Power Charge Indifference Adjustment (PCIA)
Lee Ewing & Tim Lindl – Keyes & Fox LLP
February 23, 2023
PCIA Overview
● Law requires remaining SDG&E customers to be left economically “indifferent” to CEA’s customers leaving SDG&E’s service. ● The PCIA is the “exit fee” that is intended to ensure such indifference. ● The PCIA can be negative (SDG&E customers paying CEA customers) or positive (CEA customers paying SDG&E customers)
● PCIA lasts for as long as the departed customers’ obligation to pay for the underlying resources lasts - e.g., until the resource is retired, the PPA expires, or the resource or PPA is re-vintaged (vintaging will be addressed later). Vintaging is an ever-on-going battle that is not just backwards looking.
PCIA Overview
TOTAL COST
OF SDG&E
PORTFOLIO
MARKET
VALUE OF
SDG&E
PORTFOLIO
INDIFFERENCE
AMOUNT
(PCIA)
RPS ADDER
($/GWH) *
GWh
MARKET
VALUE OF
SDG&E
PORTFOLIO
ENERGY
INDEX
($/GWH) *
GWh
RA ADDER
($/MW) *
MW
Setting the PCIA:
SDG&E Annual ERRA
Forecast Applications
• SDG&E files an ERRA Forecast application on May 15 of each year • SDG&E’s ERRA Forecast application includes proposed PCIA rates for the next calendar year • PCIA rates include:
• The “Indifference Amount”
• The Portfolio Allocation Balancing Account (“PABA”)
• The rates are also based on each customer’s “vintage”: the year the customer departed IOU bundled service
• Bundled customers are vintaged to the latest year (e.g., 2023 in the 2023 ERRA Forecast application) and pay the PCIA as part of their commodity rate 4 Example PCIA Revenue Requirement by Vintage
$000s
UOG Legacy 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total Portfolio Costs - 417,862 77,589 199,188 63,567 5,020 1,139 1,833 - 12,360 42,422 13 (229) - - 820,765 Portfolio Market Value - 306,269 49,256 150,735 45,658 6,312 2,677 2,812 - 18,819 45,993 183 (229) - - 628,485 Total Forecasted Indifference - 111,592 28,334 48,453 17,909 (1,292) (1,538) (979) - (6,458) (3,571) (170) - - - 192,279 PABA True Up Balance - 88,939 30,388 (36,288) (40,402) 86,543 (2,410) (92,401) 89,339 (78,809) (21,020) 62,337 (99,089) 190,740 - 177,867 ERRA True Up Balance - - - - - - - - - - - - - - 319,739 319,739 Total Revenue Requirement $0 $200,531 $58,722 $12,165 ($22,493) $85,251 ($3,948) ($93,380) $89,339 ($85,267) ($24,591) $62,168 ($99,089) $190,740 $319,739 $689,885 THE Major Influencer: Gas Prices
Source: California Energy Markets, Issue 1723
SDG&E’s PCIA Trends
K&F and NewGen began representing
CEA in the 2021 ERRA Forecast case.
Reviewing the PCIA:
SDG&E Annual ERRA
Compliance
Applications
• SDG&E files an ERRA
Compliance application on
June 1 of each year
• Essentially making sure
SDG&E’s generation costs
were put in the right
accounting bucket to ensure
CCA customers have not
overpaid
7 Participation in ERRA Proceedings
● These proceedings present the most direct opportunity to influence the PCIA by ensuring that unbundled customers are only assigned the costs they caused
● Focus is on the PCIA, PABA, GTSR, and bundled customer commodity rates ● 2023 ERRA Forecast Application Issues
○ SDG&E Sales Forecasting Process
○ Valuing Banked RECs
○ Splitting the ERRA Undercollection Between Vintages
○ Accounting for Modified CAM Procurement Costs
○ CPUC Decision: "SDG&E has demonstrated previously that it requires a greater degree of oversight and the lack of transparency and missing detail in SDG&E’s filings make it clear that improvement is still needed.” ● Potential issues for SDG&E’s ERRA proceedings in 2023 (2024 ERRA Forecast & 2022 ERRA Compliance) ○ Recovery of costs for SDG&E’s Green Access Programs
○ Battery cost and benefits
QUESTIONS?
Contact Info:
Lee Ewing
[email protected]
410-978-2437
Tim Lindl
[email protected]
510-314-8385