Clean Energy Alliance: Regulatory Update
Andy Ball – Keyes & Fox LLP
March 28, 2024
Overview
● Provider of Last Resort – Proposed Decision
● Resource Adequacy (Briefly)
2 What is Provider of Last Resort?
● A POLR is the utility (or other LSE) that has the obligation to serve all customers.
○ POLRs cannot discriminate between customers; must maintain facilities to provide adequate service.
● Long-standing Commission concept; recently defined in statute via SB 520:
○ An LSE “that the Commission . . . [d]esignates to provide electrical service to any retail customer whose service is transferred to the designated [LSE] because the customer’s [LSE] failed to provide, or denied, service to the customer or otherwise failed to meet its obligations.”
● In practical terms: POLRs are SDG&E, SCE, and PG&E.
3 Relevant POLR Issues
● Customer Migration:
○ Involuntary vs. voluntary.
○ One-off vs. mass.
● Financial Security Requirements/Re-Entry Fees:
○ Statute requires protection against cost-shifts in the case of customer migration.
● Key Issue: How does system adapt to mass, involuntary migration from CCA to POLR (i.e. traditional IOU)?
4 POLR Proposed Decision
● POLR proceeding initiated to (i) respond to legislative changes of SB 520 and (ii) consider reforms to POLR requirements.
○ Proceeding will remain open for Tracks 2 and 3.
● PD filed March 14, 2024.
● Opening Comments on PD due April 3; Reply Comments on PD due April 8.
● Commission can hear PD on April 18 at the earliest.
5 POLR Proposed Decision – Key Points
● PD adopts new minimum Financial Security Requirements:
○ Prior minimum FSR = $147,000.
○ CEA’s minimum FSR obligation will be the greater of either $147,000 or the product of $0.50 and CEA’s customer count.
○ Note: This is minimum FSR; if procurement or administrative costs increase, or IOU revenues decrease, FSR could grow.
● Practical Takeaway: CEA’s FSR likely to remain at $147,000 for the now.
6 POLR Proposed Decision – Key Points
● PD adopts new minimum Financial Reporting obligations. ● Tier 1:
○ All CCAs must provide most recent audited financial information twice a year, in January and July.
● Tier 2:
○ CCAs at risk of failure must submit information to, and meet with, Energy Division.
○ At risk if: credit rating downgrade; DLOH < 45 days and debt service coverage ratio < 1.0; low cash reserves; procurement default; bankruptcy.
○ ED Consultation: disclose risk condition; provide procurement and detailed financial information. 7
Resource Adequacy - Slice of Day
● Significant change to RA program (to say the least!):
○ Compliance is measured based on ability to serve LSE-specific load (plus PRM) in all 24 hours of the CAISO’s worst day of the month. ● For now, Flexible RARs remain in place. Local RARs, too. ● Pressure for further delay of SOD is building.
● Proposed Decision expected in May 2024; final decision expected in June 2024.
QUESTIONS?
Andy Ball
[email protected]
610-389-9996
Tim Lindl
[email protected]
510-314-8385
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