Energy Planning & Resources Committee
of the Clean Power Alliance of Southern California
Regular Meeting
Wednesday, March 22, 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 90 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
West Hollywood City Hall
3rd Floor Conference Room
8300 Santa Monica Blvd.
West Hollywood, CA 90069
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 Agenda Page 1
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.
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If the PDF is downloaded, the bookmark panel (ribbon icon) appears on the left side of the screen.
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, while not required, 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 January 25, 2023, Energy Committee Meeting
2. Receive and File January 2023 and February 2023 Risk Management Team Reports
REGULAR AGENDA
3. Approve Entering into Negotiations for Bilateral Offer(s) for Power and Resource Adequacy Purchase Agreements as Recommended by the Review Team
COMMITTEE MEMBER COMMENTS
ADJOURN – NEXT MEETING APRIL 26, 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. Public records are available for inspection at CPA’s Office at 801 S. Grand Ave., Suite 400, Los Angeles, CA 90017, or online at www.cleanpoweralliance.org/agendas.
Agenda Page 2
Energy Committee Item 1
MINUTES
REGULAR MEETING of the Energy Planning & Resources Committee of the Clean Power Alliance of Southern California
Wednesday, January 25, 2023, 12:15 p.m.
Meeting videos are available on CPA’s YouTube Channel.
www.youtube.com/@CPApublicmeetings
Committee Members participated in this meeting from the following locations:
Manhattan Beach City Hall
City Manager Conference Room
1400 Highland Avenue
Manhattan Beach, CA 90266
CPA Office
801 S. Grand Ave., Suite 400
Los Angeles, CA 90017
Alhambra City Hall
Conference Room A
111 S. First Street
Alhambra, CA 91802
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
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 Remote
Carson Reata Kulcsar Committee Member Remote
Manhattan Beach David Lesser Committee Member Remote
Oxnard Kathleen Mallory Committee Member Remote
Sierra Madre Robert Parkhurst Chair Remote
South Pasadena Diana Mahmud Committee Member Absent
Thousand Oaks Helen Cox Committee Member Remote
All votes are unanimous, unless otherwise stated.
GENERAL PUBLIC COMMENT
Agenda Page 3
Clean Power Alliance Energy Planning & Resources Committee Page 2 of 4 January 25, 2023
There was no 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 Reports Motion: Committee Member Mallory, Oxnard
Second: Committee Member Maloney, Alhambra
Vote: The consent agenda was approved by a roll call vote with an abstention from Committee Member Lesser.
REGULAR AGENDA
3. Energy Market Update
Matt Langer, Chief Operating Officer, provided an update on the energy market, indicating that a large spike in natural gas prices beginning in December of 2022 resulted in significantly higher electricity prices that may remain through March.
Mr. Langer reviewed a graph depicting a timeline of gas prices, and noted that pipeline outages, decreasing gas storage in California, and unseasonably cold weather elsewhere contributed to price increases. Mr. Langer outlined budgeted fiscal year electricity prices versus actual/expected prices and explained that it is too early to predict how 2023 hydro capacity will impact electricity prices later this year. Prices for short-term bundled renewable energy (PCC1) are rising rapidly in 2023 after several years of stable prices. Mr. Langer noted several factors driving the PCC1 price increases, including the success of Community Choice Aggregations (CCAs) and increasing minimum compliance requirements for the Renewable Portfolio Standard (RPS). To address market volatility, lower than budgeted financial results, and to prepare for unforeseen events, staff may recommend an increase to CPA’s credit line with JPMorgan and an interim rate adjustment to take effect in April 2023. Southern California Edison (SCE) implemented significant rate increases in January 2023, and Mr. Langer reviewed the current residential rate comparisons between SCE’s base rate and CPA’s Lean Power, Clean Power, and 100% Green Power rates. Even with the proposed rate increase in April, CPA rates would be competitive with SCE.
Committee Member Cox asked if the proposed rate increases would remain in effect until the rate setting period for 2024. Mr. Langer clarified that the proposed rate increases would take effect April 1, 2023; in June, staff will present rates for FY 2023/24 to the Board to take effect July 1, 2023. Responding to Committee Member Lesser’s question regarding energy market concerns, Mr. Langer explained that staff will look at hedging strategies; although CPA is fiscally healthy, staff will focus on building financial security to withstand volatile market events and to have liquidity entering the summer months to minimize impact on customers.
There is a growing need to build more renewable energy sources and rely less on the short-term market to meet compliance requirements. In response to Committee Member Mallory’s inquiry about customer communication and the next rate setting process, Mr. Bardacke stated staff is evaluating an appropriate approach, including bill messages; Mr. Bardacke advised that currently, there is a $10/month average customer bill reduction due to the negative Power Change Indifference Adjustment (PCIA). Although the rate adjustment may absorb customer savings from the negative PCIA, the adjustment will maintain CPA’s competitiveness with SCE and Agenda Page 4
Clean Power Alliance Energy Planning & Resources Committee Page 3 of 4 January 25, 2023
build the liquidity needed to prepare for the summer months. Committee Member Cox inquired if there was customer communication available to convey the challenging message concerning 100% Green energy and renewable energy prices. Staff noted that communication is being developed, adding that short-term renewable energy purchases are indexed to the market price for power and are not fixed price contracts. Committee Member Kulcsar’s asked about the projected contribution to the net position; Mr. Bardacke clarified that the majority of the $50 million projected contribution is concentrated in June, an often-volatile month. In response to Committee Member Maloney’s question concerning CPA and SCE rates, staff indicated that rates depict the current comparisons as of January 2023; comparisons in April and July will depend on the rate strategy adopted by the Board. SCE rates increased significantly, allowing CPA to maintain the competitive advantage while balancing fiscal objectives, and impact on customer bills.
Committee Member Maloney shared that as her city, like many others, begin entering their sustainability planning process, having rate projections would be helpful as clean energy may be a significant topic of discussion. Chair Parkhurst asked several questions on gas pipelines, hedging, and the revenue shortfall. Staff clarified that there are many pipelines supplying California gas from Texas, and some have been out of use recently. Regarding hedging, staff specified that CPA, is likely the biggest buyer of PCC1, due to its large renewable energy percentage; purchasing PCC1 short-term products for compliance purposes is similar to purchasing bundled bilateral PPAs. Long-term fixed price bilateral contracts tend to be at a fixed price and keep CPA hedged for the duration of the contract. Staff added that other CCAs have been in existence longer and therefore, have had more time to build up long-term fixed price purchases.
4. Mid-Term Reliability Status Update
Mr. Langer provided an update on CPA’s Mid-Term Reliability (MTR) status. Mr.
Langer reviewed CPA’s current MTR compliance position and procurement needs, and reviewed the implications of the Proposed Decision issued by the California Public Utilities Commission (CPUC), that would modify the existing MTR compliance rules, add new procurement requirements for 2026 and 2027, and clarify compliance rules, improving CPA’s compliance outlook for 2024. Mr. Langer outlined upcoming procurement activity, including the issuance of Power Share and Power Ready Request for Offers (RFOs) in December and January, the CPUC approval of 8 Power Share contracts in January, and the expectation of 7 new projects coming on-line in late 2023. Staff is planning to accelerate additional long-term PPA procurement for reliability purposes and other portfolio needs.
Chair Parkhurst expressed his concern over the 2024 compliance window and thanked staff for communicating and collaborating with the CPUC to put CPA in a positive long-term compliance position. In response to Committee Member Kulcsar’s question, Mr. Bardacke confirmed that the four shortlisted compliance projects that did not enter exclusivity agreements are the same ones with on-line dates in 2024 and that staff was open to bilateral opportunities in for projects coming online by June 1, 2024. In response to Committee Member Cox’ inquiry about renegotiated projects, staff clarified that contract amendments were completed in September 2022; an analysis of all contracts shortlisted or waitlisted contributed to staff’s desire to move the next RFO forward and shorten the timeline between the launch of the RFO and the shortlisting process.
COMMITTEE MEMBER COMMENTS
Agenda Page 5
Clean Power Alliance Energy Planning & Resources Committee Page 4 of 4 January 25, 2023
Committee Member Lesser inquired about in-person meetings; Mr. Bardacke specified that members can continue to meet remotely from a public location. Committee Member Cox expressed appreciation for staff’s work in contract negotiations and hedging strategies. Chair Parkhurst referred to a Rocky Mountain Institute article naming wind and solar as the cheapest sources of electricity for 96% of the world’s population.
ADJOURN
Chair Parkhurst adjourned the meeting at 1:30 p.m.
Agenda Page 6
Staff Report – Agenda Item 2
To: 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: March 22, 2023
January 2023 RMT REPORT
Key Actions
• Reviewed current counterparty credit exposure
• Reviewed December 2022 market performance
• Reviewed December 2022 generation and storage performance • Reviewed energy positions and approved 2022-2027 hedges • Reviewed positions for RPS and carbon free products
• Reviewed Resource Adequacy (RA) positions, including CPA’s 2023 Year-Ahead open position and procurement strategy
• Review January 2023 CRR Allocations and Auction and CY 2022 performance.
Policy Compliance
Policy Deviation Required Action
Renewables Attributes: As of December
1, 2022, PCC1 and PCC2 renewable
energy attributes under contract for 2023
were below the ERMP minimum of 65%;
as of January 1, 2023, PCC1 and PCC2
renewable energy attributes under
contract for 2024 were below the prompt
year ERMP minimum of 65%.
None. As a result of recent procurement
activity, CPA expects to be in
compliance with both 2023 and 2024
PCC1 and PCC2 Policy requirements by
the end of Q1 2023.
Carbon Free Energy: As of January 1,
2023, 2024 carbon free energy under
contract was below the prompt year ERMP
minimum of 75%.
CPA is running solicitations to buy
Carbon Free energy and expects to
reach compliance in Q1 2023.
Carbon Free Energy: As of December 1,
2022, carbon free energy under contract
None. As previously reported, due to
scarcity of carbon free energy
Agenda Page 7
Energy Committee Item 2
for 2023 and 2025 was above the ERMP
maximums of 100% and 50%,
respectively*; as of January 1, 2023, 2026
carbon free energy purchases were above
the ERMP maximum of 50%.
(hydroelectric power), CPA is procuring
additional supply in advance as it
becomes available.
Resource Adequacy: As of December 1,
2022, July, August and September 2023,
Resource Adequacy under contract was
below the ERMP minimum of 90%.*
As a result of recent procurement
activity, CPA has cured the July 2023
deviation. CPA is running solicitations to
buy August and September 2023
Resource Adequacy.
*This policy deviation was inadvertently omitted from the December RMT report.
February 2023 RMT REPORT
Key Actions
• Reviewed current counterparty credit exposure
• Reviewed January 2023 market performance
• Reviewed January 2023 generation and storage performance • Reviewed energy positions and approved 2023-2027 hedges • Reviewed positions for RPS and carbon free products and approved RFO for 2023-2025 RECs
• Reviewed Resource Adequacy (RA) positions, including CPA’s 2023 Month-Ahead and 2024 Year-Ahead open position and procurement strategy. Approved RFO for May 2023-2027 RA
• Review February 2023 CRR Allocations and Auction and CY 2022 performance.
Policy Compliance
Policy Deviation Required Action
Carbon Free Energy: As of December 1,
2022, carbon free energy under contract
for 2023 was above the ERMP maximum
of 100%
None. As previously reported, due to
scarcity of carbon free energy
(hydroelectric power), CPA is procuring
additional supply in advance as it
becomes available.
Resource Adequacy: As of December 1,
2022, July, August and September 2023,
Resource Adequacy under contract was
below the ERMP Month-Ahead minimum
of 90%.
As a result of recent procurement
activity, CPA has almost cured the July
2023 deviation. CPA is running
solicitations to buy August and
September 2023 Resource Adequacy.
ATTACHMENT
None.
Agenda Page 8
Staff Report – Agenda Item 3
To: Energy Committee
From: John McNamara, Director, Structured Contracts
Approved by: Ted Bardacke, Chief Executive Officer
Matthew Langer, Chief Operating Officer
Subject: Approve Entering into Negotiations for Bilateral Offer(s) for Power and Resource Adequacy Purchase Agreements as Recommended by the Review Team
Date: March 22, 2023
RECOMMENDATION
Approve entering into negotiations for bilateral offer(s) for Power and Resource Adequacy Purchase Agreements as recommended by the Review Team.
ATTACHMENT
1. Bilateral Offers Review
Agenda Page 9
Bilateral Offers Review
Energy Committee March 22, 2023
Agenda Page 10
On June 24, 2021, the CPUC issued its Decision Requiring Procurement to Address Mid-Term Reliability (MTR) (2023-2026)*, which ordered CPA to procure a total of 679 MW of new reliable capacity between 2023-2026 On February 28, 2023, the CPUC issued Decision 23-02-040 which had a favorable outcome for CPA and should allow it to meet its near-term MTR compliance obligations Tight Resource Adequacy (RA) market conditions are expected to persist which puts additional pressure on CPA’s ability to comply with its RA compliance obligations CPA has the opportunity to enter into an energy storage agreement with Project A and a resource adequacy purchase agreement with Project B that would count towards Mid-Term Reliability compliance requirements and/or contribute to CPA’s future compliance requirements for RA On March 16, 2023, a joint Staff/Energy Committee member Review Team met and recommended both Project A and Project B offers to the Energy Committee for approval to enter contract negotiations 2 Executive Summary
*D.21-06-035 under Rulemaking 20-05-003
Agenda Page 11
CPA's typical process for entering into long-term contracts is as follows:
o CPA launches a Request for Offers (RFO), in consultation with the Energy Committee, that identifies the products and contract parameters CPA is seeking to procure o A confidential Review Team made up of staff and Energy Committee members meets to review detailed project information and select short list and wait list projects to enter into exclusive negotiations o The short list and wait list are approved by the Energy Committee o If negotiations are successful, final contracts are brought to the Board for consideration prior to execution "Bilateral" offers are proposals received outside of the RFO process o CPA considers bilateral offers if they present an opportunity that is unlikely to be met through the RFO process such as a near-term online date, resource diversity, etc. o A similar approval process takes place for bilateral offers, including a Review Team, Energy Committee approval to enter negotiations, and Board consideration of the final contract 3 Process Background
Agenda Page 12
Agenda
MTR & RA Position Update
Projects Overview
Action Requested
Agenda Page 13
MTR and RA
Position Update
Agenda Page 14
5 Mid-Term Reliability Decision
In June 2021, the CPUC issued its Decision which ordered CPA to procure a total of 679 MW of new reliable capacity between 2023-2026
On February 28, 2023, CPUC issued Decision 23-02-040 which had the following outcome:
o Allowed CPA to count previously excluded resources listed on a baseline generator list towards CPA’s MTR obligation if CPA adds an equivalent additional amount of MWs to CPA’s 2025 requirement o Extended the compliance deadline for Baseload Renewables and Long-Duration storage from 2026 to 2028 o Required CPA to procure an additional 117 MWs of Reliable Capacity in both 2026 and 2027 Resource Type Online By
2023 2024 2025 2026 2027 2028
Reliable Capacity (General – 4hr Storage) 118 354 89 117 117 Baseload Renewables 59
Long-Duration Storage 59
Agenda Page 15
7 CPA’s MTR Procurement Need
Decision 23-02-040 allows CPA to meet its 2024 MTR compliance obligations, assuming no significant project failures or delays CPA has limited availability to absorb project failures making additional 2024 procurement for MTR potentially valuable Additional length in 2024 and beyond will count toward the new 2026 and 2027 requirements CPA shortlisted all of the 2024 online date projects in the 2022 MTR RFO but none of them entered exclusivity Staff expects to launch a Clean Energy RFO in a few months to procure clean energy and capacity in 2025 and beyond CPA has only been considering bilateral opportunities, eligible for MTR, with online dates of June 1, 2024 or sooner as it is unlikely to receive similar offers in the upcoming RFO Current MTR position:
8/1/2023 6/1/2024 6/1/2025 6/1/2026 6/1/2027 6/1/2028
Cumulative CPA Procurement Need – General (4-Hr
Storage) 118 472 646 763 880
CPA's Eligible Executed Contracts to Date 118 472 804 804 804 Compliance Long / (Short) 0 0 158 41 (76)
CPA Procurement Need – Baseload Renewables 59
CPA's Eligible Executed Contracts and Contracts Under
Negotiation 58
Compliance Long / (Short) (1)*
CPA Procurement Need – Long-Duration Storage 59
CPA's Eligible Contracts Under Negotiation 135
Compliance Long / (Short) 76**
*Assumes CPA executes a 11.5 MW biomass power purchase agreement that has entered into an exclusivity agreement with CPA. **Assumes CPA will execute the two long duration storage contracts that have entered into exclusivity agreements with CPA.
Agenda Page 16
8 Availability of Projects with Resource Adequacy
The MTR order has further created increased demand for energy storage resources Due to a myriad of issues (including supply chain challenges, permitting, and interconnection challenges), opportunities to secure long-term RA resources are limited CPA will likely not be able to meet its RA compliance obligations through short-term transactions alone and therefore it may be prudent to enter into long-term contracts that could help contribute to CPA's 2024 and 2025 RA compliance obligations
Agenda Page 17
Projects
Overview
Agenda Page 18
9 Project A: Standalone Storage
50 MW 4-hour standalone storage project
Product: RA and Energy
Located in Kern County, California
New build (expansion to an existing site) project with a 6/1/2024 online date
Term: 15 years
Rationale
RA value (near term online date)
Positive NPV
MTR compliance
Project Overview
10 Criteria Rank
Value Positive NPV
Development Score High
Workforce
Development High
Environmental
Stewardship High
Benefits to DACs High
Project Location Medium
Evaluation Summary
Agenda Page 19
Project B: RA-Only Offer
Criteria Rank
Value Positive NPV
Development Score High
Workforce
Development
Medium
to High
Environmental
Stewardship High
Benefits to DACs High
Project Location Medium
Project Overview
50 MW standalone storage project
Product: RA-Only
Located in San Diego County, California
New build project with a June 1, 2025 online date
Term: 5 years 7 months
Rationale
RA value
Positive NPV
Limited term for an RA-only product to contribute to
CPA needs in a tight RA market
Evaluation Summary
Agenda Page 20
Action Requested
CPA seeks approval to enter contract negotiations for the two bilateral offers Project Technology Product Contract
Capacity
Commercial
Operation
Date
Contract
Length
Project A Standalone
Storage Energy + RA 50MW 6/1/2024 15 years
Project B Standalone
Storage RA-Only 50MW 6/1/2025 5 years 7 months
Agenda Page 21