Energy Planning & Resources Committee
of the Clean Power Alliance of Southern California
Regular Meeting
Wednesday, January 25, 2023
12:15 p.m.
Visit CPA’s YouTube Channel to watch a Live Stream of the Meeting *There may be a streaming delay of up to 60 seconds. This is a view-only live stream.
CPA Office
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Members of the public may also participate in this meeting remotely at the following locations:
Manhattan Beach City Hall
City Manager Conference Room
1400 Highland Avenue
Manhattan Beach, CA 90266
Alhambra City Hall
Conference Room A
111 S. First St.
Alhambra, CA 91801
Carson City Hall
Executive Conference Room
701 East Carson Street
Carson, CA 90745
Sierra Madre City Hall
Council Chambers
232 W. Sierra Madre Blvd.
Sierra Madre, CA 91024
Thousand Oaks City Hall
Public Works Conference Room
2100 Thousand Oaks Blvd.
Thousand Oaks, CA 91362
City of Oxnard Service Center 1
East Conference Room
214 South C Street
Oxnard, CA 93030
PUBLIC COMMENT: Members of the public may submit their comments by one of the following options:
• Email Public Comment: Members of the public are encouraged to submit written comments on any agenda item to [email protected] up to four hours before the meeting. Written public comments will be announced at the meeting and become part of the meeting record. Public comments received in writing will not be read aloud at the meeting. • Provide Public Comment During the Meeting: The General Public Comment item is reserved for persons wishing to address the Committee on any Clean Power Alliance-related matters not on today’s agenda. Public comments on matters on today’s Consent Agenda and Regular Agenda shall be heard at the time the matter is called. Comments on items on the Consent Agenda are consolidated into one public comment period. Members of the public who wish to address the Committee at CPA’s Office are requested to complete a comment card and provide it to staff. If you are attending from a remote location, please identify yourself to a CPA representative when your item is called. Each speaker is limited to two (2) minutes (in whole-minute increments) per agenda item with a cumulative total of five 5 minutes to be allocated between the General Public Comment, the entire Consent Agenda, or individual items in the Regular Agenda. Please refer to Policy No. 8 – Public Comment for additional information.
REVISED
Location Added
Agenda Page 1
ACCESSIBILITY: Meetings are accessible to people with disabilities. Individuals who need special assistance or a disability-related modification or accommodation to participate in this meeting, or who have a disability and wish to request an alternative format for the meeting materials, should contact the Clerk of the Board at least two (2) working days before the meeting at [email protected] or (213) 713- 5995. Notification in advance of the meeting will enable us to make reasonable arrangements to ensure accessibility to this meeting and the materials related to it.
CALL TO ORDER & ROLL CALL
GENERAL PUBLIC COMMENT
CONSENT AGENDA
1. Approve Minutes from November 23, 2022, Energy Committee Meeting
2. Receive and File November and December 2022 Risk Management Team Report
REGULAR AGENDA
3. Energy Market Update
4. Mid-Term Reliability Status Update
COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING FEBRUARY 22, 2023
Public Records: Public records that relate to any item on the open session agenda for a Committee Meeting are available for public inspection. Those records that are distributed less than 72 hours prior to the meeting are available for public inspection at the same time they are distributed to all, or a majority of, the members of the Committee. Those documents are available for inspection online at www.cleanpoweralliance.org/agendas.
Agenda Page 2
MINUTES
REGULAR MEETING of the Energy Planning & Resources Committee of the Clean Power Alliance of Southern California
Wednesday, November 23, 2022, 12:15 p.m.
Pursuant to the Proclamation of the State of Emergency by Governor Newsom on March 4, 2020, AB 361, and enacting Resolutions, and as a response to mitigating the spread of COVID19, the Energy Planning & Resources Committee conducted this meeting remotely.
CALL TO ORDER & ROLL CALL
Chair Parkhurst called the meeting to order at 12:15 p.m. and, Gabriela Monzon, Board Clerk, conducted roll call.
ROLL CALL
Alhambra Jeffrey Maloney Committee Member Absent
Carson Reata Kulcsar Committee Member Remote
Culver City Daniel Lee Committee Member Absent
Oxnard Kathleen Mallory Committee Member Remote
Sierra Madre Robert Parkhurst Chair Remote
South Pasadena Diana Mahmud Committee Member Remote
Thousand Oaks Helen Cox Committee Member Absent
All votes are unanimous, unless otherwise stated.
GENERAL PUBLIC COMMENT
There was no public comment.
CONSENT AGENDA
1. Approve Minutes from October 26, 2022, Energy Committee Meeting
2. Receive and File October 2022 Risk Management Team Report Motion: Committee Member Mahmud, South Pasadena
Second: Committee Member Mallory, Oxnard
Vote: The consent agenda was approved by a roll call vote.
REGULAR AGENDA
Action Items
3. a. Approve Six (6) Shortlist and Three (3) Waitlist Projects as Recommended by the Review Team for the 2022 Mid-Term Reliability (MTR) RFO as Described Herein
Agenda Page 3
Clean Power Alliance Energy Planning & Resources Committee Page 2 of 3 November 23, 2022
b. Approve Entering into Negotiations with One (1) Standalone Storage Bilateral Offer for a Power Purchase Agreement as Recommended by the Review Team, as Described Herein
John McNamara, Director, Structured Contracts, provided a presentation on the 2022 Midterm Reliability (MTR) RFO and the recommended shortlist and waitlist, including a bilateral offer.
At Chair Parkhurst’s request, Mr. McNamara clarified that the overall goal of the MTR is to provide reliability and new incremental capacity to California’s grid; staff is recommending this RFO solicitation to meet the compliance requirement at the best available price. Responding to Chair Parkhurst’s compliance question, Mr.
McNamara stated that the shortlisted project from the RFO would allow CPA to meet all procurement compliance for 2024 except for the baseload requirement. In response to Committee Member Mahmud’s question, Matt Langer, Chief Operating Officer, stated that the bill authorizing the extension of Diablo Canyon specifically forbade the CPUC from including the extension as a reason to justify a decrease in capacity procurement moving forward, cementing the need to meet the CPUC compliance obligations. Committee Member Mahmud inquired about the development of new biomass conversion facilities to meet SB 1383 compliance. Natasha Keefer, Vice President, Power Supply, indicated that there are few biomass facilities that can comply with the regulations set forth in SB 1383, limiting the number of new facilities planned. Ted Bardacke, CEO, added that the new development of biodigesters has generally been for the transportation market and not for electricity generation. In response to Committee Member Mahmud’s inquiry about recently granted commercial operation date (COD) extensions, Mr.
McNamara specified that it was made very clear to existing counterparties during the price refresh process that the COD extension was an exceptional circumstance not to be expected in the future. Committee Member Mahmud opined that there should be continual discussion emphasizing the one-time-only extension and that any uncertainty on the part of the counterparties should be built into project schedules. Mr. McNamara verified that there is one counterparty that participated in CPA’s price refresh process that is on the shortlist. Responding to Committee Member Mahmud’s question concerning coordinating RFOs with other Community Choice Aggregations (CCAs), staff indicated active coordination is not allowed, and required exclusivity policies vary among CCAs; the CPUC set up compliance milestones in such a way that many CCAs are actively running RFO’s simultaneously.
Motion: Committee Member Mahmud, South Pasadena
Second: Committee Member Mallory, Oxnard
Vote: Item 3 was approved by a roll call vote.
4. Ratify the Final 2022 Integrated Resource Plan filed with the California Public Utilities Commission on November 1, 2022
Natasha Keefer, Vice President, Power Supply, shared that a final quality control review of the 2022 Integrated Resource Plan (IRP) identified several items that needed correction, and those corrections were made to the final IRP submitted on November 1. Chair Parkhurst and Committee Member Mahmud thanked staff for their thoroughness and forthrightness in finding and outlining errors and providing helpful comments to the Committee.
Agenda Page 4
Clean Power Alliance Energy Planning & Resources Committee Page 3 of 3 November 23, 2022
Motion: Committee Member Mahmud, South Pasadena
Second: Committee Member Mallory, Oxnard
Vote: Item 4 was approved by a roll call vote.
Information Item
5. Receive Power Purchase Agreements (PPAs) Update
Mr. McNamara provided a presentation update on five long-term Renewable PPAs and one amendment that will be presented to the Board in December. Mr.
McNamara reviewed details of the five PPAs, including Arlington, Incremental Geysers, Existing Geysers, the San Gabriel project, and the Beverly project. Staff will also be seeking the Board’s approval of an amendment to an existing Disadvantaged Communities Green Tariff (DAC-GT) contract, Radiant. Mr.
Bardacke added that this is a no-risk cost amendment for CPA because if the CPUC approves the amendment, the CPUC will reimburse the full above-market procurement cost of the amended Radiant PPA; this was not included in the price refresh process as it was unknown at the time whether the CPUC would reimburse the additional cost.
Committee Member Mahmud asked if the Arlington PPA would have been placed in the first quartile if it had included a Right of First Offer (ROFO); Mr. Bardacke responded that the Arlington PPA was considered within the context of the price refresh and compared to those prices, and it ranked high at the time of the price refresh. Committee Member Mahmud asked how that compares to prices of PPAs that staff recommended be shortlisted, and Mr. Bardacke indicated that prices were higher with the most recent MTR RFO than they were in the price refresh process. Responding to Committee Member Kulcsar’s question regarding the Radiant project, staff indicated that even if the PPA amendment is approved by the Board, the price adjustment is still contingent upon CPUC approval. Chair Parkhurst inquired whether Southern California Edison has been able to enroll customers in the Power Share program, and Mr. Bardacke indicated they have not.
Responding to Chair Parkhurst’s question concerning allocation, Mr. Langer indicated that CPA has taken on additional allocation in the Community Solar portion.
COMMITTEE MEMBER COMMENTS
Committee Member Mahmud complimented staff for their clear presentation of the MTR RFO and expressed appreciation for Ms. Keefer’s diligent work on behalf of CPA.
Committee Member Mallory thanked Ms. Keefer for her easily digestible presentations of complicated topics. Chair Parkhurst echoed those sentiments, thanking the Committee for their diligent work over the past year.
ADJOURN
Chair Parkhurst adjourned the meeting at 1:30 p.m.
Agenda Page 5
Staff Report – Agenda Item 2
To: Clean Power Alliance (CPA) Energy Committee
From: Geoff Ihle, Director, Energy Market Risk Management Approved by: Ted Bardacke, Chief Executive Officer
David McNeil, Chief Financial Officer
Subject: Risk Management Team Reports
Date: January 25, 2023
November 2022 RMT REPORT
Key Actions
• Reviewed current counterparty credit exposure
• Reviewed October 2022 market performance
• Reviewed October 2022 generation performance
• Reviewed energy positions and approved 2022-2027 hedges • Reviewed positions for RPS and carbon free products, and SCE’s PCC1 Market Offer schedule
• Reviewed Resource Adequacy (RA) positions, including CPA’s 2023 Year-Ahead open position
• Reviewed December 2022 CRR Allocations and Auction
December 2022 RMT REPORT
Key Actions
• Reviewed current counterparty credit exposure
• Reviewed December 2022 market performance
• Reviewed December 2022 generation performance
• Reviewed energy positions and approved 2022-2027 hedges • Reviewed positions for RPS and carbon free products, and SCE’s PCC1 Market Offer schedule
• Reviewed Resource Adequacy (RA) positions, including CPA’s 2023 Year-Ahead open position and procurement strategy
• Reviewed December 2022 CRR Allocations and Auction. Reviewed CY 2022 performance
Agenda Page 6
Policy Compliance
Month Policy Deviation Required Action
November None
December None
ATTACHMENT
None.
Agenda Page 7
Staff Report – Agenda Item 3
To: Clean Power Alliance (CPA) Energy Committee
From: Matt Langer, Chief Operating Officer
Approved by: Ted Bardacke, Chief Executive Officer
Subject: Energy Market Update
Date: January 25, 2023
Staff will provide a presentation on the item.
ATTACHMENT
1. Energy Market Update Presentation
Agenda Page 8
Item 3 – Energy Market Update
January 25, 2023
Agenda Page 9
Summary
A large spike in natural gas prices beginning in December resulted in significantly higher electricity prices in December and January, and likely into February and March as well Prices for short-term renewable energy contracts, which have been stable over recent years, are climbing rapidly in 2023
Although CPA is well-hedged, these market factors mean CPA will not meet its FY 2022/23 financial objectives
Agenda Page 10
Gas Prices
December prices reached levels unseen since the 2021 Texas cold snap that lasted just a few days; high prices are being sustained into January, February, and beyond 0 5
10 15
20 25
30 35
$/1000 cf
SoCal City Gate
Average Price
Agenda Page 11
Electricity Prices
Since December, electricity prices have far exceeded CPA budget forecast and historical winter prices Agenda Page 12
Electricity Prices – Hydro Conditions
California is experiencing above average precipitation, but it is still early in the hydro year and hydro levels began 2023 a t historically low levels
Above average precipitation, were it to continue, may limit electricity price increases. But it is too early to predict how 2023 hydro capacity will impact electricity prices later this year Agenda Page 13
Short-Term Renewable Energy Prices
Prices for short-term bundled renewable energy (PCC1) are rising rapidly in 2023 after several years of stable prices
$15.10 * $14.23 * $13.24 *
$23.00 **
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
2020 2021 2022 2023
Price/MWh
Short-Term Renewable Energy Prices
*Market Price Benchmark published by CPUC based on market transactions for that year **Based on recent broker quotes for short-term PCC1 renewable energy Agenda Page 14
Financial Implications
For the five months ending November 30, 2022, CPA recorded net income of $7.2 million, $52.6 million below budgeted net income of $59.8 million. Financial results were adversely impacted a major heat event in September 2022
CPA expects financial results from December 2022 to March 2022 to remain below budget due to significant increases in wholesale energy prices. Staff estimate a contribution to the net position in FY 2022/23 of ~$50 million compared to a budgeted contribution of ~$200 million.
To address market volatility, lower than budgeted financial results, and prepare for unforeseen events, at its January 18 meeting the Executive Committee recommended that the Board consider:
o Increasing CPA’s $80 million credit line with JPMorgan in March 2023 o Increasing rates in March 2023 through an interim “market adjustment” that would come into effect in April 2022 before the traditional rate setting cycle begins next spring SCE implemented significant rate increases on January 1, 2023 and even with a proposed rate increase in April, CPA would maintain rates that are highly competitive with SCE Agenda Page 15
Questions
Agenda Page 16
Residential Rate Comparisons
40% renewables
lowest cost option
50% renewables
historic “parity rate”
100% renewable energy
no up-charge for low-income customers
Energy Product
July 2022
(Average
Monthly Bill)
Comparison to
SCE
Jan 2023
(Average
Monthly Bill)
Comparison to
SCE
SCE base rate
(~35% renewables) $172 $190
Lean Power $170 -1.0% $161 -16%
Clean Power $172 0.0% $162 -15%
100% Green $177 3.0% $168 -12%
Jan 2023 monthly bills are estimates; comparisons may vary slightly Agenda Page 17
Staff Report – Agenda Item 4
To: Clean Power Alliance (CPA) Energy Committee
From: Matt Langer, Chief Operating Officer
Approved by: Ted Bardacke, Chief Executive Officer
Subject: Mid-Term Reliability Status Update
Date: January 25, 2023
Staff will provide a presentation on the item.
ATTACHMENT
1. Mid-Term Reliability Status Update
Agenda Page 18
Item 4 – Mid-Term Reliability Status Update
January 25, 2023
Agenda Page 19
Summary
Staff has been actively working to fill CPA’s Mid-Term Reliability (MTR) procurement requirements for 2023-2026, primarily the short position CPA has in 2024 None of the 2024 shortlisted or waitlisted projects (4 projects, 200 MW total) from the 2022 MTR RFO entered exclusivity; shortlisted long-duration storage and base-load projects remain viable
A recent proposed decision from the CPUC could improve CPA’s compliance outlook for 2024 while adding addition procurement requirements for 2026 and 2027 Staff is planning to accelerate additional long-term PPA procurement for reliability purposes and other portfolio needs
Agenda Page 20
3 CPA’s MTR Procurement Need
CPA’s current MTR compliance position (cumulative MW):
8/1/2023 6/1/2024 6/1/2025 6/1/2026
CPA Procurement Need – General (4-Hr Storage) 118.0 472.0 561.0 CPA's Eligible Executed Contracts to Date 118.0 368.0 700.4 Compliance Long / (Short) 0.0 (104.0) 139.4
CPA Procurement Need – Baseload Renewables 59.0
CPA's Eligible Executed Contracts to Date 47.52
Compliance Long / (Short) (11.48)*
CPA Procurement Need – Long-Duration Storage 59.0
CPA's Eligible Executed Contracts to Date 0.0
Compliance Long / (Short) (59.0)
*Assumes CPA executes an 18 MW incremental geothermal bilateral. The contract was approved the Board on December 1, 2022 and is awaiting final execution by the developer.
Agenda Page 21
4 CPUC Proposed Decision Implications
On January 13, the CPUC issued a Proposed Decision that would modify the existing MTR compliance rules, add new procurement requirements for 2026 and 2027, and clarify compliance rules • The changes are in alignment with many of the arguments made by CalCCA in the proceeding • LSEs who procured capacity in excess of their IRP procurement order targets in 2021-2023 would be able to count that excess towards their 2023 and 2024 MTR requirements with an equivalent requirement added to the LSE’s 2025 requirement
• Long-lead time (LLT) resources would automatically receive an extension from 2026 to 2028 • An additional 2000 MW across all LSEs would be added in both 2026 and 2027 Agenda Page 22
Upcoming Procurement Activity
Staff is currently evaluating the impact the Proposed Decision would have on CPA’s MTR need
The annual Clean Energy RFO will likely be moved forward from the fall to closer to mid-year and have a broader focus on all clean energy sources plus storage compared to the compliance-driven RFOs of the last two years
To meet any remaining compliance need and/or to create a buffer, if attractive opportunities arise staff may bring forward bilateral offers for consideration by the Energy Committee ahead of the annual RFO
Power Share and Power Ready RFOs were issued in December and January respectively; 8 Power Share contracts were approved by CPUC in January, including the amended Radiant contracts – the 7 new projects are expected to come on-line in late 2023.
Agenda Page 23
Questions and Comments
Agenda Page 24