacity factors. SCE’s goal is to work directly with
Sellers to resolve any issues and ensure the project data is ready for evaluation.
After the reviews are undertaken and the data for eligible projects is deemed complete,
SCE will perform a quantitative assessment of each proposal individually and rank the
proposals based on the relationship between the benefits and costs attributable to the
proposal. Total benefits and total costs are combined to calculate the net levelized cost or
Net Market Value for each proposal. Benefits are comprised of the value of a proposal
relative to its energy and capacity value in the market based on SCE’s forecast of
capacity and energy market values as well as congestion and curtailments benefits. Costs
include contract payments based on the bid price, debt equivalents, integration costs,
congestion costs and transmission upgrade costs. SCE discounts the monthly benefit and
cost streams to a common base date. Specifically, Net Market Value is defined as
Levelized Benefits – Levelized Costs. The components of the Levelized Cost and
Levelized Benefits that comprise the Net Market Value calculation are illustrated in
Table 3.
Table 3: Comparison of Cost and Benefit Valuation Categories
Levelized Costs
Levelized Benefits
Contract Payments – TOD-adjusted based Energy Benefits – Benefit received from
on the proposed energy price, expected expected payments from the day-ahead
generation profile and contract term
market for energy (market value of energy)
based on SCE’s internal forecast, taking
into account dispatchability of the resource.
Additional ancillary services and real time
42
For this solicitation, proposals were received via Accion Power’s website established specifically for this
solicitation.
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Transmission Costs – Cost adder to reflect
the cost of building required network
upgrades
based
on
the
latest
Interconnection Study or Agreement
benefits may be applied to dispatchable
projects.
Capacity Benefits – Benefit expected to be
received from a resource as a result of its
contribution towards the system and local
Resource Adequacy requirement. Based on
SCE’s forecast of net capacity value and
the expected quantity of Resource
Adequacy (RA). RA quantities are based
on the Commission’s applicable accounting
rules (e.g. exceedance methodology for
solar and wind).
Congestion – Locational benefit resulting
from certain resource locations.
Debt Equivalence Cost – Cost of
mitigating contract commitments on SCE’s
balance sheet
Renewable Integration Cost Adder Curtailment Benefit – Benefit expected to
(Fixed) – Fixed cost component of the be received as a result of not paying the
integration cost. This includes the costs for counterparty for curtailed hours.
meeting new and existing flexible capacity
requirements.
Renewable Integration Cost Adder
(Variable) – Variable component of the
integration cost. This includes ancillary
service costs, inter and intra hour flexible
ramping capacity costs. Static values for
wind and solar from WECC studies have
been used for the variable component.
Congestion – Locational cost resulting
from certain resource locations. For
Energy-Only projects, an incremental cost
adder is included.
In developing its relative merit order ranking of proposals, SCE’s evaluation
methodology incorporates information provided by Sellers as well as assumptions
prescribed and set by the Company with regard to its internal methodologies and
forecasts of market conditions. The result of the quantitative analysis is a merit-order
ranking of all complete and conforming Proposals’ Net Market Value.43
Following the quantitative analysis, SCE conducts an assessment of the qualitative
attributes for the top ranked proposals. The analysis utilizes the Project Viability
Calculator to assess certain factors including the company/development team experience,
43
SCE initially ranked all the proposals submitted including the mutually exclusive proposals, such as the
type of proposals submitted by a number of Sellers who offered the same project but with different delivery
dates, contract terms or pricing mechanism. SCE evaluated all the proposals but in the process of ranking
proposals for shortlist selection also identified the best offer for each proposal.
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technology, and development milestones. The Project Viability Calculator is a tool whose
purpose is to help assess the relative likelihood that proposed projects will be
successfully developed and constructed. Additional attributes such as transmission
area/cluster, generating facility location, seller concentration, project size/expected
generation, dispatchability, contribution to other programs goals, portfolio fit (of initial
deliveries or otherwise), significant transmission network upgrade costs outside of the
CAISO, and resource diversity are also considered in the qualitative analysis.
Following its analysis, SCE consulted with its Procurement Review Group (“PRG”)
regarding the short list and results of its evaluation. SCE then began negotiations with the
projects on the shortlist with the goal of completing negotiations over an approximate 3month period.
SCE’s overall LCBF methodology and approach is described in more detail in Appendix
A to this report.
Congestion Cost Adders
SCE developed congestion adders for the 2014 RPS RFP that are based on the same
methodology used to develop congestion adders in the 2013 RPS solicitation. There are
two elements of congestion costs that are incorporated into SCE’s quantitative
evaluation: (1) locational adders; and (2) energy-only cost adder.
Locational Adders
SCE’s LCBF methodology specifies that SCE will apply a locational congestion adder,
which may be positive or negative depending on expected congestion in the area, to
differentiate the value of energy between different project locations. The locational
adders are based on SCE’s forecast of energy locational marginal prices (“LMPs”) in the
CAISO market in the location that the seller plans to interconnect or to which it plans to
inject energy. SCE produced the forecast using the
SCE posted on the Accion website its long-term (2015-2024) forecast of locational
congestion adders by eight delivery periods (quarterly on-peak and quarterly off-peak).44
By posting this information, SCE provided prospective bidders information regarding the
relative value of locating generation at different locations. The information provided was
on a nodal level, with 378 pricing points. Congestion varies from approximately negative
-$11/MWh on average (Malin) to various pricing nodes with low single digit average
positive $/MWh values. These values are based on delivery points to CAISO locations.
The forecast was based on a combination of historical data and a long-term forecast.45
44
https://scerps.accionpower.com/_scerps_1401/documents.asp?strFolder=e. Bidders Conference
Materials/&filedown=&HideFiles=True. 45
SCE applied locational congestion adders to all projects in California.
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The IE views SCE’s nodal-level energy price forecast as an improvement over energy
forecasts with less local differentiation, which were used prior to the 2013 RPS
solicitation. In addition, providing the locational adders to prospective bidders provides
important guidance regarding the positive and negative values associated with locations
for new projects.
Energy-Only Adder
In addition to the locational adders, SCE developed an additional congestion adder for
Energy Only projects. These are projects that are not Full Capacity Deliverability Status
(“FCDS”) interconnection projects and do not fund transmission delivery network
upgrades. As such, Energy Only (“EO”) projects do not qualify as capacity resources and
do not receive RA capacity benefit value in SCE’s quantitative evaluation.
In its draft 2013 RPS Procurement Plan, SCE proposed a congestion adder for Energy
Only projects on the basis that these projects increase the risk of congestion to a degree
greater than FCDS projects because they do not fund the deliverability upgrades needed
to ensure that their energy can serve load and avoid localized congestion. The
Commission accepted use of an Energy Only congestion adder for the 2013 RPS
solicitation on the grounds that “energy-only interconnections may increase congestion
risk.”46
For the 2013 RPS solicitation, SCE developed a congestion adder, which was $.47/MWh
and incremental to the locational congestion adder. The EO congestion cost adder applied
to all CAISO projects that selected an EO interconnection, or any EO portion of the
contract term if FCDS status is expected to be achieved after the commercial on-line date.
This adder was based on SCE’s estimate of the average impact on system congestion
from adding incremental capacity without any incremental deliverability network
upgrades. It was the same amount for all EO projects.
SCE used the same
methodology for the 2014 RPS RFP as it used in the 2013 RPS solicitation to derive the
congestion adder.
46
D 13-11-024, p. 52.
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The methodology used by SCE seems reasonable,
We concur with SCE’s rationale for
incorporating the EO congestion cost adder as part of the LCBF methodology. Adding
new generation without network upgrades to assure deliverability is likely to add to
congestion. Incorporating the adder, we believe, sends a proper price signal to generators.
Renewable Integration Cost Adder
Integration costs are the additional system costs required to provide sufficient operational
flexibility to ensure adequate system reliability as more intermittent renewable resources
join the grid. In D.14-11-042, the Commission approved an interim renewable integration
cost adder (“RICA”) methodology, and directed SCE to include an interim RICA for the
2014 RPS solicitation.
There are two components of the RICA methodology approved for the 2014 RPS RFP:


A variable cost component of $4/MWh for wind projects and $3/MWh for solar
projects;
A fixed component calculated by SCE.
The fixed component is based on SCE’s portfolio need to secure additional capacity to
meet its flexible and non-flexible RA requirements over the contract period, which, in
turn, is the product of two parameters:


SCE’s projection of a monthly premium for flexible RA expressed in $/kWmonth; and
The Monthly increase (or decrease) in the need for flexible RA associated with
one MW of installed capacity of wind or solar expressed as MW of flex capacity
needed/MW of wind or solar capacity.
SCE calculates this change in flexible RA need by using the hourly aggregate system
profile for load, wind, and solar from the 2014 LTPP Trajectory Scenario. This hourly
data is used to calculate the hourly three hour net-load ramp for each hour of the year,
consistent with the CAISO’s Flexible Capacity study. SCE then identifies the maximum
three hour net-load ramp for each month, and determines the relative contributions from
wind and solar to that maximum ramp. Finally, SCE determines the monthly increase (or
decrease) in the need for flexible capacity associated with one MW of installed capacity
of wind and solar. This is determined based on the relative contribution of wind/solar
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indicated above and the total installed capacity of wind/solar in the system. Maximum
generation for wind/solar from the 2014 LTPP Trajectory Scenario is used as the estimate
for the total installed wind/solar capacity for the system. The result of flexible capacity
needs for wind/solar based on the described methodology is summarized in Table 4
below:
Table 4: Contribution of 1 MW of Installed Capacity to Flexible RA
Month
January
February
March
April
May
June
July
August
September
October
November
December
Solar
0.52
0.75
0.63
0.78
0.66
0.58
0.58
0.61
0.78
0.66
0.59
0.63
Wind
0.12
0.09
0.15
0.13
0.01
0.07
0.04
0.05
0.20
0.02
0.00
0.20
In terms of bid evaluation, SCE multiplies the estimate for flexible RA value by the need
for flexible capacity for the wind or solar product and converts this fixed component to
$/MWh by summing the fixed component for each month over the course of a year and
dividing by the forecasted generation. The variable RICA amount in $/MWh is then
added to derive the total RICA in $/MWh.
As indicated previously, this is an interim methodology, and the Commission will review
the methodology to determine RICA on a more permanent basis.
Curtailment Cap and Benefit Calculation
For bundled energy product, Sellers are required to submit proposal pricing based on two
curtailment scenarios:
1. 50 Hour Curtailment Cap – without payment, of up to 50 hours times the
Contract Capacity for each year during the Term of the Renewable PPA. After
50 hours, if the ERR Generating Facility is capable of delivering product, SCE
will pay for SCE instructed curtailment (excluding curtailments ordered by
CAISO, the Transmission Provider, or in an Emergency) at the Product Price;
2. No Curtailment Cap – If the ERR Generating Facility is capable of delivering
Product, SCE will pay for SCE instructed curtailments (excluding curtailments
ordered by CAISO, the Transmission Provider, or in an Emergency) at the
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Product Price as detailed in the Renewable PPA. Under this scenario, no
Curtailment Cap would apply.
The IE prepared several questions regarding SCE’s approach on curtailment. The IE
asked SCE to explain how the two pricing proposals for curtailment would be accounted
for in the project evaluation assessment and for ranking purposes. The IE initially
inquired whether one pricing option would be used as a “base case” for offer ranking and
the other as an indicator of the additional cost/benefit to reflect curtailment value, or
whether the two options would be valued separately and included in one ranking list. The
IE asked how SCE would specifically value the “free” curtailment of up to 50 hours/year
multiplied by the contract capacity.
SCE responded that it was developing a methodology to calculate the curtailment benefit.
SCE subsequently discussed its proposed methodology with the IE. Under this
methodology, the monthly energy to be curtailed is 1/12 of the annual curtailment amount
(i.e. 50 hours * contract capacity * (1/12)). SCE assumes that the curtailment occurs
during the highest cost hours first. The benefit calculation is based on the sum of the
dollars not paid to the counterparty under the PPA. SCE assumes that real-time prices are
zero when it curtails, so there is no positive impact on real-time costs to load associated
with the curtailment of the resource. This simplifies the analysis because the value of
curtailment is calculated simply as the value of not having to pay a generator during the
highest value hours in a month for each month.
SCE included the curtailment benefit as a component of the calculation of the Renewable
Premium value for each offer. While generally the curtailment benefit values were fairly
small
the methodology to account for this factor was not referenced in the Protocol or
Procurement Plan and was developed shortly prior to offer submission.
Overall Market Valuation Assessment
As previously described, SCE’s valuation methodology takes into account both the
proposed costs and benefits for each project submitted based on the specific proposal
submitted. The valuation methodology takes into consideration the total cost to ratepayers
of a proposal by including the proposed contract payments (as bid by each Seller in its
Proposal) plus other costs to ratepayers (including the transmission rate impact associated
with required network upgrades, congestion cost impacts, integration costs and the
implications of the estimated cost of imputed debt on the utility’s balance sheet).
Importantly, all projects are treated equally using this methodology which allows for a
comparison of different types of technologies, with different terms and start dates.
Some of the major strengths of the LCBF methodology used by SCE include:

All Proposals are treated the same with regard to the cost and benefit components
and assessment for each project;
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
All Proposals are evaluated using the same consistent set of input price forecasts
for energy, capacity, congestion, and transmission costs;

The methodology can be efficiently utilized to evaluate a large number of
proposals in a fairly quick manner as compared to other utility methodologies
which may rely on detailed system-wide simulation or optimization model
assessments;

The evaluation methodology generally treated all eligible resources and
technologies in a technology neutral manner with no undue biases toward any
technology or resource type. This was particularly true of the quantitative
evaluation methodology which we felt was generally balanced and technology
neutral;

The use of a Market Valuation approach such as Net Market Value or similar
process used by other utilities is common and generally accepted in the industry;

For this RPS RFP, the evaluation methodology accounts for integration costs
associated with intermittent renewable resources.
The weaknesses of this methodology include:

There is still much uncertainty associated with transmission access and cost,
status of new transmission projects, and the expectations about the initial
operation date of the transmission facilities. Reimbursable network upgrade costs
can have a significant impact on the ranking of projects which could influence
shortlist selection;

The methodology to account for integration costs is being used for the first time
and will likely evolve over time to produce more accurate estimates.

The IE views SCE’s portfolio approach of combining Net
Market Value to identify the best projects with judgment and further analysis to
consider the “cost” side of a project in more detail as a positive step to consider
for future solicitations as a potential means of seeking lower costs for consumers.
However, in future solicitations, SCE should be more explicit in its LCBF
methodology regarding its evaluation and selection approach, including what it
will use as a measure of costs, such as levelized cost per MWh or some other
metric.
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3. Evaluation of Transmission Costs
SCE’s evaluation methodology assigns estimated reimbursable transmission network
upgrade costs to the contract price of generation in order to compare offers fairly and
equitably. Transmission costs are based on the estimated cost of reimbursable network
upgrades attributable to individual projects. SCE requires that all Proposals must
demonstrate that they have a Phase II interconnection study or better or an equivalent.
Transmission costs applicable to the project will be based on the applicable completed
interconnection study or interconnection agreement.
For the 2014 RPS RFP, Sellers were required to provide copies of their Interconnection
Studies (at least a Phase II study) and Interconnection Agreement (if they had an
Agreement) with their proposals, which were uploaded into the Accion Power website. In
addition, the Proposal Form required each Seller to provide a significant amount of
information on the transmission arrangements for its project including:





















whether they were interconnecting to a new transmission project;
whether the project has an interconnection queue position;
what interconnection cluster are they in;
what is their interconnection queue position number;
what is the interconnection point;
whether the project is connecting to a West LA Basin or Moorpark high voltage
substation;
name of Balancing Authority or utility;
whether the Seller will dynamically transfer the product into a California
Balancing Authority;
interconnection documents provided;
status of the project’s interconnection;
delivery point or point of interconnection;
interconnection voltage;
date of interconnection document from which the Delivery Point is transcribed;
is the project located in the IID;
is conferment of deliverability status by the CAISO subject to the completion of
the Tehachapi Renewable Transportation Project (“TRTP”);
commercial operation date from Interconnection Agreement;
deliverability status (full capacity deliverability status, partial capacity
deliverability status, interim deliverability status, energy only deliverability
status);
full capacity deliverability date or partial capacity deliverability date;
estimated time to construct;
name of interconnection document from which the estimated time to construct is
transcribed;
page number from the Interconnection Document with regard to the time to
construct;
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



Seller’s estimated date to sign an Interconnection Agreement;
network upgrade costs;
document and page number from which the upgrade is provided;
cost of reliability network upgrades and deliverability network upgrades.
The information provided to the website allowed SCE to complete a number of cross
checks on the information to determine whether the information was consistent. SCE’s
RPS project team also provided the transmission information for each project to its
transmission group for review and assessment to ensure that the information was
reasonable and credible. The SCE project team also sought input from the Transmission
and Distribution Group regarding validation of the projects’ transmission information and
any other information regarding transmission access and cost.
SCE uses the interconnection studies submitted as part of the offer submittal package to
determine the applicable reimbursable network upgrade costs for all projects. SCE
applies the required network upgrade costs associated with delivery of the project’s
energy to the nearest defined market (e.g. NP15, SP15, ZP26 Generation Trading Hubs).
Once total network upgrade costs are determined, SCE allocates the reimbursable
transmission costs over 40 years (i.e. assumed asset life) using a 16% capital cost
recovery factor to determine levelized costs.
The methodology used by SCE to determine reimbursable transmission upgrade costs is a
major improvement over methodologies that rely on high level estimates, since the
transmission upgrades are more defined and should be more accurate. Since all Sellers
must have completed a Phase II study at a minimum, the projects are also placed on a
more level playing field in the evaluation process.
Inclusion of more accurate transmission cost estimates in the evaluation also provides a
more complete view of all costs attributable to a specific project, including the cost to
California ratepayers associated with a new transmission project.
The information required of the Sellers by SCE also provides valuable information
regarding whether a project will be fully deliverable at the time the project reaches its
commercial operation date, which is relevant for assessing project viability, capacity
value and congestion cost impacts.
For the next solicitation, SCE should evaluate whether it should include only network
costs that its customers or California IOU customers incur, which are network upgrades
for projects interconnected to the CAISO, as opposed to network upgrades for projects
interconnected with any California balancing authority. While a desire to consider costs
socialized among all California customers may have some appeal, the RPS procurements
are for the purpose of satisfying SCE’s RPS obligations with respect to its own
customers.
4. Evaluation of Offer’s Project Viability
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Use of the Project Viability Calculator (“PVC”) was incorporated into SCE’s evaluation
of the proposals in connection with short-listing. SCE asked the Sellers to complete the
PVC based on their assessment of their own projects, including providing scores for the
project and supporting justification for the scores. Also, both the IE and SCE completed
the PVC scores for short-listed projects. SCE also conducted an internal due diligence
evaluation of all the short-listed projects to assess project viability based on publicly
available information about the project and counterparty.47 SCE provided a summary of
the due diligence assessment to the IE.
The original objective of the PVC was to evaluate the viability of renewable energy
projects at different stages of development based on a number of traditional project
viability criteria such as developers’ experience, site control, project financing status,
environmental permitting status, status of interconnection progress, technical feasibility,
transmission system upgrade requirements, and reasonableness of the expected
Commercial Operation Date. SCE’s approach for this solicitation to include stricter
thresholds essentially changed to a large degree the importance of the PVC as structured.
Through the IE’s work on numerous competitive procurement processes throughout the
United States and Canada, our assessment is that there is generally a trade-off between
stricter threshold criteria and qualitative evaluation criteria such as those effectively
included in the PVC. Stricter thresholds generally mean a project has to be more mature
in the development process to compete and therefore should score more highly based on
qualitative criteria. That proved to be the case in this solicitation.
Nevertheless, the PVC has several strengths and weaknesses as a component of the
evaluation and selection process. The advantages of the PVC include:




The PVC represents a standardized tool to evaluate all projects;
The PVC is a transparent tool;
As a result, the PVC sends an important signal to Sellers regarding the qualitative
criteria, at least those pertaining to project viability, of importance when
developing their projects. The IE has found in other processes where the utility
conducts a quantitative and qualitative evaluation that the weights and rankings
of the various criteria are not explicitly defined but are used by the utility as an
internal evaluation and scoring process;
The PVC scores, along with supporting documentation provided by the Sellers to
support its scores, provide a valuable base of information on which to evaluate
projects. We do note, however, that the Sellers generally scored their own
projects more favorably from a project viability perspective than SCE and the IE.
There are also disadvantages associated with the PVC that should be taken into
consideration with respect to future solicitations. These include:
47
SCE not only conducted a due diligence assessment based on the information provided by the Seller in its
proposal but also conducted internet research on the Seller and the project in an attempt to gain knowledge
about the status of the project and any issues identified in the local press or other publicly available source.
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
While several of the criteria and guidelines are objective and scoring and ranking
is fairly obvious, there are several criteria that are ambiguous and unclear and
require the analyst to develop his/her own basis for scoring. For some of the
criteria, personal judgment is used which may vary among analysts.
Reasonableness of the COD, Project Financing Status, and Transmission System
Upgrade Requirements are somewhat ambiguous criteria.

The current PVC has been a valuable tool for assessing project viability in
previous solicitations where the threshold criteria were more lenient. However,
with stricter threshold requirements and a more mature market, the PVC perhaps
is now overly general resulting in high scores for most projects and limited ability
to distinguish potential project development issues or “red-flags” that may
influence project viability for purposes of selecting the final short-list or
informing contract negotiations.
C. Recommended Future LCBF Improvements
The IE has several recommendations for future LCBF and solicitation improvements. We
also assume that continued development of the methodology to derive integration costs
will be a factor going forward as part of the RPS Procurement Planning process.

The IE felt that SCE’s use of a portfolio assessment process for short-list
identification and selection was a positive step forward for informing selection of
the final shortlist for RPS projects. While the Net Market Value concept as the
basis for rank ordering projects has been utilized for a number of RPS
solicitations (and is a common evaluation tool), the use of this metric for rank
ordering and selecting projects does not address the cost to consumers of
securing renewable resources to meet RPS requirements without respect to value.
The IE believes that in future
RPS solicitations, SCE should continue to utilize the portfolio approach along
with the Net Market Value methodology to inform the resource selection
decision. In addition, SCE should also encourage bidders to offer pricing for
different project in-service dates to provide a more robust set of options to
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evaluate.48 Importantly, SCE should include in its procurement documents, and
should communicate to prospective bidders, that it is considering costs and not
just Net Market Value in its evaluation and selection process if in fact SCE plans
to do so in the future and the metric or metrics it will utilize in evaluating costs.
Finally, in the next solicitation, SCE should state a preference for projects with
earlier in-service dates if it values earlier deliveries in order to provide greater
certainty of RPS compliance (or, alternatively, that it would prefer earlier
deliveries if, at the time of the evaluation, it is projecting, or still projecting,
significant net short positions in early years). In addition, SCE may want to
strongly encourage Sellers to offer multiple options with different start dates and
contract terms to provide additional flexibility to inform the evaluation and
selection decision. This approach is valuable with additional market and
compliance uncertainty as the amount of RPS requirements increases and the
amount of renewable energy in the utility portfolio continues to increase. This
would send the proper signal to potential bidders and likely elicit more offers that
better meet SCE’s needs, ideally affording more flexibility to the utility to
develop its portfolio.

In light of SCE’s and the Commission’s concern regarding project viability--the
likelihood that projects selected in the RPS solicitation process will be permitted,
financed, and placed into service--consideration should be given to placing the
risk of permitting failure on the Seller in the Pro Forma PPA. Under Section
2.03(a) of the Pro Forma PPA, the Seller has the right to terminate the PPA and
get back its security deposit if it fails to obtain necessary construction permits. It
is far more typical in renewable energy solicitations of which Merrimack Energy
is aware that Sellers who fail to achieve commercial operation due to failure to
receive permits take the financial risk in the PPA-by forfeiting all or a portion of
the security deposit as liquidated damages. This may help in reducing the
“contract failure” rate, by deterring developers with major project permitting
risks from bidding or by requiring them to price the risk into their bids.49
D. Additional Information or Observations Regarding SCE’s Evaluation
Methodology
There is a need for improving the quality control aspects of SCE’s evaluation of
proposals. Based on discussions with SCE, the Company recognizes the need for
improvement in this area.
48
As SCE encouraged bidders to submit proposals with different contract term lengths, SCE could take the
same approach with respect to initial delivery dates.
49
In light of the increased risk removal of the “permitting out” provision would have on developers, SCE
should consider whether it should revise the development security amounts in its Pro Forma PPA, which
might be warranted if many bidders have considerable permitting risks and either the development security
amounts are higher than for other California IOUs and/or the company believes that removal of the
“permitting out” provision would tend to significantly increase bid prices.
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V. Did SCE Fairly Administer the Evaluation Process?
This section of the report discusses SCE’s administration of the evaluation and selection
process and whether or not the process was conducted fairly and consistently. The IE’s
conclusion is that overall the evaluation process was conducted in a fair and consistent
manner. The IE agreed that the depth of the shortlist selected by SCE and the proposals
selected for the shortlist were reasonable
This
section of the report discusses the evaluation and selection process that led to the shortlist
selected by SCE and describes the fairness and reasonableness of the decision process.
A. Principles and Guidelines Used to Determine Fairness of Process
In evaluating SCE’s performance in implementing its evaluation and selection process,
Merrimack Energy has applied a number of principles and factors, which incorporate
those suggested by the Commission’s Energy Division as well as additional principles
that Merrimack Energy has used in its oversight of other competitive bidding processes.
These include:

Were all offers treated the same regardless of the identity of the Participant?

Were Participant questions answered fairly and consistently and the answers made
available to all Participants, where appropriate?

Did the utility ask for “clarifications” that provided one Participant an advantage
over others?

Was the economic evaluation of the offers fair and consistent to all Participants?

Was there a reasonable justification for any fixed parameters that were a part of
the IOU’s LCBF methodology (e.g. RMR values, debt equivalence parameters)?

Were the quantitative and qualitative factors that were used to evaluate offers fair
to all offers?

Did SCE consistently apply the requirements, procedures and criteria of the
evaluation process as identified in the RFP documents to different proposals and
types of projects?

Was the evaluation and selection process based on adequate information about
each proposal and a thorough investigation by SCE’s project team?
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B. Description of IE Methodology Used to Evaluate Administration of SCE’s LCBF
Process
SCE provided the IE access to the data inputs used in the evaluation model as well as the
outputs which served as the basis for selection of the short-list. SCE provided several
output files for IE review and comments during the evaluation process, with revisions to
the outputs based on updates to proposal information obtained during the cure and
conformance period.
As previously noted, SCE used the Accion Power website as the bidding platform. Sellers
were able to upload their proposals to the website and were required to provide the
proposals based on a consistent Bid Form or file format which facilitated review and
evaluation. Sellers were also provided with a bid number, including a unique identifier
for each option proposed.50 The IE had access to all proposals and documents submitted
to the website. The IE also had access to all questions and communications between SCE
and the Sellers throughout the process. The IE was notified via email any time a Seller
submitted a question or posted information on the website as well as when a response
was submitted by SCE. The IE also had the option to review all email communication
between SCE and the Sellers and questions and answers posted to the website.
Most importantly, one of the most attractive features of the website was the ability for the
IE and SCE team to create reports to summarize proposal information and to then
transform the files into Excel to manage the data. The IE created several reports
immediately after submission of the proposals to summarize pertinent high level project
information, the pricing proposals submitted, and interconnection and deliverability
information, including cost information. The IE was able to use both the information
generated through the report function on the website along with review of each of the
offers submitted to prepare a detailed summary of the offers submitted quickly after
receipt of proposals. The summary proved valuable with regard to the discussion of offers
with the SCE team and assessment of SCE’s evaluation results.
The website also maintained a record of all communications and follow-up information
provided by the Sellers, which allowed the IE to remotely monitor all activity and
communications.
During the course of proposal review, the IE raised questions and comments about the
components of the evaluation results, specific questions about individual proposals, and
possible inconsistencies for several proposals.
The IE participated in on-site meetings at SCE’s offices at a crucial time in the bid
evaluation and selection process designed to walk through the evaluation results overall
50
For example, a Seller who offered three proposals and was classified as Bidder 100, may have proposals
100-1, 100-2 and 100-3 as the identifiers for the three proposals submitted. This allowed SCE and the IE to
easily identify specific proposals in reviewing and discussing the offers.
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as well as specific projects and to develop the portfolios utilized for informing project
selection.
The IE was also present via teleconference for all project team meetings, project
management meetings, and epRMC meetings in which proposal review and shortlist
selection decisions were taking place. The IE raised comments and was asked for its
opinion on shortlist selection.
The IE conducted a review and assessment of both the quantitative and qualitative
aspects of proposal evaluation and selection. With respect to the quantitative analysis, the
IE:

Reviewed the pricing formulas proposed by each Seller and developed a
general ranking of proposals based on the pricing ranges proposed;

Conducted an assessment of each shortlisted proposal based on the Project
Viability Calculator;

Conducted a comparison of the rankings of selected proposals by SCE in
comparison to the rankings based on the IE’s analysis and met with the SCE
project team to review the rankings and basis for project selection;

Reviewed the output generated by SCE and reviewed the results of the
evaluation with SCE’s project team leads, including raising questions and
comments about the evaluation of specific projects that seemed inconsistent
with the IE’s views of the expected results;

Audited the communications between SCE and Sellers by reviewing the email
traffic between the parties during all stages of the solicitation process (i.e.
leading up to and after proposal submission and following short list selection
through final contract execution) by reviewing the email exchanges on the
Accion Power website;

Maintained communications with the SCE project team during this process
regarding the status of conformance of proposals with SCE eligibility
requirements and identifying any proposals that were not yet in conformance
with requirements;

Reviewed and assessed the decisions made by SCE regarding short-list
selection, including development of project portfolios and the cost impacts
associated with each portfolio, calculation of Net Market Values for each
project option, calculation of the Alternative Net Market Values for California
projects not interconnecting to the CAISO, and the application of qualitative
factors used to assist in project ranking and selection.
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For qualitative factors, the IE independently scored all of the short-listed proposals based
on the Project Viability Calculator. The IE and SCE were generally consistent with
regard to scoring of projects based on the PVC, with one or two exceptions. Overall, the
PVC scores for all projects would indicate that the short-listed projects as a whole would
appear to be very viable and feasible.
With a few exceptions, we conclude that SCE on the whole reasonably followed the
criteria outlined in the Procurement Protocol.
Notwithstanding this deviation, the evaluation was consistent and
equitable across different types of proposals and technologies and reflected the totality of
costs and benefits identified in the Procurement Protocol.
Furthermore, based on our assessment of the evaluation process relative to the above
criteria, it is our opinion that all Sellers were treated fairly and consistently and all had
access to the same amount and quality of information. SCE maintained a website
dedicated to the 2014 RPS RFP and utilized the Accion Power website which provided
same time access to information for all Sellers. We also observed no difference in the
treatment of Sellers regarding clarification questions for Sellers, correspondence and
communications with Sellers, and follow-up contacts. Finally, SCE generally
implemented the evaluation criteria and methodologies as outlined in the Procurement
Protocol.
C. Did the Utility Identify, for Each Offer, the Terms that Deviate From the Utility
RFO? Did the IOU Identify Nonconforming Offers Fairly – Fair Both to the
Nonconforming Offers and to Conforming Participants?
As illustrated in Table 1, SCE received 218 individual offers.51 A total of 221 offers were
originally submitted but three offers from one Seller were withdrawn at the time of
submission. Three Sellers contacted SCE after the due date and time for proposal
submission complaining that they had wanted to submit additional offers but the offers
were not accepted by the Accion Power website. Upon review, it was determined that the
Sellers attempted to complete their proposals very close to the deadline for submission
and were not able to submit their offers prior to the deadline. As a result, their partial
proposals were rejected from consideration by the Accion Power website which “shut
down” at the scheduled time identified in the Protocol.
51
This total does not account for the differentiation of offers with and without curtailment, which for PCC
1 projects essentially doubles the offer count as each project is required to submit two prices for every offer
to reflect the curtailment option.
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Shortly after proposals were uploaded by Sellers to Accion Power’s website, SCE
performed a detailed review of the proposal packages to identify any deficiencies with
regard to the information required from Sellers. This review would be used to seek
information from Sellers to cure any deficiencies. Another SCE objective was to assess
whether any offers did not meet the eligibility requirements listed in the Protocol. SCE’s
follow-up with Sellers via the website immediately after submission of proposals focused
on three areas:

Clarification of information submitted - The primary areas for clarification
included mutual exclusivity of offers submitted, pricing proposals and escalation
rates, storage options, Energy-Only or Firm Capacity Deliverability status, and
curtailment rights. SCE submitted questions to the Sellers regarding specific
issues and was able to resolve these issues via email exchange with the affected
Sellers. Based on our review of the email exchanges, it appeared that all Sellers
provided adequate information as requested by SCE;

Missing information – Several Sellers did not provide all the information
required in their offers. SCE identified documents which were not complete and
contacted the affected Sellers regarding the missing information. Common
examples of missing information included incomplete Project Viability
Calculators, failure of the Seller to sign required attestations, and incomplete
information forms. Sellers were able to cure any missing information and posted
complete documents to the website;

Corrections to filed documents – The two primary areas in which incorrect
information was discovered by SCE were associated with errors in the generation
profiles of several Sellers as well as the GIS files submitted which showed project
boundaries. Again SCE contacted the affected Sellers who then provided the
information requested by SCE.
Sellers were generally able to cure the deficiencies identified by SCE associated with
their proposals and provided the information requested in a timely manner. No offers
were eliminated for failure to cure deficiencies. In addressing non-conformities of a less
substantive nature, such as incomplete information, SCE was fairly lenient in allowing a
variety of shortcomings, such as errors in submittals, to be cured so that the proposals, as
revised, would be sufficiently complete and conforming and could compete in the
process. In our view, SCE’s approach was fair, reasonable, and inclusive.
Based on review of the offers, SCE identified offers that were viewed to be nonconforming for various reasons. SCE and the IE held a conference call to discuss offers
that were potentially non-conforming and perhaps were not eligible or should be
excluded from the evaluation on February 9, 2015. In addition, other offers were
excluded from consideration as the review and evaluation process proceeded. The offers
removed or withdrawn during the bid review and evaluation process included the
following:
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The IE had several discussions with SCE on decisions to remove project options from
consideration and was in agreement with SCE’s decisions. After removal of these
.
options,
D. If the IOU Conducted Any Part of the Offer Evaluation, Were the Parameters
and Inputs to the Evaluation Criteria Determined Reasonably and Fairly? What
Controls Were in Place to Ensure the Parameters and Inputs Were Reasonable and
Fair?
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The parameters and input files for the quantitative evaluation were largely developed
internally by SCE and were locked down prior to submission of the proposals. The IE had
the opportunity to review the input files and forecasts prior to receipt of offers.52
All the forward curves were locked down prior to receipt of proposals and would
therefore not be influenced by any offer. The IE reviewed the methodology used by SCE
to develop its forward curves for energy at different pricing points and felt that the
methodology (i.e. use of market quotes in the near term followed by a fundamental
forecast for the mid-term and trend analysis beyond a certain date)53 was reasonable and
consistent with industry practices.
SCE also prepared a forecast of capacity prices for purposes of calculating the capacity
benefit for eligible proposals.
52
The IE was familiar with SCE’s approach for developing its input forecasts based on serving as IE on
other solicitations such as the 2013 RPS solicitation and the CHP RFO 1, 2 and 3 solicitations. The CHP
RFO 3 solicitation is being undertaken concurrently with the 2014 RPS solicitation.
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Other inputs such as TOD factors, transmission adders, etc. were identified in the
Procurement Protocol and were consistently applied in the evaluation. Furthermore, the
quantitative methodology was consistently applied to all Sellers, with the overall
methodology (except for the inputs) revised (with some improvements) from the previous
solicitation.
From the qualitative perspective, the Project Viability Calculator tool developed by the
Energy Division was used in the PVC scoring of short-listed projects. SCE did not make
any adjustments to the PVC.
E. If the IE or a Third Party Conducted Any Part of the Offer Evaluation, What
Information/Data Did the Utility Communicate to that Party and What Controls
Did SCE Exercise Over the Quality or Specifics of the Out-Sourced Analysis?
As noted, the IE conducted an independent evaluation of short-listed proposals using the
same Project Viability Calculator as SCE. SCE did not attempt to influence the IE’s
scoring and evaluation of the proposals. The IE had the same access to information as did
SCE in the PVC assessment.
Other than the IE’s independent PVC scoring, the IE did not conduct any part of the offer
evaluation.
F. Were Transmission Cost Adders and Integration Costs Properly Assessed and
Applied to Bids? Any Additional Information, Observations, or Recommendations
Regarding Integration Cost Adder Methodology.
SCE’s preferred approach was to use at a minimum the Phase II interconnection study
results as the basis for assessing network upgrade costs to individual projects. If a project
already had executed an Interconnection Agreement, the costs included in the Agreement
were used (except as noted below).
There were several issues associated with applying transmission cost adders to particular
bids:


Determining the extent to which the costs of transmission network upgrades
occurring in California but outside of CAISO should be assigned to the project in
the economic evaluation.
Assessing the extent to which transmission upgrade costs incurred within CAISO
are caused by the particular generator, with costs spread to California ratepayers.
Network Upgrade Costs in California But Outside of CAISO
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SCE’s 2014 RPS Procurement Plan provides for consideration of network upgrade costs
in SCE’s evaluation of generators interconnecting with balancing authorities in California
other than CAISO as well as with CAISO.54 Technically, SCE considered reimbursable
network upgrades with California balancing authorities other than CAISO as part of the
qualitative evaluation rather than quantitative renewable premium analysis. Hence,
projects such as those interconnecting with IID had Net Market Values with no network
upgrade costs assigned to them. With network upgrade costs assigned to the generator,
the resulting net cost or benefit was referred to as the Alternative Net Market Value. The
distinction is based on the fact that under current regulatory rules, network upgrades
within CAISO will ultimately be paid by the IOUs’ customers, while the network
upgrades to IID’s transmission system will ultimately be paid by IID’s customers. The
2013 RPS RFP was the first solicitation conducted by SCE where the costs of network
upgrades to be built by a non-CAISO California balancing authority on behalf of a
generator would be taken into consideration in the evaluation of bids. The CPUC
approved this practice in a number of resolutions approving PPAs arising out of the 2013
RPS solicitation.
At the same time, SCE has drawn the line at the state’s border. Network upgrade costs
that will be ultimately paid by ratepayers outside California were not considered in the
economic evaluation. This appears to be a reasonable point of distinction.
55
All in all, SCE’s treatment of network upgrade costs was consistent with its practice in its
last RPS solicitation, which the Commission approved, as well as the Company’s 2014
RPS Procurement Plan.56 The Commission recently issued Resolution E-4726, which
54
SCE’s Final 2014 RPS Procurement Plan (Dec. 8, 2014), Appendix I.1, SCE’s Least-Cost Best-Fit
Methodology, pp. 9-10.
55
56
With respect to IID’s claims that SCE was double counting IID network upgrade costs, the Commission
stated in approving a power purchase agreement arising out of the 2103 RPS solicitation:
For both CAISO and IID-interconnected projects the generator initially funds the transmission
network upgrade costs, which are later reimbursed to the generator. While the reimbursement
mechanism is different for the CAISO and IID-interconnected projects, in both instances
ratepayers ultimately fund the transmission costs. Thus, as with CAISO-interconnected projects, it
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directed SCE to consider the differences in the reimbursement mechanisms used by the
CAISO and IID in its evaluation of costs associated with network upgrades. On
September 28, 2015, SCE filed a Tier 1 Advice Letter re-evaluating proposals from its
2014 solicitation that were interconnected to the Imperial Irrigation District’s electrical
system such that the differences between the CAISO Tariff and the Imperial Irrigation
District Open Access Transmission Tariff were considered.
Application of Transmission Cost Adder Methodology to Projects Inside CAISO
SCE’s LCBF methodology provides that it will calculate transmission cost adders based
on the estimated cost of reimbursable network upgrades attributable to individual projects
based on the applicable completed interconnection study (Phase 2 or equivalent) or
interconnection agreement. SCE applied these principles to a variety of projects with
Phase 2 interconnection studies and interconnection agreements.
is reasonable to treat transmission costs as separate project costs, similar to price, congestion, and
transmission costs, for IID-interconnected projects when evaluating offers.
Resolution E-4705 (March 26, 2015) at 14. Our understanding is that IID credits generator network
upgrade from transmission costs the generators will incur to transmit their energy into CAISO. Delivery to
a CAISO interface is a requirement under Section 2.02 of SCE’s 2014 RPS Procurement Protocol. These
transmission costs are not incurred by projects interconnected with CAISO but are not unusual to be
incurred by a generator interconnecting with a different balancing authority that wishes to transmit its
energy to a different balancing authority.
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Other than the specific issues described above, SCE’s review of interconnection
arrangements and calculation of transmission adders appeared reasonable and in
accordance with the solicitation documents.
G. Describe any additional measures the utility exercised in evaluating affiliate,
buyout, and turnkey offers.
There were no affiliate, buyout, or turnkey offers.
H. Describe Any Additional Criteria or Analysis Used in Creating its Short List (e.g.
Seller Concentration, Online Date, Transmission Availability, etc.). Were the
Additional Criteria Clearly Included in the Solicitation Materials?
While SCE rank ordered projects based on the Net Market Value, there were several
areas where SCE exercised judgment in creating the short-list. The shortlist selection
process and the additional criteria used in developing the short-list are described below.
1.
As
indicated previously, the procurement target was not in any of the solicitation
documents.
2. SCE conducted its evaluation of the eligible offers and rank ordered the offers
according to the Net Market Value metric. SCE used the rank ordering of the
projects as a basis for identifying the highest ranked offers.
3.
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During the discussions leading up to evaluation and selection, SCE considered qualitative
attributes to either eliminate or add projects to the short-list. The qualitative attributes
considered included attributes that were identified in SCE’s Procurement Plan as well as
specific attributes that were considered based on the circumstances in the market
influencing this solicitation. The following qualitative attributes were considered in the
development of the short-list:
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In the IE’s view, SCE’s decision to select a deep short-list was
generally reasonable and consistent overall with the Procurement Protocol.
I. Results Analysis
1. Identify instances where the IE and the IOU disagreed in the LCBF
evaluation process
The IE raised a number of clarifying questions with SCE about its interpretation of
several proposals as well as potential inconsistencies in the evaluation results. Generally,
the IE identified potential inconsistencies or potential errors, brought these to SCE’s
attention, and held discussions with SCE about the IE’s questions. All specific issues
associated with questions raised by the IE with regard to the evaluation of projects were
resolved prior to the completion of the evaluation and ranking process.
J. Overall, Was the Overall Offer Evaluation Fairly Administered
In the IE’s opinion, the overall offer evaluation was fairly administered for the reasons
previously stated in this report.
K. Any Other Relevant Information or Observations
For purposes of referring back to the actual shortlist selected with regard to the projects
identified in this section, the IE has replicated the shortlist in Appendix D with the
updated quantitative evaluation.
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VI. Did the Proposed RPS Shortlist Merit Commission Approval? Was
the Evaluation, Selection and Contract Negotiation Process Reasonable
and in Accord with the Procurement Protocol?
This section addresses whether SCE’s shortlist merits CPUC approval. This section also
addresses the reasonableness of SCE’s evaluation and selection of final offers and the
contract negotiation process.
A. Did the IOU Conduct a Fair Solicitation That Was Consistent with
Commission Decisions and its Approved LCBF Methodology?
For the reasons stated herein, Merrimack Energy concludes that SCE conducted a fair
solicitation process that was consistent with Commission decisions and SCE’s approved
LCBF methodology for the most part. SCE followed its stated evaluation process from
receipt and initial review of proposals to final short-list selection with a few exceptions.
This approach was not specifically reflected in SCE’s Approved
LCBF Methodology. However, it did help facilitate the higher level objectives of the
solicitation—higher certainty of achieving RPS compliance at the lowest reasonable cost
to ratepayers.
Due to errors in the initial
evaluation, SCE conducted a re-valuation of the offers, as described in Section II.D of
this report, which did not result in any changes that would have affected SCE’s shortlist
selection decisions or decisions to execute PPAs arising out of the solicitation.
In this context, SCE’s shortlisting decisions were reasonable and were generally
grounded in the requirements, evaluation criteria and stated preferences set forth in the
Procurement Protocol, with modifications that were reasonable under the circumstances.
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B. Did the IOU Choose Projects for the Short-list That Provide the Best Overall
Value to Ratepayers? Could the IOU Have Incorporated a Decision-Making
Process That Provided for a Different Portfolio of Projects That Provide
Better Overall Ratepayer Value?
C. Did the Short-list Conform to the Needs of the IOU’s Portfolio, RPS
Requirements, RPS Procurement Plan and Protocol?
The short-list reasonably conforms to SCEs needs as identified in the RPS Protocol and
RPS Procurement Plan. All short-listed proposals have either an Interconnection
Agreement or Phase II interconnection study as required. The proposals selected have an
initial delivery date that is consistent with SCE’s needs during Compliance Period 3,
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The IE believes that overall SCE followed the general methodology described in its RPS
Procurement Plan and Procurement Protocol in evaluating offers and in developing and
finalizing a short-list while taking into consideration its most recent forecast regarding
RPS compliance and applying reasoned judgment. Overall, SCE’s decisions were
consistent with the RPS Procurement Plan, Procurement Protocol and with LCBF
principles.
D. In the IE’s Opinion, is the IOU’s Proposed Short-list Reasonable
The IE’s overall opinion is that the short-list merits CPUC approval,
SCE selected attractive offers with
sufficient GWh volumes to meet SCE’s requirements even if some projects withdraw or
fail.
E. Contract Negotiation Process
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SCE made the decision to execute PPAs with each shortlisted party with which it could
reach agreement on contract terms and with any modifications to the short-listed
proposals that it found acceptable. This approach was not required but certainly
allowable within the context of the Procurement Protocol and was, in the IE’s opinion, a
reasonable exercise of discretion
and historical and projected failure rates for selected proposed new
projects.
VII. The Luz Solar Partners PPAs and the Fairness of the ProjectSpecific Negotiations
A.
The SEGS III, IV and V Projects and the Associated Luz Solar
Partners LTD PPAs
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The SEGS III, IV and V projects are owned by Luz Solar Partners LTD as separate
entities of the Seller.65 The Seller is a special purpose entity intended to own and operate
the Project. Luz Solar Partners executed all the requisite acknowledgements comprising
the proposal for the sale of renewable energy and capacity from the SEGS III, IV, and V
projects. The projects are existing 30 MW solar thermal facilities located in Boron
California near Kramer Junction. Each SEGS project has been delivering renewable
power to SCE since their Commercial Operation Date (“COD”). SEGS III and IV were
completed in 1987 and SEGS V in 1988. The projects have full ownership of the site. As
existing QF facilities, the units have completed all interconnection requirements and have
Full Capacity Deliverability. All projects have gas backup generation. NextEra Energy
Resources, a prime owner and operator of the SEGS facilities is an experienced
developer, owner and operator of renewable energy projects in the US, including owning
and operating 962 MW of operating wind projects, 310 MW of operating solar projects in
California, with an additional 250 MW of solar thermal and 550 MW of solar PV projects
under construction.
Commercial Terms of the Luz Solar Partners SEGS III, IV, and V PPA
Luz Solar Partners was successful in reaching agreement on contract terms with SCE for
SEGS III, SEGS IV, and SEGS V.
SCE and Luz Solar Partners executed the PPAs on July 30, 2015.
65
SEGS III is owned by Luz Solar Partners LTD III. SEGS IV is owned by Luz Solar Partners LTD IV.
SEGS V is owned by Luz Solar Partners V. Each Luz Solar Partners entity is a California Limited
Partnership. Luz Solar Partners III is owned by NextEra Energy Resources (50% ownership), Fortress
Investment Group (46.8%), and Other (3.2%). Luz Solar Partners IV is owned by NextEra Energy
Resources (37.8%), Fortress Investment Group (50%) and Constellation (12.2%). Luz Solar Partners V is
owned by NextEra (45.8%), Fortress Investment Group (50%), and Constellation (4.2%).
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During the negotiations process, some of the primary issues raised for negotiation
included:
The key commercial terms of the Luz Solar Partners SEGS III, SEGS IV and SEGS V
PPAs are summarized below.
Delivery Term (Sections 1.02)
Type of Facility (Section 1.01(g))
Vintage (Recital A)
Location of Facility (Section 1.01(b),
Exhibit B
Contract Capacity (Section 1.01(h))
Forecasted Commercial Operation Date
(Section 1.02)
10 years for all three units
Solar Thermal
Existing
41100 Highway 395, Boron CA; The site of
SEGS III – V is near the intersection of
Highways 395 and 58, Kramer Junction, in
western San Bernardino County, CA.
30 MW – each unit
SEGS III – March 1, 2017
SEGS IV – March 1, 2017
SEGS V – February 1, 2018
Commercial Operation Deadline Section
1.02(b))
Conditions Precedent to Commencement
of Term (Section 2.02) - Commercial
Operation Date (Section 2.02(b))
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Products (Section 1.01(d))
All electric energy (net of station use), all
Capacity Attributes, all Green Attributes,
and all RA benefits generated by,
associated with or attributable to the
Generating Facility, whether operating as
an ERR or as a multi-fuel facility using
non-renewable fuel in excess of the de
minimis quantity applicable to the
Generating Facility (as determined by the
CEC) throughout the Term.66
Price (Section 1.03(a))
Expected first year energy output (Section
1.01(i))
Delivery Point (Section 1.01(f))
Interconnection Point (Section 1.01(e))
SEGS III – 68 GWh
SEGS IV – 69 GWh
SEGS V – 68 GWh
Point of interconnection with the CAISOcontrolled grid at SUNGEN 1 B1
Kramer Substation
66
Current CEC guidelines,
which are subject to change, allow all of the generation from multi-fuel facilities using a de minimis
quantity (typically 2% of the annual energy input to the facility) of non-renewable energy resources in the
same generation process as the renewable energy resource to be counted as RPS-eligible.
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Time of Delivery Periods (“TOD Periods”)
TOD Period
On-Peak
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2:00 p.m. – 8:00 p.m.
Applicable Days
Weekdays except Holidays.
71
Off-Peak
Super-Off-Peak
8:00 a m. – 2:00 p m.
2:00 p.m. – 8:00 p.m.
Weekdays, Weekends and Holidays
H lid
Weekends and Holidays.
8:00 p.m. – 10:00 p m.
Weekdays, Weekends and Holidays
10:00 p.m. -8:00 a.m.
Weekdays, Weekends and Holidays
Season
TOD Period
Full Capacity Deliverability Status
Product Payment Allocation Factor
Summer
June 1st – Sep 30th
On-Peak
1.29
Off-Peak
1.04
Super-Off-Peak
0.94
On-Peak
1.10
Off-Peak
0.96
Super-Off-Peak
0.95
Winter
Oct 1st – May 31st
“Holiday” is defined as New Year’s Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day,
Veterans Day, Thanksgiving Day, and Christmas Day. When any Holiday falls on a Sunday, the following
Monday will be recognized as a Holiday. No change will be made for Holidays falling on Saturday.
SCE’s economic analysis of the costs of the Projects were based on post-TOD payments
in light of the Project’s production profile. There were no direct costs associated with
network upgrades.
Other PPA Contract Terms and Conditions
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67
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B.
Identify principles used to evaluate the fairness of the negotiations
The general principles followed by the IE in evaluating contract negotiations include
assurance that the risk allocation provisions in the contract are reasonably balanced
between the counterparties and that the utility customers are not placed at undue risk as
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result of the contracting process. The IE generally “monitors” but does not actively
participate in the contract negotiation process but will identify issues to the utility
transactors if negotiations are moving off track, if there are biases or inconsistencies in
the process, or if the IE wants to ensure that all similar projects being negotiated are
treated in a similar manner. It has been our experience in monitoring a number of
negotiation processes that contract negotiations can divert off course but eventually
return to a balance after contested provisions are resolved. We also attempt to ensure that
similarly situated counterparties are treated the same or similarly and that all
counterparties are provided with the same message. For example, SCE informed
shortlisted bidders throughout the process that this was still a very competitive process
with no guarantee of a bidder being awarded a contract since more projects were
shortlisted than the amount of renewable energy it was seeking to contract in the
solicitation. SCE provided a clear message that all shortlisted bidders should consider
offering price reductions during the negotiation process, particularly if the bidder revises
the initial delivery date to allow it to lower its costs through use of the ITC.
C.
Using the above principles (section V.A), please evaluate fairness of
project-specific negotiations
SCE’s process involved the initiation of contract negotiations with
,
several of which included multiple projects. Shortly after the selection of the short-list,
SCE notified the selected bidder of offer selection for the short-list. In the email
conveying short-list selection, SCE also informed the bidder that short-listing does not
guarantee the execution of the contract and that bidders were required to upload to the
Accion website the RPS Pro Forma PPA with any proposed changes shown in redline
format as well as a completed Exhibit B. SCE also informed the bidder that it must post
an executed Non-Disclosure Agreement. The notification was issued to all short-listed
bidders at the same time via the Accion website.
Internally, SCE established contract negotiation teams for each counterparty that included
a commercial contract manager, attorney and credit analyst. In addition, SCE established
a core team to address issues that arose during the contract negotiation process from an
internal policy perspective to ensure a consistent message and internal policy was
conveyed to all contract negotiation teams. In addition, SCE held weekly core team
meetings as well as weekly meetings of the contract negotiation teams to assess the status
of negotiations, discuss any policy of contract negotiation issues that may arise and
ensure that all contract negotiation teams were fully aware of any issues that may emerge
in other contract negotiation processes. The IE found this process to be particularly
valuable for keeping everyone on the contract negotiation teams up to speed on any
issues that were emerging during the contract negotiation sessions. In addition, attorneys
at SCE were also assessing revisions to pro forma contract language for key provisions
that warrant review.
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The IE concludes that all counterparties were fairly treated during the contract
negotiation process. The Pro Forma Agreement was still the starting point for all
negotiations and most of the applicable provisions from the Pro Forma remained in the
Luz Solar Partners PPAs. Furthermore, the checks and balances process undertaken by
SCE to review and internally approve all contracts prior to execution resulted in
consistent treatment for all counterparties, and all of the contract negotiations that were in
process were successfully concluded,
In the IE’s opinion, SCE acted
fairly and responsibly in the contract negotiations and treated Luz Solar Partners in a
similar manner to other counter parties in light of the nature of the SEGS projects and the
contract issues raised by Luz Solar Partners.
D.
Identify the terms and conditions that underwent significant changes
during the course of negotiations?
This section of the report will address the pro forma PPA terms and conditions that
underwent significant change during the course of negotiations. In the case of SCE’s RPS
solicitation process, the IE will address two areas of interest. The first are those contract
provisions that were revised or added to the PPA that affected many of the shortlisted
projects. The second are provisions that underwent changes for the specific PPA that is
the subject of this Advice Letter report.
General PPA Changes
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The starting point for negotiations with all counterparties was the standard Pro Forma
Renewable PPA. SCE posted the Pro Forma PPA on the website. SCE’s Pro Forma PPA
is structured under the assumption that:

Seller’s proposal is based upon the greenfield development of a new Generating
Facility;

The Generating Facility’s first point of interconnection will be with the CAISO;
and

SCE will be the Scheduling Coordinator.
Shortlisted Bidders were requested to provide a red-line version of the PPA as soon as
practical after shortlist notification, although it was typical that red-lines were submitted
to the Accion website two to three weeks after shortlist notification. SCE informed the
shortlisted Bidders that there was only a three month window for negotiations and
encouraged shortlisted Bidders to post the red-line of the Pro Forma within a reasonable
timeframe since contract negotiations could not begin in earnest until the red-line had
been posted.
Several contract provisions were revised or provisions added during the course of
negotiations to address issues that were pertinent to most or several projects or were
initiated based on SCE policy. For each provision, SCE made revisions to the Pro Forma
PPA and submitted the proposed revisions to the affected counterparty at the next
contract turn. The first two revisions, i.e.
were also addressed in the 2013 RPS solicitation. The
primary revisions to the Pro Forma PPA included the following:
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
Addition of Section 8.06 in the Pro Forma Agreement to include as Section in
the PPA dealing with Consolidation of Seller’s Financial Statements. The
overall premise of this provision is listed in Section 8.06(a), which states:
Buyer shall determine through consultation with its internal accountants
and review with their independent registered public accounting firm,
whether Buyer is required to consolidate Seller’s financial statements with
Buyer’s financial statements for financial accounting purposes under
Accounting Standards Codification (ASC) 810/Accounting Standards
Update 2009-17, “Consolidation of Variable Interest Entities” (ASC 810),
or future guidance issued by accounting profession governance bodies or
the SEC that affects Buyer accounting treatment for this Agreement (the
“Financial Consolidation Requirement”).
The remainder of this section defines the requirements for the Supplier if
SCE finds the consolidation requirement to be applicable.
Changes Specific to the Luz Solar Partners SEGS III, IV and V PPAs
Beginning on page 72 of this report are several specific provisions identified that were
somewhat unique to this PPA including:
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E.
Was similar information/options made available to other participants,
e.g. if a participant was told to reduce its price down to $X, was the
same information made available to others?
The IE concludes that similar information and options were made available to all
participants. Not only were SCE’s processes and procedures established with a goal of
ensuring that all projects had access to the same information but SCE on several
occasions sent emails and other notification to all shortlisted bidders informing them of
the schedule for completing negotiations and finalizing contracts through the Accion
Power website.
F.
Any other relevant information or observations, such as other data or
information used to inform the negotiations
None
VIII. Does the Contract Merit CPUC Approval?
A. Provide narrative for each category and describe the project’s ranking
relative to: 1) other offers from the solicitation (or recent bilaterals or
market information if used in reasonableness comparison; 2) other
procurement opportunities (e.g. distributed generation programs); and 3)
from an overall market perspective:
1.
Contract Price, including transmission cost adders
2.
Project’s net market value
3.
Consistency with stated RFO goals
4.
Portfolio Fit
5.
Project Viability
a.
Project Viability Calculator score
b.
IOU-specific project viability measures
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c.
6.
Other (credit and collateral, developer’s project
development portfolio, transmission, other site-related
matters, etc.)
Any other relevant factors
The SEGS III, IV and V are all existing solar thermal facilities, each rated at 30 MW. The
facilities are located in Boron, California near Kramer Junction. SEGS III and IV
completed construction in 1987, while SEGS V completed construction in 1988. All three
projects have been delivering renewable power to SCE since their COD date. The
projects all have full ownership of the land associated with the site. As existing QF
facilities, all three projects have completed all interconnection requirements and have
Full Capacity Deliverability. As existing projects, the three facilities do not have any
development risk and are not dependent on any tax credits to support their pricing offers.
All three units are capable of producing 30 MW of clean, renewable energy, with annual
generation of 68 GWh per year for SEGS Unit III, 69 GWh per year for Unit IV, and 68
GWh per year for Unit V. The facilities are able to ramp from their minimum load of 5
MW up to their maximum load of 30 MW at a rate of 2 MW/minute from solar thermal
energy. The units are also equipped with a gas boiler system that is capable of
supplementing the solar generation. Through FERC regulations, the SEGS units are
allowed to burn gas for up to 25% of the thermal input for the generation of electricity
annually. The units were offered to SCE as a bundled product of renewable solar energy
as well as full ability to dispatch gas-fired generation at the facility. The SEGS units are
considered “Multifuel Facilities” by the California Energy Commission and as such may
burn a de minimis quantity of nonrenewable fuel.68
The COD date for both SEGS III and IV is March 1,
2017, while SEGS V has a COD date of February 1, 2018.
68
Generally, the de minimis quantity is two percent of the annual energy input to the facility unless
otherwise noted.
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The three SEGS PPAs are generally consistent with several of the goals and criteria
identified by SCE for undertaking this solicitation. The projects will provide energy
beginning in 2017 and early 2018, which is consistent with SCE’s requirement to meet
RPS requirements in Compliance Period 3. The total compliance period three generation
provided by the three units total 741.488 GWh. SEGS III, IV, and V are estimated to
individually provide 266.89 GWh, 271.794 GWh, and 202.804 GWh in Compliance
Period 3 respectively.
From a project viability perspective, the project provides several benefits. As an existing
and operating renewable energy project for nearly 30 years, the facility presents no
development, technological or financing risk.
The primary project owner/operator, NextEra Energy is a very experienced developer,
owner and operator of over 18,000 MWs of energy generation systems, including wind,
solar, natural gas and nuclear. In California, NextEra has 962 MW of operating wind
projects, 310 MW of operating solar PV projects, and is under construction on an
additional 250 MW of solar thermal and 550 MW of solar PV projects. As an existing
QF facility, all three SEGS projects have completed all interconnection requirements and
have Full Capacity Deliverability.
B. Do you agree with the IOU that the contract merits CPUC approval? Explain
the merits of the contract based on offer evaluation, contract negotiations, final
price, and viability.
Merrimack Energy agrees with SCE that SEGS III, SEGS IV and SEGS V PPAs merit
CPUC approval.
On the other hand,
the projects do provide valuable portfolio fit due to the early 2017 and early 2018
commercial operation dates which coincide closely with Compliance Period 3
requirements. The projects are also existing resources with a long track record operated
by a company with a large portfolio of existing renewable resources in California. The
projects also offer resource diversity benefits to SCE’s RPS portfolio.
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Moreover, the SEGS PPAs have merit based on the existing nature of the projects,
associated project viability, and diversity of resource type.
The PPA was reasonably
negotiated by the parties with contract terms that taken as a whole appropriate protect the
interests of SCE’s ratepayers. All in all, it is reasonable to support the approval of the
SEGS III, SEGS IV and SEGS V PPAs.
C. Any other relevant information or observations
In the IE’s opinion, the SEGS PPAs merit CPUC approval for several
reasons, including their contribution to the Compliance Period 3 targets, resource
diversity and “best fit” values, reasonably small size (30 MW each)
and the high likelihood of
being successfully executed based on being associated with existing operating resources.
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Appendix A: SCE’s Least Cost Best Fit Evaluation Methodology
Market Valuation
SCE will evaluate the quantifiable attributes of each Proposal individually and
subsequently rank them based on the Proposal’s benefit and cost relationship, specifically
the net levelized cost of the project or Net Market Value. These individual quantitative
components include: capacity benefits, energy benefits, contract payments, debt
equivalence mitigation cost, transmission cost, integration cost, and congestion cost. In
developing its relative merit order ranking of Proposals, SCE’s evaluation methodology
incorporates information provided by sellers and assumptions prescribed and set by the
Commission with its internal methodologies and forecasts of market conditions. The
objective of the quantitative assessment and relative Net Market Value ranking is to
develop a preliminary shortlist that is further refined based on the non-quantifiable
attributes discussed below.
Each of the elements for the RPS quantitative analysis is described below.
Benefits
1. Capacity Benefit
Each proposal is assigned a capacity benefit, if applicable, based on SCE’s forecast of net
capacity value and the quantity of Resource Adequacy (“RA”) derived by SCE based on
the seller’s offer capped at the generating facility’s peak capacity contribution factor,
calculated for each facility pursuant to the Qualifying Capacity Methodology Manual,
based on the hourly generation profile submitted as part of the offer submittal package.
For wind and solar Proposals, peak capacity contribution factors are calculated in a
manner consistent with the Commission’s Resource Adequacy accounting rules (D.0906-028) utilizing a 70% exceedance factor methodology based on the hourly generation
profile submitted as part of the offer submittal package. Peak capacity contribution
factors are both technology and location-specific. Technological differentiation does not
refer to the fuel source, but rather the method of converting other energy sources into
electricity (e.g. solar trough, solar photovoltaic). For Proposals with dispatchable
capabilities at SCE’s control, the peak capacity contribution factor is based on the
availability of the proposed project. For other technologies without dispatchable
capabilities, the quantity of Resource Adequacy benefits is based on a three-year rolling
average of production during certain hours.
For proposals located outside of the California Independent System Operator (“CAISO”),
SCE limits the monthly RA quantities to the available import allocation at each CAISO
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intertie. SCE utilizes the CAISO’s Advisory Estimates of Future RA Import Capability
(“CAISO Advisory Estimates”) published on the CAISO website. Capacity benefits for
all Proposals located outside of the CAISO and delivering at a CAISO intertie, including
Proposals located in the Imperial Irrigation District, will be capped by import capability
quantities indicated in the CAISO forecasts.
Monthly capacity benefits include the product of SCE’s net capacity value forecast and
the quantity of RA capacity determined for each month of the year. Capacity benefits are
only applied for those months in which SCE has a capacity need. Additional value will be
attributed to facilities located in the Los Angeles Basin or Big Creek/Ventura local
reliability areas.
2. Energy Benefit
SCE measures the energy benefits, as applicable, of a Proposal by evaluating the
estimated market value of energy. The evaluation of energy benefits is performed with a
base portfolio and system that is consistent with Track II of SCE’s most recent LongTerm Procurement Plan (“LTPP”), with some updates to account for the latest gas price
and the results of recent procurement activities. In the event that a Proposal provides
additional value to SCE from the provision of one or more ancillary services (regulation,
spin, or non-spin), SCE may use an internal forecast for ancillary service prices as a
means of evaluating any incremental benefit.
For Proposals with must-take energy, SCE calculates the energy benefits of a Proposal
based on SCE’s internal forecast of the market value of energy. The hourly energy
benefit for the Proposal is the resulting market price multiplied by the hourly sellerprovided generation profile.
SCE will also take into account the value of proposed curtailment provisions. In the 2014
RPS RFP Procurement Protocol, SCE is asking bidders for two prices assuming: (1) up to
50 hours of unpaid discretionary curtailment orders under Section 3.12(g)(iii) of the 2014
Pro Forma; and (2) no discretionary curtailment orders under Section 3.12(g)(iii) of the
2014 Pro Forma. Proposals with more favorable curtailment provisions will be attributed
the incremental value of curtailment, while proposals with no unpaid curtailment hours
will not.
For Proposals with dispatchable capabilities at SCE’s control, SCE calculates the net
energy benefits based on the market value of the energy when the proposed resource
dispatches. SCE utilizes a production cost or equivalent model to determine the dispatch
economics for the proposed resource according to the unit characteristics provided by the
seller.
SCE’s gas price and power price forecasts are based on a blend of a near-term market
view and a longer-term fundamental view of prices.
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The simulation model, and hence the energy benefit calculation, captures additional
quantitative effects that SCE has been asked to consider by the Commission, including
dispatchability. The dispatchability benefits, such as ancillary services and real-time
flexibility, are implied in the energy benefit and are not addressed separately.
Costs
1. Contract Payments
The primary costs associated with each Proposal are the contract payments that SCE
makes to sellers for the expected renewable energy deliveries.
Proposals typically include an all-in price for delivered renewable energy, which is
adjusted in each time-of-delivery (“TOD”) period by the applicable energy payment
allocation factors (“TOD factors”). Total payments are determined by multiplying the
generation by the contract price, adjusted for each TOD period.
2. Debt Equivalence
“Debt Equivalence” is the term used by credit rating agencies to describe the fixed
financial obligation resulting from long-term power purchase agreements (“PPAs”).
Pursuant to D.04-12-048, the Commission permitted the IOUs to recognize costs
associated with the effect debt equivalence has on the IOU’s credit quality and cost of
borrowing in their evaluation process. In D.07-12-052, the Commission reversed this
position. SCE, however, filed a petition for modification of D.07-12-052. In November
2008, the Commission issued D.08-11-008, which authorized the IOUs to recognize the
effects of debt equivalence when comparing PPAs in their bid evaluations, but not when
the IOUs are considering a utility-owned generation project. As such, SCE considers debt
equivalence in the evaluation process.
3. Integration Cost
Integration costs, where applicable, are the additional system costs required to provide
sufficient operational flexibility to ensure adequate system reliability as more intermittent
renewable resources join the grid. In D.14-11-042, the Commission approved an interim
renewable integration cost adder (“RICA”) methodology, and directed SCE to include an
interim RICA for the 2014 RPS solicitation. The Commission also stated that a final
RICA methodology will be considered in the RPS proceeding and in coordination with
the LTPP proceeding and any other relevant proceeding in the future.
SCE will use an interim RICA in the LCBF evaluation process for its 2014 RPS
solicitation. Pursuant to D.14-11-042, this interim RICA will be calculated as the sum of
two cost components: variable costs and fixed costs. For the interim RICA, the variable
cost component is set at $4/MWh for wind and $3/MWh for solar. SCE will calculate the
fixed cost component based on SCE’s portfolio need to secure additional capacity from
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resources not already procured to meet its flexible and non-flexible RA requirements over
the contract period. Specifically, this component will be the product of two parameters:
 SCE’s confidential projection of a monthly premium (which can be zero or
positive) for flexible RA expressed as $/kW-month; and
 Monthly increase (or decrease) in the need for flexible RA associated with one
MW of installed capacity of wind or solar expressed as MW of flex capacity
needed/MW of wind or solar capacity.
SCE will calculate this change in flexible RA need by using the hourly aggregate system
profile for load, wind, and solar from the 2014 LTPP Trajectory Scenario. This hourly
data will be used to calculate the hourly three hour net-load ramp for each hour of the
year, consistent with the CAISO’s Flexible Capacity study. SCE will then identify the
maximum three hour net-load ramp for each month, and determine the relative
contributions from wind and solar to that maximum ramp. Finally, SCE will determine
the monthly increase (or decrease) in the need for flexible capacity associated with one
MW of installed capacity of wind and solar. This is determined based on the relative
contribution of wind/solar indicated above and the total installed capacity of wind/solar in
the system. Maximum generation number for wind/solar from the 2014 LTPP Trajectory
Scenario will be used as the estimate for the total installed wind/solar capacity for the
system. The result of flexible capacity needs for wind/solar based on the described
methodology is summarized below:
Table A1: Contribution of 1 MW of Installed Capacity to Flexible RA
Month
January
February
March
April
May
June
July
August
September
October
November
December
Solar
0.52
0.75
0.63
0.78
0.66
0.58
0.58
0.61
0.78
0.66
0.59
0.63
Wind
0.12
0.09
0.15
0.13
0.01
0.07
0.04
0.05
0.20
0.02
0.00
0.20
SCE will apply the interim RICA in bid valuation by multiplying the monthly RICA
estimate in $/MWh to the generation profile for each wind/solar bid.
4. Congestion Cost
Localized congestion may cause a reduction in prices at a particular locational marginal
price (“LMP”) in the CAISO market. In D.11-04-030, the Commission held that the
IOUs must incorporate an assessment of these congestion costs in their LCBF evaluation.
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SCE applies a locational congestion adder to all projects to differentiate between project
locations. These locational adders may be positive or negative depending on the expected
congestion in the area. The locational adders are based on SCE’s forecast of LMPs in the
CAISO market in the location that seller plans to interconnect.
Projects that select an Energy-only (“EO”) interconnection do not fund the deliverability
upgrades needed to ensure their energy can serve load and avoid localized congestion. As
such, these projects increase the risk of congestion in these locations to a degree greater
than projects with a Full Capacity Deliverability Status (“FCDS”) interconnection. In
order to capture this difference, SCE applies an incremental congestion cost adder to all
CAISO projects that selected an EO interconnection, or any EO portion of the contract
term if FCDS status is expected to be achieved after the commercial on-line date. The
incremental congestion cost adder is based on SCE’s estimate of the average impact on
system congestion from adding incremental capacity without any incremental
deliverability network upgrades, and is the same for all EO projects. The incremental
congestion cost adder is also based on SCE’s forecast of LMPs in the CAISO market in
the location that the seller plans to interconnect.
5. Transmission Costs
Transmission costs are based on the estimated cost of the reimbursable network upgrades
attributable to individual projects. To participate in the 2014 RPS RFP, SCE requires
sellers to have an existing Phase II Interconnection study, or to have an equivalent or
better process or exemption. Transmission costs applicable to the project will be based on
the applicable completed interconnection study or interconnection agreement. The Seller
must provide copies of all interconnection studies and/or agreements as part of seller’s
proposal.
SCE uses the interconnection studies submitted as part of the offer submittal package to
determine the applicable network upgrade costs for all projects. These costs will not be
imputed for projects in transmission-constrained areas. SCE applies the required upgrade
costs to get the project delivered to the nearest defined market (e.g. NP15, SP15, ZP26
Generation Trading Hubs). For projects with an assumed delivery point outside the
CAISO (e.g. liquid power trading hub), SCE applies a power swapping methodology,
where the power is assumed to be sold into the local market.
Portfolio Fit
SCE’s LCBF quantitative evaluation process inherently captures the impact of portfolio
fit. For example, as different Proposals are added to the overall portfolio, the resultant
residual net short or net long position is impacted. Projects that more often increase
SCE’s net long capacity positions are assigned less capacity benefits than those projects
that are more often filling net short positions.
Merrimack Energy Group, Inc.
90
SCE also considers portfolio fit in its qualitative analysis. Specifically, when assessing
additional qualitative characteristics to determine advancement to the shortlist or tiebreakers, SCE’s preference is for those projects that have commercial operation dates that
match periods of SCE’s need for renewable energy.
Credit and Collateral Requirements
In order to ensure comparable pricing for ranking, SCE requires sellers to bid conforming
Proposals committing to posting SCE’s pro forma performance assurance amount. SCE
accepts lesser performance assurance to be bid as long as a conforming Proposal is also
submitted. Performance assurance is the collateral posted by the seller during the
operating period.
Project Viability
SCE assesses the following attributes using the Project Viability Calculator:














Company/Development Team
Project Development Experience
Ownership/O&M Experience
Technology
Technical Feasibility
Resource Quality
Manufacturing Supply Chain
Development Milestones
Site Control
Permitting Status
Project Financing Status
Interconnection Progress
Transmission Requirements
Reasonableness of Commercial Operation Date (COD)
Other Qualitative Criteria/Preferences
Following the Project Viability Calculator qualitative assessment, SCE considers
additional qualitative characteristics to determine advancement to the shortlist or tiebreakers, if any. These additional characteristics may include:





Contribution to other SCE program goals (e.g. GHG reductions pursuant to the
CHP Settlement Agreement);
Transmission area (e.g. Tehachapi, Sunrise, within SCE’s load pocket);
Congestion, negative price, and curtailment considerations not captured in the
quantitative valuation;
EO concentration;
Facility interconnection process progress;
Merrimack Energy Group, Inc.
91











Portfolio fit of COD;
Significant transmission network upgrade costs outside of the CAISO
Seller concentration;
Expected generation (GWh/year);
Dispatchability;
Alternative Renewable Premium (i.e. Renewable Premium including integration
costs);
Environmental impacts of seller’s proposed project on California water quality
and use;
Resource diversity;
Benefits to minority and low income communities;
Local reliability;
Environmental stewardship.
Merrimack Energy Group, Inc.
92
APPENDIX B
Time of Delivery Periods
and
Product Payment Allocation Factors
2014 RPS RFP
Time of Delivery Periods (“TOD Periods”)
TOD Period
Time of Day
Applicable Days
On-Peak
2:00 p.m. – 8:00 p.m.
Weekdays except Holidays.
Off-Peak
8:00 a m. – 2:00 p m.
Weekdays, Weekends and Holidays
2:00 p.m. – 8:00 p.m.
Weekends and Holidays.
8:00 p.m. – 10:00 p m.
Weekdays, Weekends and Holidays
10:00 p.m. – 8:00 a.m.
Weekdays, Weekends and Holidays
Super-Off-Peak
Product Payment Allocation Factors
Season
TOD Period
Product Payment Allocation Factor
Summer
Jun 1st – Sep 30th
On-Peak
1.29
Off-Peak
1.04
Super-Off-Peak
0.94
On-Peak
1.10
Off-Peak
0.96
Super-Off-Peak
0.95
Winter
Oct 1st – May 31st
“Holiday” is defined as New Year’s Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day,
Veterans Day, Thanksgiving Day, and Christmas Day.
When any Holiday falls on a Sunday, the following Monday will be recognized as a Holiday. No change will be
made for Holidays falling on Saturday.
Merrimack Energy Group, Inc.
93
2013 RPS SOLICITATION
Time of Delivery Periods (“TOD Periods”)
TOD Period
Summer
Jun 1st – Sep 30th
Winter
Oct 1st – May 31st
Applicable Days
On-Peak
Noon – 6:00 p m.
Not Applicable.
Weekdays except Holidays.
Mid-Peak
8:00 a m. – Noon
8:00 a m. - 9:00 p m.
Weekdays except Holidays.
6:00 p.m. – 11:00 p m.
11:00 p.m. – 8:00 a.m.
Off-Peak
Super-Off-Peak
Weekdays except Holidays.
6:00 a m. – 8:00 a m.
Weekdays except Holidays.
9:00 p.m. – Midnight
Weekdays except Holidays.
Midnight – Midnight
6:00 a m. – Midnight
Weekends and Holidays
Not Applicable.
Midnight – 6:00 a m.
Weekdays, Weekends and Holidays
Product Payment Allocation Factors
Full Capacity
Deliverability Status
Product Payment
Allocation Factor
Season
TOD Period
Summer
On-Peak
Fixed Value.
1.22
2.64
Mid-Peak
Fixed Value.
1.11
1.27
Off-Peak
Fixed Value.
0.94
0.82
Mid-Peak
Fixed Value.
1.05
0.96
Off-Peak
Fixed Value.
1.01
0.87
Super-Off-Peak
Fixed Value.
0.85
0.74
Winter
Calculation Method
Energy-Only
Deliverability Status
Product Payment
Allocation Factor
“Holiday” is defined as New Year’s Day, Presidents’ Day, Memorial Day, Independence Day, Labor Day,
Veterans Day, Thanksgiving Day, and Christmas Day.
When any Holiday falls on a Sunday, the following Monday will be recognized as a Holiday. No change will be
made for Holidays falling on Saturday.
Merrimack Energy Group, Inc.
94
CONFIDENTIAL Appendix D-(1-3)
Contract Summary
Confidential Protected Materials – Public Disclosure Prohibited
CONFIDENTIAL Appendix E-(1-3)
Comparison of the SEGS Contracts with
SCE’s 2014 Pro Forma Renewable Power Purchase and Sale Agreement
Confidential Protected Materials – Public Disclosure Prohibited
CONFIDENTIAL Appendix F-(1-3)
SEGS Contracts
Confidential Protected Materials – Public Disclosure Prohibited
CONFIDENTIAL Appendix G
Renewable Net Short Calculations
Confidential Protected Materials – Public Disclosure Prohibited
PUBLIC Appendix G
Renewable Net Short Calculations
Physical Renewable Net Short Calculations Based on CPUC Assumptions
Deficit from RPS
Variable
Calculation
prior to Reporting
Item
2011
2012
2013
Actuals
Actuals
Actuals
2011-2013
Forecast Year
2014
2015
2016
Actual
Forecast
Forecast
1
2
23.3%
25.0%
CP1
2014-2016
CP2
2017
2018
2019
2020
Forecast
Forecast
Forecast
Forecast
3
4
5
6
27.0%
29.0%
2017-2020
CP3
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
7
8
9
10
11
12
13
14
15
16
18
19
20
Annual RPS Requirement
1
A
Bundled Retail Sales Forecast (LTPP)
B
RPS Procurement Quantity Requirement (%)
C
73,777
A*B
Gross RPS Procurement Quantity Requirement (GWh)
C+D
Net RPS Procurement Need (GWh)
D
Voluntary Margin of Over-procurement
E
75,597
20.0%
14,755
74,480
20.0%
15,119
-
223,854
14,896
-
75,829
20.0%
44,771
-
75,089
21.7%
16,455
-
23,277
-
-
14,755
15,119
14,896
44,771
16,455
15,654
15,821
16,535
48,010
17,731
75,662
31.0%
-
-
-
-
76,194
33.0%
24,968
-
25,144
-
23,277
24,968
17,780
16,933
76,660
33.0%
-
76,980
33.0%
25,298
-
77,205
33.0%
25,404
-
77,360
33.0%
25,478
-
78,467
33.0%
25,529
-
79,931
33.0%
25,894
-
81,431
33.0%
26,377
-
82,645
33.0%
26,872
-
84,128
33.0%
27,273
-
33.0%
33.0%
33.0%
33.0%
27,762
-
-
25,144
25,298
25,404
25,478
25,529
25,894
26,377
26,872
27,273
27,762
16,279
16,182
16,167
16,066
16,000
15,774
14,325
12,962
12,778
11,500
RPS-Eligible Procurement
Fa
Risk-Adjusted RECs from Online Generation
Faa
Forecast Failure Rate for Online Generation (%)
0.0%
0.0%
Fb
Risk-Adjusted RECs from RPS Facilities in Development
-
-
Fbb
0.0%
-
Forecast Failure Rate for RPS Facilities in Development (%)
N/A
N/A
Fc
Pre-Approved Generic RECs
-
-
-
Fe
Executed REC Sales
362
778
15,291
F
Fa+Fb+Fc-Fe
Total RPS Eligible Procurement (GWh)
F0
Category 0 RECs
3
F1
Category 1 RECs
3
F2
Category 2 RECs
3
F3
Category 3 RECs
3
2
0.0%
-
0.0%
18,095
0.0%
-
0.0%
0.0%
18,055
0.0%
53,882
0.0%
0.0%
17,255
17,436
0.0%
0.0%
0.0%
69,405
0.0%
188
1,602
1,790
3,630
3,913
4,905
5,923
32.1%
32.1%
34.2%
37.7%
205
240
248
-
-
-
0.0%
18,371
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
6,005
5,982
5,958
5,948
5,910
5,873
5,837
5,827
5,791
5,768
34.7%
38.0%
38.0%
38.0%
38.0%
38.0%
37.9%
37.9%
37.9%
37.9%
37.9%
736
247
247
247
248
247
247
247
248
247
247
-
-
-
-
-
-
-
-
-
-
12.0%
27.2%
19.7%
-
-
-
-
-
473
1,614
-
-
-
-
15,043
16,062
46,396
17,731
18,283
19,658
55,672
20,928
21,554
22,925
23,104
88,511
22,532
22,411
22,373
22,262
22,158
21,895
20,409
19,037
18,816
17,516
15,239
14,912
15,822
45,973
16,510
15,442
15,178
47,130
13,347
12,223
12,066
11,217
48,853
10,586
10,499
10,496
10,399
10,367
10,181
10,011
9,990
9,828
8,561
52
131
240
423
1,222
2,841
4,479
8,542
7,538
9,126
10,619
11,639
38,923
11,699
11,665
11,630
11,615
11,543
11,467
10,150
8,799
8,741
8,707
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,166
1,625
1,277
(352)
(1,864)
(2,612)
(2,887)
(3,031)
(3,216)
(3,371)
(3,999)
(5,968)
(7,836)
(8,457)
21.6%
20.7%
23.4%
30.5%
30.5%
29.6%
29.2%
29.1%
28.8%
28.6%
27.9%
25.5%
23.4%
22.8%
20.8%
4,997
4,997
43
-
-
Gross RPS Position (Physical Net Short)
Ga
F-E
Annual Gross RPS Position (GWh)
Gb
F/A
Annual Gross RPS Position (%)
536
(76)
20.7%
19.9%
(10,247)
Application of Bank
Ha
Existing Banked RECs above the PQR
Hb
RECs above the PQR added to Bank
536
Hc
Non-bankable RECs above the PQR
-
Gross Balance of RECs above the PQR
536
Ia
Planned Application of RECs above the PQR towards RPS Compliance
-
Ib
Planned Sales of RECs above the PQR
H
Ha+Hb
J
H-Ia-Ib
Net Balance of RECs above the PQR
0
536
451
1,586
9
30
39
451
1,586
1,586
2,861
-
-
-
J0
Category 0 RECs
3
1,164
J1
Category 1 RECs
3
52
J2
Category 2 RECs
3
1,586
1,136
0
536
0
(85)
0
451
0
1,586
1,164
1,586
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
-
-
1,586
2,861
1,275
0
0
0
-
-
0
0
2,861
4,997
0
4,997
(0)
0
-
-
4,997
0
0
0
0
0
0
0
0
4,997
0
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,945
7,259
7,357
7,507
7,506
7,753
9,118
9,988
10,101
10,672
(10,247)
-
-
131
240
423
-
-
-
-
1,059
1,334
1,858
4,251
2,033
1,136
1,586
1,275
(352)
(1,864)
(2,612)
(2,887)
(3,031)
(3,216)
(3,371)
(3,999)
(5,968)
(7,836)
(8,457)
21.5%
20.7%
23.4%
30.5%
30.5%
29.6%
29.2%
29.1%
28.8%
28.6%
27.9%
25.5%
23.4%
22.8%
1,222
0
4,997
Expiring Contracts
K
RECs from Expiring RPS Contracts
2,250
3,225
7,508
3,902
4,328
5,472
6,352
20,055
Net RPS Position (Optimized Net Short)
La
Ga+Ia-Ib-Hc
Lb
(F+Ia-Ib-Hc)/A
Annual Net RPS Position after Bank Optimization (GWh)
Annual Net RPS Position after Bank Optimization (%)
536
20.7%
(85)
19.9%
20.8%
Note: Fields in grey are potected as Confidential under CPUC Confidentiality Rules
Note: Values are shown in GWhs
Notes:
1 Bundled retail sales forecast for 2015‐2019 and 2025‐2030 is from SCE's bundled retail sales forecast; bundled retail sales forecast for 2020‐2024 is forecast used in 2014 LTPP
2 Includes 11 executed 2014 RPS solicitation contracts; new generation forecast based on individual project specific success rates for large near‐term projects and flat average success rate for remaining projects based on these projects' overall weighted average success rate
3 Forecast of deliveries by portfolio content categories is for executed contracts only; does not include program generics
C-1
Physical Renewable Net Short Calculations Based on SCE Assumptions
Deficit from RPS
Variable
Calculation
prior to Reporting
Item
2011
2012
2013
Actuals
Actuals
Actuals
2011-2013
Forecast Year
2014
2015
2016
Actual
Forecast
Forecast
1
2
23.3%
25.0%
CP1
2014-2016
CP2
2017
2018
2019
2020
Forecast
Forecast
Forecast
Forecast
3
4
5
6
27.0%
29.0%
2017-2020
CP3
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
Forecast
7
8
9
10
11
12
13
14
15
16
18
19
20
Annual RPS Requirement
1
A
SCE Bundled Sales Forecast
B
RPS Procurement Quantity Requirement (%)
C
73,777
A*B
Gross RPS Procurement Quantity Requirement (GWh)
C+D
Net RPS Procurement Need (GWh)
D
Voluntary Margin of Over-procurement
E
75,597
20.0%
14,755
74,480
20.0%
15,119
-
223,854
14,896
-
75,829
20.0%
44,771
-
74,595
21.7%
16,455
-
23,125
-
-
14,755
15,119
14,896
44,771
16,455
15,654
15,821
16,535
48,010
17,731
74,687
31.0%
-
-
-
-
74,744
33.0%
24,647
-
24,665
-
23,125
24,647
17,780
16,933
75,141
33.0%
-
75,743
33.0%
24,796
-
76,605
33.0%
24,995
-
77,360
33.0%
25,280
-
78,467
33.0%
25,529
-
79,931
33.0%
25,894
-
81,431
33.0%
26,377
-
82,645
33.0%
26,872
-
84,128
33.0%
27,273
-
33.0%
33.0%
33.0%
33.0%
27,762
-
-
24,665
24,796
24,995
25,280
25,529
25,894
26,377
26,872
27,273
27,762
16,279
16,182
16,167
16,066
16,000
15,774
14,325
12,962
12,778
11,500
RPS-Eligible Procurement
Fa
Risk-Adjusted RECs from Online Generation
Faa
Forecast Failure Rate for Online Generation (%)
0.0%
0.0%
Fb
Risk-Adjusted RECs from RPS Facilities in Development
-
-
Fbb
0.0%
-
Forecast Failure Rate for RPS Facilities in Development (%)
N/A
N/A
Fc
Pre-Approved Generic RECs
-
-
-
Fe
Executed REC Sales
362
778
15,291
F
Fa+Fb+Fc-Fe
Total RPS Eligible Procurement (GWh)
F0
Category 0 RECs
3
F1
Category 1 RECs
3
F2
Category 2 RECs
3
F3
Category 3 RECs
3
2
0.0%
-
0.0%
18,095
0.0%
-
0.0%
0.0%
18,055
0.0%
53,882
0.0%
0.0%
17,255
17,436
0.0%
0.0%
0.0%
69,405
0.0%
188
1,602
1,790
3,630
3,913
4,905
5,923
32.1%
32.1%
34.2%
37.7%
205
240
248
-
-
-
0.0%
18,371
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
6,005
5,982
5,958
5,948
5,910
5,873
5,837
5,827
5,791
5,768
34.7%
38.0%
38.0%
38.0%
38.0%
38.0%
37.9%
37.9%
37.9%
37.9%
37.9%
736
247
247
247
248
247
247
247
248
247
247
-
-
-
-
-
-
-
-
-
-
12.0%
27.2%
19.7%
-
-
-
-
-
473
1,614
-
-
-
-
15,043
16,062
46,396
17,731
18,283
19,658
55,672
20,928
21,554
22,925
23,104
88,511
22,532
22,411
22,373
22,262
22,158
21,895
20,409
19,037
18,816
17,516
15,239
14,912
15,822
45,973
16,510
15,442
15,178
47,130
13,347
12,223
12,066
11,217
48,853
10,586
10,499
10,496
10,399
10,367
10,181
10,011
9,990
9,828
8,561
52
131
240
423
1,222
2,841
4,479
8,542
7,538
9,126
10,619
11,639
38,923
11,699
11,665
11,630
11,615
11,543
11,467
10,150
8,799
8,741
8,707
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,166
1,625
1,277
(199)
(1,543)
(2,134)
(2,385)
(2,623)
(3,018)
(3,371)
(3,999)
(5,968)
(7,836)
(8,457)
21.6%
20.7%
23.4%
30.7%
30.9%
30.1%
29.8%
29.5%
29.1%
28.6%
27.9%
25.5%
23.4%
22.8%
20.8%
4,997
4,997
43
-
-
Gross RPS Position (Physical Net Short)
Ga
F-E
Annual Gross RPS Position (GWh)
Gb
F/A
Annual Gross RPS Position (%)
536
(76)
20.7%
19.9%
(10,247)
Application of Bank
Ha
Existing Banked RECs above the PQR
Hb
RECs above the PQR added to Bank
536
Hc
Non-bankable RECs above the PQR
-
Gross Balance of RECs above the PQR
536
Ia
Planned Application of RECs above the PQR towards RPS Compliance
-
Ib
Planned Sales of RECs above the PQR
H
Ha+Hb
J
H-Ia-Ib
Net Balance of RECs above the PQR
0
536
451
1,586
9
30
39
451
1,586
1,586
2,861
-
-
-
J0
Category 0 RECs
3
1,164
J1
Category 1 RECs
3
52
J2
Category 2 RECs
3
1,586
1,136
0
536
0
(85)
0
451
0
1,586
1,164
1,586
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
-
-
1,586
2,861
1,275
0
0
0
-
-
0
0
2,861
4,997
0
4,997
(0)
0
-
-
4,997
0
0
0
0
0
0
0
0
4,997
0
4,997
4,997
4,997
4,997
4,997
4,997
4,997
4,997
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,945
7,259
7,357
7,507
7,506
7,753
9,118
9,988
10,101
10,672
(10,247)
-
-
131
240
423
-
-
-
-
1,059
1,334
1,858
4,251
2,033
1,136
1,586
1,275
(199)
(1,543)
(2,134)
(2,385)
(2,623)
(3,018)
(3,371)
(3,999)
(5,968)
(7,836)
(8,457)
21.5%
20.7%
23.4%
30.7%
30.9%
30.1%
29.8%
29.5%
29.1%
28.6%
27.9%
25.5%
23.4%
22.8%
1,222
0
4,997
Expiring Contracts
K
RECs from Expiring RPS Contracts
2,250
3,225
7,508
3,902
4,328
5,472
6,352
20,055
Net RPS Position (Optimized Net Short)
La
Ga+Ia-Ib-Hc
Lb
Annual Net RPS Position after Bank Optimization (GWh)
(Ga+Ia-Ib-Hc)/A Annual Net RPS Position after Bank Optimization (%)
536
20.7%
(85)
19.9%
20.8%
Note: Fields in grey are potected as Confidential under CPUC Confidentiality Rules
Note: Values are shown in GWhs
Notes:
1 Based on SCE's May 2015 bundled retail sales forecast
2 Includes 11 executed 2014 RPS solicitation contracts; new generation forecast based on individual project specific success rates for large near‐term projects and flat average success rate for remaining projects based on these projects' overall weighted average success rate
3 Forecast of deliveries by portfolio content categories is for executed contracts only; does not include program generics
C-2
PUBLIC Appendix H
Confidentiality Declaration
PUBLIC Appendix I
Proposed Protective Order
BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF CALIFORNIA
Submission of the SEGS Contracts for
Procurement of Renewable Energy From SCE’s
2014 Renewables Portfolio Standard Solicitation
)
)
)
Advice 3300-E
PROPOSED PROTECTIVE ORDER
1.
Scope. This Protective Order shall govern access to and the use of Protected
Materials, produced by, or on behalf of, any Disclosing Party (as defined in Paragraph 2 below)
in this proceeding.
2.
Definitions.
In addition to the terms defined and capitalized in other sections of this Protective Order,
the following terms are defined for the purposes of this Protective Order:
A.
For purposes of this Protective Order, the term “Protected Materials”
means: (i) trade secret, market sensitive, or other confidential and/or proprietary information as
determined by the Disclosing Party in accordance with the provisions of Decision (“D.”) 06-06066 and subsequent decisions, General Order 66-C, Public Utilities Code section 454.5(g), or
any other right of confidentiality provided by law; or (ii) any other materials that are made
subject to this Protective Order by the Assigned Administrative Law Judge (“Assigned ALJ”),
Law and Motion Administrative Law Judge (“Law and Motion ALJ”), Assigned Commissioner,
the California Public Utilities Commission (“Commission”), or any court or other body having
appropriate authority. Protected Materials also include memoranda, handwritten notes,
spreadsheets, computer files and reports, and any other form of information (including
information in electronic form) that copies, discloses, incorporates, includes or compiles other
Protected Materials or from which such materials may be derived (except that any derivative
1
materials must be separately shown to be confidential). Protected Materials do not include: (i)
any information or document contained in the public files of the Commission or any other state
or federal agency, or in any state or federal court; or (ii) any information that is public
knowledge, or which becomes public knowledge, other than through disclosure in violation of
this Protective Order or any other nondisclosure agreement or protective order.
B.
The term “redacted” refers to situations in which Protected Material in a
document, whether the document is in paper or electronic form, have been covered, blocked out,
or removed.
C.
The term “Disclosing Party” means a party who initially discloses any
specified Protected Material in this proceeding.
D.
The term “Requesting Party” means any party that is requesting receipt of
Protected Material from a Disclosing Party.
E.
The term “Party” refers to the Requesting Party or the Disclosing Party
and the term “Parties” refers to both the Requesting Party and the Disclosing Party.
F.
The term “Market Participant” refers to a Requesting Party that is:
1)
A person or entity, or an employee of an entity, that engages in the
wholesale purchase, sale or marketing of energy or capacity, or the
bidding on or purchasing of power plants, or bidding on utility
procurement solicitations, or consulting on such matters, subject to the
limitations in 3) below.
2)
A trade association or similar organization, or an employee of such
organization,
a)
whose primary focus in proceedings at the Commission is to
advocate for persons/entities that purchase, sell or market
energy or capacity at wholesale; bid on, own, or purchase
power plants; or bid on utility procurement solicitations; or
b)
a majority of whose members purchase, sell or market energy
or capacity at wholesale; bid on, own, or purchase power
plants; or bid on utility procurement solicitations; or
2
3)
G.
c)
formed for the purpose of obtaining Protected Materials; or
d)
controlled or primarily funded by a person or entity whose
primary purpose is to purchase, sell or market energy or
capacity at wholesale; bid on, own, or purchase power plants;
or bid on utility procurement solicitations.
A person or entity that meets the criteria of 1) above is not a Market
Participant for purpose of access to Protected Materials unless the
person/entity seeking access to Protected Materials has the potential to
materially affect the price paid or received for electricity if in
possession of such information. An entity will be considered not to
have such potential if:
a)
the person or entity’s participation in the California electricity
market is de minimis in nature. In the resource adequacy
proceeding (R.05-12-013) it was determined in D.06-06-064 §
3.3.2 that the resource adequacy requirement should be
rounded to the nearest megawatt (MW), and load serving
entities (LSEs) with local resource adequacy requirements less
than 1 MW are not required to make a showing. Therefore, a
de minimis amount of energy would be less than 1 MW of
capacity per year, and/or an equivalent of energy; and/or
b)
the person or entity has no ability to dictate the price of
electricity it purchases or sells because such price is set by a
process over which the person or entity has no control, i.e.,
where the prices for power put to the grid are completely
overseen by the Commission, such as subject to a standard
offer contract or tariff price. A person or entity that currently
has no ability to dictate the price of electricity it purchases or
sells under this section, but that will have such ability within
one year because its contract is expiring or other circumstances
are changing, does not meet this exception; and/or
c)
the person or entity is a cogenerator that consumes all the
power it generates in its own industrial and commercial
processes, if it can establish a legitimate need for Protected
Materials.
The term “Non-Market Participant” refers to a Requesting Party that does
not meet the definition of Market Participant.
H.
“Reviewing Representatives” are limited to person(s) designated in
accordance with Paragraph 5 who meet the following criteria:
3
I.
1)
Reviewing Representatives may not currently be engaged in: (a) a
transaction for the purchase, sale, or marketing at wholesale of
electrical energy or capacity or natural gas (or the direct supervision of
any employee(s) engagement in such a transaction); (b) the bidding on
or purchasing of power plants (or the direct supervision of any
employee(s) engagement in such a transaction); or (c) knowingly
providing electricity or gas marketing consulting or advisory services
to others in connection with a transaction for the purchase, sale, or
marketing at wholesale of electrical energy or capacity or natural gas
or the bidding on or purchasing of power plants (or the direct
supervision of any employee(s) engagement in such a transaction or
consulting).
2)
Reviewing Representatives may not be an employee of a Market
Participant. If the Market Participant or Non-Market Participant
chooses to retain outside attorneys, consultants, or experts in the same
law firm or consulting firm to provide advice in connection with
marketing activities, then the attorney, consultant, or expert serving as
a Reviewing Representative must be separated by an ethics wall
consistent with the ethics wall requirements in D.11-07-028, as that
decision may be subsequently modified or changed by the
Commission, from those in the firm who are involved in wholesale
commercial dealings.
3)
Reviewing Representatives shall use Protected Materials only for the
purpose of participating in the Commission proceeding in which they
received the information.
4)
Reviewing Representatives are permitted to participate in regulatory
proceedings on behalf of Market Participants and Non-Market
Participants.
5)
All Reviewing Representatives are required to execute the
Nondisclosure Certificate attached to this Protective Order and are
bound by the terms of this Protective Order.
The term “Authorized Reviewers” refers to: (1) a Requesting Party that is
a Non-Market Participant; or (2) a Reviewing Representative of a Requesting Party. A
Requesting Party that is a Market Participant is not an Authorized Reviewer but it may designate
a Reviewing Representative in accordance with Paragraph 5.
J.
The term “Nondisclosure Certificate” refers to the Nondisclosure
Certificate attached as Appendix A.
4
3.
Designation, Filing, and Service of Protected Materials.
When filing or providing in discovery any documents or items containing Protected
Materials, a party shall physically mark such documents (or in the case of non-documentary
materials such as computer diskettes, on each item) as “PROTECTED MATERIALS SUBJECT
TO PROTECTIVE ORDER,” or with words of similar import as long as one or more of the
terms “Protected Materials” or “Protective Order” is included in the designation to indicate that
the materials in question are Protected Materials. All materials so designated shall be treated as
Protected Materials unless and until: (a) the designation is withdrawn pursuant to Paragraph 14
hereof; (b) an Assigned ALJ, Law and Motion ALJ, Assigned Commissioner, or the Commission
makes a determination that: (i) the document does not contain Protected Materials or does not
warrant confidential treatment or (ii) denies a motion to file the document under seal; or (c) the
document or information becomes public knowledge, other than through disclosure in violation
of this Protective Order or any other nondisclosure agreement or protective order.
All documents containing Protected Materials that are tendered for filing with the
Commission shall be placed in sealed envelopes or otherwise appropriately protected and shall
be tendered with a motion to file the document under seal pursuant to Rule 11.4 of the
Commission’s Rules of Practice and Procedure. All documents containing Protected Materials
that are served on parties in a proceeding shall be placed in sealed envelopes or otherwise
appropriately protected and shall be endorsed to the effect that they are served under seal
pursuant to this Protective Order. Such documents shall only be served upon Authorized
Reviewers and persons employed by or working on behalf of the Commission. Service upon
Authorized Reviewers and persons employed by or working on behalf of the Commission may
either be: (a) by electronic mail in accordance with the procedures adopted in this proceeding;
(b) by facsimile; or (c) by overnight mail or messenger service. Whenever service of a document
5
containing Protected Materials is made by overnight mail or messenger service, the Assigned
ALJ shall be served with such document by the same means and at the same time.
4.
Redaction of Documents. Whenever a Party files, serves or provides in discovery
a document that includes Protected Materials (including but not limited to briefs, testimony,
exhibits, and responses to data requests), such Party shall also prepare a redacted version of such
document. The redacted version shall enable persons familiar with this proceeding to determine
with reasonable certainty the nature of the data that has been redacted and where the redactions
occurred. The redacted version of a document to be filed shall be served on all persons on the
service list, and the redacted version of a discovery document shall be served on all persons
entitled thereto.
5.
Designation of Reviewing Representatives. The Requesting Party shall provide
written notice identifying its proposed Reviewing Representative(s) to the Disclosing Party
before the Disclosing Party provides any Protected Materials to the Requesting Party’s
Authorized Reviewers. The written notice shall include the information identified in this
paragraph. If the Requesting Party decides to designate any additional Reviewing
Representative(s) after the Requesting Party’s Authorized Reviewers receive Protected
Materials, the Requesting Party shall identify the additional proposed Reviewing
Representative(s) to the Disclosing Party before the Requesting Party provides Protected
Materials to the additional Reviewing Representative(s). Within five (5) business days after
receiving written notice of the identity of any Reviewing Representative, the Disclosing Party
may provide the Requesting Party with a written objection to a specific Reviewing
Representative stating the grounds for the objection. Any dispute concerning whether an
identified person or entity is an appropriate Reviewing Representative shall be resolved through
the dispute resolution procedures in Paragraph 11 of this Protective Order. If a Disclosing Party
6
objects to a specific Reviewing Representative within five (5) business days after the Reviewing
Representative is identified, the Parties shall not provide any Protected Materials to the disputed
Reviewing Representative until the Parties are able to resolve the dispute consistent with the
dispute resolution procedures in Paragraph 11. Failure by the Disclosing Party to object within
five (5) business days does not waive the Disclosing Party’s right to later object to the Reviewing
Representative, even if Protected Materials has already been disclosed. However, further
disclosure of Protected Materials would be stayed until the parties are able to resolve the dispute
consistent with the dispute resolution procedures in Paragraph 11.
Reviewing Representative(s) have a duty to disclose to the Disclosing Party any potential
conflict of interest that puts the Reviewing Representative in violation of D.06-12-030, as
modified by subsequent decisions of the Commission. A resume or curriculum vitae is
reasonable disclosure of such potential conflicts, and should be the default evidence provided in
most cases.
6.
Nondisclosure Certificates. A Reviewing Representative shall not inspect,
participate in discussions regarding, or otherwise be granted access to, Protected Materials unless
and until he or she has first completed and executed a Nondisclosure Certificate, attached hereto
as Appendix A, and delivered the signed Nondisclosure Certificate to the Disclosing Party. The
Disclosing Party shall retain the executed Nondisclosure Certificates pertaining to the Protected
Materials it has disclosed and shall promptly provide copies of the Nondisclosure Certificates to
Commission Staff upon request.
7.
Access to Protected Materials and Use of Protected Materials. Subject to the
terms of this Protective Order, Authorized Reviewers shall be entitled to access any Protected
Materials and may make copies of Protected Materials, but such copies become Protected
Materials. Authorized Reviewers may make notes of Protected Materials, which shall be treated
7
as Protected Materials if such notes disclose any Protected Materials. Protected Materials
obtained by a Party in this proceeding may also be requested by that Party in a subsequent
Commission proceeding, subject to the terms of any nondisclosure agreement or protective order
governing that subsequent proceeding, without constituting a violation of this Protective Order.
8.
Maintaining Confidentiality of Protected Materials. Each Authorized Reviewer
shall treat Protected Materials as confidential in accordance with this Protective Order and the
Nondisclosure Certificate. Protected Materials shall not be used except as necessary for
participation in this proceeding, and shall not be disclosed in any manner to any person except:
(i) Authorized Reviewers; (ii) an Authorized Reviewer’s employees and administrative
personnel, such as clerks, secretaries, and word processors, to the extent necessary to assist the
Authorized Reviewer, provided that they shall first ensure that such personnel are familiar with
the terms of this Protective Order and have signed a Nondisclosure Certificate; and (iii) persons
employed by or working on behalf of the Commission. Authorized Reviewers shall adopt
suitable measures to maintain the confidentiality of Protected Materials they have obtained
pursuant to this Protective Order, and shall treat such Protected Materials in the same manner as
they treat their own most highly confidential information.
Authorized Reviewers shall be liable for any unauthorized disclosure or use by
themselves and/or employees, paralegals, or administrative staff. In the event any Authorized
Reviewer is requested or required by applicable laws or regulations, or in the course of
administrative or judicial proceedings (in response to oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar process) to disclose
any of Protected Materials, the Authorized Reviewer shall immediately inform the Disclosing
Party of the request, and the Disclosing Party may, at its sole discretion and cost, direct any
challenge or defense against the disclosure requirement, and the Authorized Reviewer shall
8
cooperate in good faith with such Party either to oppose the disclosure of the Protected Materials
consistent with applicable law, or to obtain confidential treatment of the Protected Materials by
the person or entity who wishes to receive them prior to any such disclosure. If there are
multiple requests for substantially similar Protected Materials in the same case or proceeding
where an Authorized Reviewer has been ordered to produce certain specific Protected Materials,
the Authorized Reviewer may, upon request for substantially similar materials by another person
or entity, respond in a manner consistent with that order to those substantially similar requests.
9.
Return or Destruction of Protected Materials. Protected Materials shall remain
available to Authorized Reviewers until an order terminating this proceeding becomes no longer
subject to judicial review. If requested to do so in writing after that date, the Authorized
Reviewers shall, within fifteen days after such request, return the Protected Materials to the
Disclosing Party that produced such Protected Materials, or shall destroy the materials, except
that copies of filings, official transcripts and exhibits in this proceeding that contain Protected
Materials, and notes of Protected Materials may be retained, if such Protected Materials are
maintained in accordance with Paragraph 8. Within such time period each Authorized Reviewer,
if requested to do so, shall also submit to the Disclosing Party an affidavit stating that, to the best
of its knowledge, all Protected Materials have been returned or have been destroyed or will be
maintained in accordance with Paragraph 8. To the extent Protected Materials are not returned
or destroyed, they shall remain subject to this Protective Order.
In the event that a Reviewing Representative to whom Protected Materials are disclosed
ceases to be engaged to provide services in this proceeding, then access to such materials by that
person shall be terminated and the Reviewing Representative shall immediately return or destroy
all Protected Materials, or provide an affidavit stating that all Protected Materials and all notes of
Protected Materials will be maintained in accordance with Paragraph 8. Even if a Reviewing
9
Representative is no longer engaged in this proceeding, every such person shall continue to be
bound by the provisions of this Protective Order and the Nondisclosure Certificate.
10.
Access and Use by Governmental Entities.
A.
In the event the Commission receives a request from the California Energy
Commission (“CEC”) for a copy of or access to any Party’s Protected Materials, the procedure
for handling such requests shall be as follows. Not less than five (5) business days after
delivering written notice to the Disclosing Party of the request, the Commission shall release
such Protected Materials to the CEC upon receipt from the CEC of an Interagency Information
Request and Confidentiality Agreement (“Interagency Confidentiality Agreement”). Such
Interagency Confidentiality Agreement shall: (i) provide that the CEC will treat the requested
Protected Materials as confidential in accordance with this Protective Order; (ii) include an
explanation of the purpose for the CEC’s request, as well as an explanation of how the request
relates to furtherance of the CEC’s functions; (iii) be signed by a person authorized to bind the
CEC contractually; and (iv) expressly state that furnishing of the requested Protected Materials
to employees or representatives of the CEC does not, by itself, make such Protected Materials
public. In addition, the Interagency Confidentiality Agreement shall include an express
acknowledgment of the Commission’s sole authority (subject to judicial review) to make the
determination whether the Protected Materials should remain confidential or be disclosed to the
public, notwithstanding any provision to the contrary in the statutes or regulations applicable to
the CEC.
B.
In the event the Commission receives a request for a copy of or access to a
party’s Protected Materials from a state governmental agency other than the CEC that is
authorized to enter into a written agreement sufficient to satisfy the requirements for maintaining
confidentiality set forth in Government Code Section 6254.5(e), the Commission may, not less
10
than five (5) business days after giving written notice to the Disclosing Party of the request,
release such Protected Materials to the requesting governmental agency, upon receiving from the
requesting agency an executed Interagency Confidentiality Agreement that contains the same
provisions described in Paragraph 10.A above.
C.
The CEC may use Protected Materials when needed to fulfill its statutory
responsibilities or cooperative agreements with the Commission. Commission confidentiality
designations will be maintained by the CEC in making such assessments, and the CEC will not
publish any assessment that directly reveals the data or allows the data submitted by an
individual load serving entity to be “reverse engineered.”
11.
Dispute Resolution. All disputes that arise under this Protective Order, including
but not limited to alleged violations of this Protective Order and disputes concerning whether
materials were properly designated as Protected Materials, shall first be addressed by the parties
through a meet and confer process in an attempt to resolve such disputes. If the meet and confer
process is unsuccessful, either party may present the dispute for resolution to the Assigned ALJ
or the Law and Motion ALJ.
12.
Other Objections to Use or Disclosure. Nothing in this Protective Order shall be
construed as limiting the right of a Party, the Commission Staff, or a state governmental agency
covered by Paragraph 10 to object to the use or disclosure of Protected Materials on any legal
ground, including relevance or privilege.
13.
Remedies. Any violation of this Protective Order shall constitute a violation of an
order of the Commission. Notwithstanding the foregoing, the parties and Commission Staff
reserve their rights to pursue any legal or equitable remedies that may be available in the event of
an actual or anticipated disclosure of Protected Materials.
11
14.
Withdrawal of Designation. A Disclosing Party may agree at any time to remove
the “Protected Materials” designation from any materials of such Party if, in its opinion,
confidentiality protection is no longer required. In such a case, the Disclosing Party will notify
all Requesting Parties that the Disclosing Party has agreed to withdraw its designation of
Protected Materials for specific documents or material.
15.
Modification. This Protective Order shall remain in effect unless and until it is
modified or terminated by the Commission or the Assigned ALJ. The identity of the parties
submitting Protected Materials may differ from time to time. In light of this situation,
modifications to this Protective Order may become necessary. The Parties shall work
cooperatively to develop such modifications and, to the extent the Parties are able to agree to
modifications, shall file a motion with the Assigned ALJ or the Commission seeking approval of
the modifications. To the extent Parties are unable to agree on modifications after a good faith
effort, each party governed by this Protective Order has the right to seek modifications in it as
appropriate from the Assigned ALJ or the Commission.
16.
Interpretation. Headings are for convenience only and may not be used to restrict
the scope of this Protective Order.
Entered: __________________________________
Administrative Law Judge
Date: __________________________________
12
APPENDIX A TO PROPOSED PROTECTIVE ORDER
BEFORE THE PUBLIC UTILITIES COMMISSION
OF THE STATE OF CALIFORNIA
Submission of the SEGS Contracts for
Procurement of Renewable Energy From SCE’s
2014 Renewables Portfolio Standard Solicitation
)
)
)
Advice 3300-E
NON-DISCLOSURE CERTIFICATE
I hereby certify my understanding that access to Protected Materials is provided to me
pursuant to the terms and restrictions of the Protective Order in this proceeding, that I have been
given a copy of and have read the Protective Order, and that I agree to be bound by it. I
understand that the contents of the Protected Materials, any notes or other memoranda, or any
other form of information that copies or discloses Protected Materials shall not be disclosed to
anyone other than in accordance with that Protective Order. I acknowledge that a violation of
this certificate constitutes a violation of an order of California Public Utilities Commission.
Signed: _______________________
Name ________________________
Title: _________________________
Organization: __________________
Dated: ________________________