1 Agenda Item 13
PRO.0152, Amendment No. 2,
Power Scheduling Coordination
and Related Support Services
January 24, 2023
Summary of Requested Action
2 Increase capacity in existing contract, PRO.0152,
for Power Scheduling Coordinator Services with
APX, Inc.
Original First
Amendment
If Further
Amended Change
Services $4,242,800 $4,242,800 $4,242,800 0
CAISO
Pass-through
Payments
$130,500,000 $255,500,000 $891,500,000 $636,000,000
Duration 5 years 5 years 5 years 0
Need Increase in Contract Capacity
3 Contractor implements critical payment step in
approved purchase of power operations for:
• CleanPowerSF
Higher Power prices necessitate an increase in
capacity to process payments
• Staff responding to market
• Payments to CAISO for power “pass through”
higher than forecast
• Hetch Hetchy Power
Purchase of Power Dominates
Power Operating Budget
Purchase
of Power
78%
Personnel
6%
All Other
16%
$425 million Power Enterprise
FY 2022-23 Operating Budgets
4 $344M appropriated for
Purchase of Power
• $251M for CleanPowerSF
• $93M for Hetch Hetchy
Power
• Annual expenditure
Includes:
• Transmission, Distribution
and related charges
• Electricity and reliability
products
How we provide our Services
5 Some Purchase of Power Costs
invoiced by CAISO
6 We incur CAISO costs for:
• Transmission & related
charges
• Electricity & reliability
products
Must be certified
“Scheduling Coordinator”
to transact in CAISO
markets
• Contract with APX, Inc. for
this service
Electricity prices: flat to declining in
2018-2020, surging in 2021-2022
7 Sources: Power Settlements’ SettleCore database (CAISO); S&P Platts as forward prices as of 1/11/2023
$39 $36 $33
$53
$76
$112
$88
$0
$20
$40
$60
$80
$100
$120
2018 2019 2020 2021 2022 2023* 2024*
2018-2022: Day-Ahead Settlement LMP prices
2023-2024: Avg. of Forward prices, 12/12/2022 –1/11/2023 Annual NP-15 prices ($/MWh)
Electricity prices were high in all
regions of U.S. in 2022
8 Source: S&P Platts
Annual peak real-time LMP prices ($/MWh) and Year over Year % change
CAISO
NP15
CAISO
SP15
ERCOT
Hub
MISO
Michigan
PJM
Chicago
NYISO
N.Y.C.
SPP-N
Hub
SPP-S
Hub PJM AEP ISO NE
2018 $35.66
3.5%
$39.80
14.9%
$36.50
28.2%
$36.30
10.5%
$31.67
6.2%
$46.41
27.0%
$27.96
12.0%
$29.13
-5.1%
$36.64
19.3%
$45.41
23.6%
2019 $37.35
4.8%
$37.61
-5.5%
$47.42
29.9%
$29.25
-19.4%
$26.05
-17.8%
$31.18
-32.8%
$24.17
-13.6%
$26.11
-10.4%
$28.13
-23.2%
$32.53
-28.4%
2020 $29.13
-22.0%
$30.52
-18.9%
$25.12
-47.0%
$25.76
-12.0%
$21.18
-18.7%
$23.99
-23.1%
$19.81
-18.0%
$21.19
-18.8%
$22.54
-19.8%
$25.05
-23.0%
2021 $46.44
59.4%
$43.26
41.7%
$150.25
498.1%
$41.77
62.2%
$38.47
81.6%
$46.76
94.9%
$48.64
145.6%
$65.03
206.8%
$41.07
82.2%
$46.74
86.6%
2022 $84.81
82.6%
$72.91
68.6%
$72.81
-51.5%
$76.49
83.1%
$67.40
75.2%
$94.94
103.0%
$47.70
-1.9%
$67.92
4.4%
$75.90
84.8%
$88.31
88.9%
Significant Wholesale Market Price
Increases are Driving Need
9 Those Prices Result in Higher Pass-
through Payments Absorbing Capacity
10 GM Executed "Bridge" Amendment
11 PUC & Board authorized GM to Contract for
power and related products and services (Admin
Code §21.43)
• Enables GM to respond to commercial and market
conditions so we can continue to provide customers with reliable electric service, subject to annual expenditure cap First Amendment to APX contract increased
pass-through capacity by $125,000,000
• No change in scope
• Only increased pass-through portion of contract
Allows regular amendment process to proceed in
orderly fashion
Forward Price Projections Average about
200% Higher Now
12 $-
$50.00
$100.00
$150.00
$200.00
$250.00
$300.00
$350.00
Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 $/MWh
Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 12/21/2022 $258.75 $289.39 $160.27 $98.04 $69.87 $66.41 $84.39 $119.81 $134.56 $123.86 $94.89 $96.67 $117.58 $126.55 6/1/2021 $46.76 $47.19 $44.14 $40.40 $27.73 $27.41 $37.31 $52.56 $55.43 $53.17 $39.36 $40.48 $44.77 $45.09 % Change 453% 513% 263% 143% 152% 142% 126% 128% 143% 133% 141% 139% 163% 181% Staff Recommendation
13 Authorize GM to Increase
contract capacity
• add $636,000,000 for a total not-to-
exceed agreement amount of
$895,742,800
Authorize GM to Seek Approval
of Board of Supervisors
• to increase the contract capacity, and
• increase the annual Admin Code
§21.43 expenditure cap from
$150,000,000 to $200,000,000 given
higher power prices
14 Questions?
Thank you
DEPARTMENT
Power Enterprise
AGENDA NO.
13 MEETING DATE
January 24, 2023
APPROVAL:
COMMISSION
SECRETARY
Donna Hood
AGENDA ITEM
Public Utilities Commission
City and County of San Francisco
Professional Services Amend: Regular Calendar
Project Manager: Sunita Jones
Approve Amendment No. 2 to Contract No. PRO.0152, Power Scheduling Coordination and Related Support Services
Summary of
Proposed
Commission Action:
Approve the Second Amendment to Contract No. PRO.0152, Power Scheduling Coordination and Related Support Services , with APX Inc., to allow for the processing of the California Independent System Operator power transmission service charges ; and authorize the General Manager to execute this amendment , increasing the contract by $636,000,000 for a total not -to-exceed contract amount of $895,742,800, subject to the Board of Supervisors approval under Charter Section 9.118.
Background: For the San Francisco Public Utilities Commission (SFPUC) to provide service to its Hetch Hetchy Power ( Hetchy Power ) and CleanPowerSF electric customers, it must transmit electric energy through the transmission system controlled by the California Independent System Operator (CAISO) and conduct wholesale electricity transactions through the CAISO -operated wholesale market. Only entities that have been certified as Scheduling Coordinators may interact with the CAISO to schedule all power deliveries over the transmission system and to process payments for electricity transactions. The SFPUC is not a CAISO -certified Scheduling Coordinator. Without contracting with a c ertified Scheduling Coordinator, the SFPUC will not be able to trans mit power to provide service to its electric customers or engage in the CAISO wholesale markets. APX has provided this service to SFPUC since 2008.
The CAISO transmission charges and wholesale energy market transaction charges are incurred by the SFPUC when submitting Day Ahead and Real Time Interchange Schedules and Bids to the CAISO .
The CAISO invoices the SFPUC weekly for these services and payments are due to the CAISO within 7 days. APX , as SFPUC’s scheduling coordinator, makes these payments on behalf of SFPUC to Contract: Approve Amendment No. 1 to Contract No. PRO.0152, Power Scheduling Coordination and Related Support Services
Commission Meeting Date: January 24, 2023
the CAISO. These are pass-through charges and APX does not charge SFPUC additional fees for that service.
Energy Price Increases and First Amendment to the Contract
Wholesale energy market prices are higher than expected for all market participants, including other municipal utilities in California .
Such increases reflect several factors , including global energy shortages caused by trade disruptions and war. In addition, new energy facilities have not come online as expected due to supply chain delays. Also, e nergy supplies and prices have been impacted by extreme winter and summer weather in the United States. In western states, in particular, drought conditions have limited the availability of hydroelectric energy, which has also constrained energy supplies and increased prices. As a result, t he SFPUC is experiencing significant increases in the energy product and related charges from the CAISO, causing the pass -
through payments APX makes on our behalf to be
higher than anticipated . CleanPowerSF’s CAISO charges have increased 197%, and Hetchy Power’s 67%, from 2021 to 2022.
On January 6, 2023, the General Manager executed the First Amendment to the APX agreement to ensure sufficient funding for power costs while this more substantial Second Amendment went through the process for approval by this Commission and the Board of Supervisors. The General Manager approved the contract under the authori
ty delegated by the Board of Supervisors in Administrative Code Section 21.43 for power purchases. The First Amendment did not change the services portion of the contract, only the amount for CAISO pass-through charges, increasing it by $125,000,000 for a total contract not -to-exceed amount of $259,742 ,8
00. Power staff
anticipates this funding will be sufficient for charges through April 2023.
APX Contract Approvals in 2022
On January 11, 2022, by Resolution No. 22- 0014 this Commission awarded Contract No. PRO.0152, Power Scheduling Coordination and Related Support Services to APX with a term of five years. The not- to-exceed contract amount is comprised of` $4,242,800 for the APX contract service costs 1 and $130,500,000 for the CAISO pass -through charges, for a total not -to-exceed amount of $134,742,800. On March 8, 2022, by Resolution No. 79- 22, the Board of Supervisors approved the contract in file number 220074.
Description of Scope The work under the Contract consists of:
1 The APX contract services include CAISO communications, settlement, dispute resolution, and invoice processing and Congestion Revenue Rights management services.
Contract: Approve Amendment No. 1 to Contract No. PRO.0152, Power Scheduling Coordination and Related Support Services
Commission Meeting Date: January 24, 2023
of Services: • Submitting day-ahead and real-time interchange schedules and bids to CAISO;
• Managing communications between CAISO and SFPUC
schedulers and operators;
• Managing CAISO settlements and processing payments of CAISO charges;
• Managing CAISO and Cal ifornia Public Utilities Commission (CPUC) Resource Adequacy Requirements;
• Managing Access to CAISO Systems for Meter, Outage,
Settlement, Scheduling, and Bid/Award data;
• Submitting Settlement Quality Meter Data (SQMD) to CAISO on behalf of SFPUC;
• Provide a monthly payment cycle with the S cheduling
Coordinator, where the S cheduling Coordinator manages the daily/weekly cash flows and cash calls; and
• Optional services, including market analyses, energy trading, development of revenue strategies, and training of SFPUC staff.
Changes to the Contract under Second Amendment:
Amendment No. 2 would increase the approved contract capacity by $636,000,000 for a total not -to-exceed contract amount of $895,742,800, in order to continue payment of the CAISO power transmission service charges through APX. The type, cost, and amount of services will not change as a result of this Amendment.
The SFPUC retains the rig ht to terminate the Contract at any time during the term per Section 20 of the contract.
Concurrent with the Second Amendment, Power staff intends to request Board of Supervisors approval of an increase of $50 million in the annual expenditure cap of $150 million on power purchases using the delegated authority in Administrative Code section 21.43. This increase to $200 million is needed due to the substantial increases in power prices described above. In addition, Power staff intends to seek other minor changes in 21.43, including the approval of updated power purchase agreement templates.
Result of Inaction: A delay in approving this Second Amendment could result in the SFPUC being unable to serve power to its electric customers.
Budget & Costs: Funding: Funds to cover the cost will be available from the Hetch Hetchy Power Operating Budget, the CleanPowerSF Operating Budget, and the CleanPowerSF Customer Fund contingent upon the passage of that fiscal year’s budget by the Board of Supervisors.
Original Not-to-Exceed Amount: $134,742,800
• APX Services Amount: $4,242,800
• CAISO Pass-Through Charges: $130,500,000
Contract: Approve Amendment No. 1 to Contract No. PRO.0152, Power Scheduling Coordination and Related Support Services
Commission Meeting Date: January 24, 2023
Amendment No. 1 Amount: $125,000,000 increase in the CAISO Pass-Through Charges
Total Not-To-Exceed Amount: $259,742,800
Amendment No. 2 Amount: $636,000,000
• CAISO Pass-Through Charges: $636,000,000
Total Not-To-Exceed Amount: $895,742,800
Schedule: Original Duration: 5 years
Amendment No. 1 and No. 2 Duration: No change
Total Duration: 5 years
Compliance with
Chapter 14B: Local
Business Enterprise
Utilization and Non-
Discrimination in
Contracting
Ordinance:
Pursuant to Chapter 14B of the San Francisco Administrative Code, the Contract Monitoring Division (CMD) Local Business Enterprise (LBE) sub-consulting requirement has been waived for this contract.
Recommendation: SFPUC staff recommends that the Commission adop t the attached resolution.
PUBLIC UTILITIES COMMISSION
City and County of San Francisco
RESOLUTION NO.
WHEREAS, The San Francisco Public Utilities Commission (SFPUC) provides service to its Hetch Hetchy Power and CleanPowerSF electric customers by transmitting electric energy through the transmission system controlled by the California Independent System Operator (CAISO). As required by CAISO, the SFPUC conducts wholesale electricity transactions through a certified Scheduling Coordinator; and
WHEREAS, On January 11, 2022, by Resolution No. 22-0014, this Commission awarded Contract No. PRO.0152, Power Scheduling Coordination and Related Support Services to APX Inc., a CAISO -certified Scheduling Coordinator, in an amount not-to-exceed $136,500,000 [$6,000,000 for APX’s professional services and $130,000,000 for CAISO pass-through charges] and with a term of five years; and
WHEREAS, On March 8, 2022, by Resolution No. 79-22, the Board of Supervisors approved File No. 220074, Amended in Committee PR O.0152, Power Scheduling Coordination and Related Support Services in an amount not -to-exceed $134,742,800 , reducing the not -to- exceed amount payable to APX for professional services to $4,242,800, and leaving the CAISO pass-through amount of $130,500,000 unchanged; and
WHEREAS, The General Manager executed the First Amendment on January 6, 2023, to add funding of $125 million for CAISO pass -through charges for a total not -to-exceed contract amount of $259,742,800, with no changes to the services portion of the contract; and WHEREAS, This Second Amendment would increase capacity for the CAISO pass - through charges by $636,000,000, for a total not- to-exceed contract amount of $895,742,800, with no changes to the services portion of the contract; and WHEREAS, Pursuant to Chapter 14B of the San Francisco Administrative Code, the Contract Monitoring Division (CMD) Local Business Enterprise (LBE) sub- consulting requirement has been waived for this contract; and
WHEREAS, Funds to cover the cost will be available f rom the Hetch Hetchy Power Operating Budget, the CleanPowerSF Operating Budget, and the CleanPowerSF Customer Fund; and
WHEREAS, Power Enterprise staff intends to seek Board of Supervisors approval of an increase of $50 million in the annual expenditure cost cap of $150 million , to allow for power purchases under the delegated authority in Administrative Code section 21.43 up to $200 million annually, and to seek other amendments reflecting operational needs, including approval of updated contract templates for power purchases; now, therefore, be it RESOLVED, That this Commission hereby approves the Second Amendment to Contract No. PRO.0152, Power Scheduling Coordination and Related Support Service s, with APX Inc .; and be it
FURTHER RESOLVED, Subject to Board of Supervisors approval under Charter Section 9.118, this Commission authorizes the General Manager to execute the Second Amendment to increase the contract by $636,000,000 for a total contract amount of $895,742,800; and be it
FURTHER RESOLVED , That this Commission authorizes the General Manager , in consultation with the City Attorney, to make other necessary, non -material changes in the Second Amendment; and be it
FURTHER RESOLVED, That this Commission au thorizes the General Manager to seek Board of Supervisors approval to increase the $150 million annual cost cap for power purchases under the delegated authority in Administrative Code section 21.43 by $50 million, for a total cap of $200 million per year , and to request other amendments to section 21.43 to reflect operating needs, including the approval of updated power purchase agreement templates.
I hereby certify that the foregoing resolution was adopted by the Public Utilities Commission at its meeting of January 24, 2023.
Secretary, Public Utilities Commission