2024 PCIA/SCE Rates: First Look
October 19, 2023
2024 ERRA Forecast October Update
On October 13, SCE filed the October update to its 2024 ERRA Forecast application
The October update is the first detailed look at the 2024 PCIA and SCE’s 2024 forecasted generation rate
SCE is requesting a January 1, 2024 implementation for its generation rates and the PCIA
Staff has conducted an initial analysis of:
(1)The impact on customer bills based on the changing PCIA and (2)Expected bill comparison based on updated SCE generation rates plus the new 2024 PCIA
Main takeaway: Customer bills will go down, while comparisons with SCE will worsen slightly and still be better than the 2023/24 Board approved targets
PCIA Impacts
The proposed 2017 and 2018 vintage PCIA rates in 2024 will continue to be negative and decline by another ½ cent, providing customers a PCIA line-item credit of approximately 1 cent This further PCIA decline means residential CPA customers will see bill reductions of ~1.6% beginning January 2024 with no action required by CPA
The primary driver for the decrease in the 2024 PCIA is 106% higher projected system RA prices and 151% higher RPS prices in 2024, partially offset by 24% lower market forward energy prices
Rate Product Current As of 1/1/24 % Change
Lean $193.70 $190.50 -1.7%
Clean $195.60 $192.40 -1.6%
100% Green $203.30 $200.10 -1.6%
Average CPA Residential Total Bill
Competitive Impacts
SCE’s average generation rates are forecast to decrease by ~8% in 2024 The decreased SCE generation rate will be partially offset by a decreased PCIA, increasing CPA total bill comparisons by ~2%, still below the targets set by the Board during FY23/24 rate setting earlier this year
Lower SCE generation costs are the result of:
• Lower estimated purchased power costs
• Higher estimated revenues from RA and REC sales offset by higher costs for retained RA and RECs Rate
Product
Jul 2023
Target
Comparison
to SCE Oct 2023 Comparison to SCE January 2024 Comparison to SCE SCE Base $191.53 $203.70 $196.30
Lean $187.70 -2% $193.70 -5% $190.50 -3.0%
Clean $189.60 -1% $195.60 -4% $192.40 -2.0%
100% Green $197.30 +3% $203.30 0% $200.10 +1.9%
Average Total Residential Bill
Next Steps
CPA is responding to SCE’s ERRA filing and will monitor any new issues that emerge
Actual SCE generation rates and the PCIA will be finalized in December, unless the ERRA proceeding is delayed
Staff is beginning to consider CPA’s rate setting strategy for fiscal year 2024/25 which begins next July
• Staff will return in the spring with rate scenarios that consider CPA’s Reserve Policy targets, CPA’s competitive position and other factors
Questions
SunZia Wind
Power Purchase Agreement Overview
October 19, 2023
Summary
CPA launched the 2023 Clean Energy and Reliability RFO in June to fill a larger portion of its portfolio needs with long-term contracts and reduce its need to procure Resource Adequacy (RA) and renewable energy in short-term markets.
In September 2023, the Energy Committee approved the RFO shortlist and waitlist recommendation. The SunZia Wind project was on the shortlist.
SunZia Wind is a planned 3,515 MW wind project in central New Mexico developed by Pattern Energy. It is complemented by a new transmission line being constructed to bring the energy to California SunZia Wind is historic in size. Its nameplate capacity is about 50% greater than Hoover Dam, and its annual generation will be about 3x as Hoover Dam. Together with the transmission line it is the single largest renewable energy project ever constructed in the United States ($8 billion).
CPA plans to be an “anchor” offtaker of the project, contracting for 500MW, or 14% of SunZia’s capacity The project has been nearly two decades in the making and has a wide variety of supporters across the Federal government, labor, environmental, and business groups
Staff plans to bring the SunZia PPA to the November Board for consideration. This is an informational presentation to provide the Executive Committee with an overview of the project and its unique characteristics.
2 Wind and CPA’s Energy Portfolio
Wind energy is important to CPA’s
portfolio because it is complementary to
solar’s generating profile, providing
renewable energy in the evening and at
night.
Expected generation from
the SunZia PPA, in grey, will make a
significant contribution towards
growing CPA’s renewable energy
supply sourced from long-term
contracts.
3 0
200
400
600
800
1000
1200
1400
1600
1800
2000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 MW
2028 Average Hourly Load versus Average Hourly PPA
Generation (Executed and Proposed)
Average Hourly PPA Generation Average Hourly SunZia Generation Average of Load 0 50
100
150
200
250
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 MW
SunZia Average Hourly Profile
2023 RFO Wind Offers
4 • In recent years, CPA has seen few in-state wind
offers because most favorable California wind locations have already been developed
• CPA received 4 conforming offers from wind projects in the 2023 RFO.
• Only one out of the four offers was in-state and accounted for about 150 MW of the total 1,000 MW of wind offered.
• CPA shortlisted the in-state offer, but the project declined to enter into negotiations
• SunZia Wind is located in one of the nation’s windiest locations, has a dedicated transmission line, and a near-term online date (2026) • Large amounts of CA wind may be available from offshore locations in the future, but development is likely to take at least a decade, has significant risks, and will be expensive CPA received 4 conforming offers from wind projects
in the 2023 RFO, located in California, Idaho,
Wyoming, and New Mexico.
SunZia Wind Project Overview
SunZia Wind is located in Lincoln County, New Mexico.
A new transmission line (SunZia Transmission) will
bring the wind power to both Arizona and CAISO
Energy will be dynamically transferred into the CAISO
at the Palo Verde intertie, at which point the project has a 2,131 MW firm transmission limit.
CPA will receive a "Buyer’s Share" of all energy that
flows to CAISO.
Under current RA rules, SunZia will provide up to 150
MW of RA to CPA under the PPA, varying by month
The project developer, Pattern Energy, has an operating portfolio of 35 renewable power facilities and has
placed approximately 6 GW of wind generation into
service in its history, including the new Western Spirit project which supplies LADWP and other public
power/CCA entities in California
SunZia Wind Project Valuation
Criteria Rank Rationale
Quantitative Value First Quartile The project was in the first quartile of projects ranked by RA Normalized NPV.
Development Score High The projects scores “High” as it is significantly de-risked. A majority of discretionary permits have been secured as has site control. Interconnection Agreements are executed. The developer, Pattern, has extensive experience in renewable energy and wind resource development.
Workforce Development High The project scores “High” as Pattern has secured agreements with IBEW and has pledged to fund CPA’s local Workforce Development efforts.
Environmental Stewardship Neutral The project scores a “Neutral” in Environmental Stewardship. Although partially located on undisturbed lands, Pattern has engaged with local, regional, and national conservation stakeholders to reduce project impacts on habitat and species Benefits to DACs Neutral The project scores “Neutral” as it is not located in a DAC.
Project Location Medium The project scores “Medium” as it is out-of-state but located in an Energy Community as defined in the Inflation Reduction Act.
SunZia Wind Supporters
The project has a long list of supporters:
Federal Government: the project groundbreaking
was headlined by Secretary of the Interior Deb
Haaland. Interior was the main permitting authority
for the transmission line. The project was praised as
evidence that the US can still do big things in
energy.
Labor: IBEW is a significant supporter of the
project, hailing it in a letter to CPA as a significant, positive and responsible economic development
opportunity and a source of good, union jobs.
Environmental: The project is supported by the
National Audobon Society, the Nature Conservancy,
and other environmental groups. Pattern has
worked with conservation groups to avoid,
minimize, or mitigate project impacts on wildlife
and habitat.
7 Interior Secretary Haaland at the
project groundbreaking on Sept 1.
Next Steps
8 Staff is wrapping up negotiations and
expects to bring the SunZia PPA to
the November Board meeting for
consideration