Item 20
VALLEY CLEAN ENERGY ALLIANCE
Staff Report – Item 20
____________________________________________________________________________________ TO: Valley Clean Energy Alliance Board
FROM: Gordon Samuel, Chief Operating Officer
SUBJECT: Valley Clean Energy’s Policy regarding PG&E allocation of Greenhouse Gas (GHG)-free (Large Hydro and Nuclear) resources to Community Choice Aggregators DATE: December 12, 2024
RECOMMENDATION
1. Accept the 2025 allocation of large hydro GHG-free attributes;
2. Accept the 2025 allocation of nuclear power GHG-free attributes;
3. Authorize the Executive Officer to enter into an agreement(s) with PG&E to accept the 2025 Large Hydro and Nuclear GHG-free allocations
BACKGROUND and ANALYSIS
PG&E owns or contracts for a number of GHG-free resources (including large hydro and nuclear from Diablo Canyon Power Plant). PG&E has been able to count these resources on its power content label (PCL) to meet its GHG-free targets. Other load serving entities (LSEs), on the other hand, have been paying for those same assets through the Power Charge Indifference Adjustment (PCIA), yet do not receive any of the GHG-free benefits – this includes VCE.
In mid-2019, CCAs approached PG&E to discuss whether PG&E would be agreeable to selling energy from their large hydro facilities. PG&E ultimately refused to make sales in 2019, but subsequently approached CCAs and offered to allocate GHG-free resources (nuclear and large hydro) to CCAs and other eligible LSEs.
Eventually the allocations became available in 2020, and the VCE Board elected to receive only the large hydro attributes. This became effective in the third quarter of 2020 and VCE received approximately 24,000 MWHs in 2020; 37,382 MWHs for 2021 (Feb -Dec); and 53,886 MWHs for 2022; and 83,073 MWHs for 2023 (note: VCE will not know the final 2024 numbers until April 2025; through mid 2024 the amounts have been tracking very similar to 2023 amounts).
In prior years, staff recommended VCE not accept the nuclear GHG-free allocation due to the inability to remarket the attributes, the short life of the Diablo Canyon power plant and potential reputational risk. However, in the current cycle regulatory changes have prompted staff to reassess this recommendation. CPUC Decision 23-12-036 extended the operation of Diablo Canyon Nuclear Power 2 Plant, which was previously set to retire in two phases in late 2024 and early 2025. First, under this new regulatory structure the cost of operation for Diablo Canyon will now be paid for by all CPUC-jurisdictional LSE customers across the entire state as a separate charge on their bills (i.e. regardless of whether VCE elects to accept or reject the attributes, VCE customers will still be paying for it).
Secondly, as part of this regulatory change VCE has already been allocated resource adequacy (RA) capacity from Diablo Canyon for the 2025 RA compliance year, with an average of 6 MW of nuclear capacity per month (ranges from approximately 4MW up to 10 MW). Third, if VCE does not accept the nuclear allocation then PG&E will be able to count VCE’s share of the GHG-free energy attributes on its PCL. Finally, as a result of the above changes, many CCAs – including MCE, SCP, PCE, Ava, DCE, Pioneer, RCEA, and SVCE – have elected to accept the nuclear attributes for 2025 which reduces the potential reputational risk associated with accepting the resource.
There is no obligation to accept this allocation of GHG-free attributes. An LSE can choose to accept neither resource pool, one or the other, or both. The volume that each LSE receives will ultimately depend on the volume of electricity generated by each resource pool and the proportion of PG&E’s load served by the LSE.
TENTATIVE SCHEDULE
COMMUNITY ADVISORY COMMITTEE
Staff presented this topic to the Community Advisory Committee (CAC) at their November 2024 meeting. The CAC had a robust discussion on the nuclear topic and supported the staff’s recommendation (6-2 vote). Those that opposed the recommendation indicated that they prefer not 3 to see nuclear reflected on VCE’s power content label (PCL), and those in favor recognized that nuclear is a clean resource widely used throughout the world, and others agreed to receiving the allocations since VCE’s customers are paying for it. The CAC was unanimously in support of taking the large hydro attributes.
RECOMMENDATION
As discussed with the CAC and Board in the past on the topic of allocations, staff’s position on large hydro has not changed, but staff has reassessed the nuclear position. Key factors in this reassessment include:
• The CPUC Decision extending Diablo Canyon operations and having all LSE’s customers pay for it; VCE is using 6 MW of Diablo for RA; many of VCE’s peers have elected to receive the nuclear attributes; large hydro and nuclear improve the VCE emission rate shown on the PCL. • The monetary value has improved over prior years. The large hydro allocations can be resold, but per the CPUC decision the nuclear attributes cannot be resold. Staff is assessing whether to sell a portion of the large hydro attributes.
• More CCA’s have opted to take the nuclear attributes this year.
Based on these factors that “force” VCE to take the resource for RA purposes and the reduction in potential reputational risk, on balance, staff believes that VCE is better served by accepting both the hydro and nuclear allocations for 2025.
In summary, staff is recommending:
1. Accept the 2025 allocation of large hydro GHG-free attributes;
2. Accept the 2025 allocation of nuclear power GHG-free attributes;
3. Recommend the Executive Officer enter into an agreement(s) with PG&E to accept the 2025 Large Hydro and Nuclear GHG-free allocations.
Attachment: Resolution 2024-XXX
Item 20
1 VALLEY CLEAN ENERGY ALLIANCE
RESOLUTION NO. 2024-___
A RESOLUTION OF VALLEY CLEAN ENERGY ALLIANCE ACCEPTING THE 2025
ALLOCATION OF LARGE HYDRO POWER AND NUCLEAR GHG-FREE ATTRIBUTES FROM
PACIFIC GAS & ELECTRIC AND AUTHORIZING THE EXECUTIVE OFFICER IN
CONSULTATION WITH LEGAL COUNSEL TO FINALIZE AND EXECUTE RELATED
AGREEMENTS
WHEREAS, the Valley Clean Energy Alliance (“VCE”) was formed as a community choice aggregation agency (“CCA”) on November 16, 2016, under the Joint Exercise of Power Act, California Government Code sections 6500 et seq., among the County of Yolo, and the Cities of Davis and Woodland, to reduce greenhouse gas emissions, provide electricity, carry out programs to reduce energy consumption, develop local jobs in renewable energy, and promote energy security and rate stability in all of the member jurisdictions. The City of Winters, located in Yolo County, was added as a member of VCE and a party to the JPA in December of 2019; and,
WHEREAS, large hydro and nuclear do not directly emit any GHG emissions, but do not qualify under the state’s RPS program;
WHEREAS, Pacific Gas and Electric (PG&E) owns and contracts for a number of GHG-free resources (including large hydro and nuclear) and count these resources on its power content label to meet its GHG-free targets;
WHEREAS, Load serving entities (LSEs), including Community Choice Aggregators (CCAs) such as VCE, have been paying for those same assets through Power Charge Indifference Adjustment (PCIA), but do not receive any of the GHG-free benefits; WHEREAS, in 2020 PG&E approached CCAs and offered to allocate GHG-free resources to CCAs and other eligible LSEs requiring no payment, and limited in the resources to which it applies (in-state, large hydroelectric, and nuclear); WHEREAS,since 2020 the VCE Board elected to accept the large hydroelectric GHG-free attributes; WHEREAS, CPUC Decision 23-12-036 extended the operation of Diablo Canyon Nuclear Power Plant and all CPUC jurisdictional load serving entities (LSE) are paying for the extension and in return the allocations are offered to the LSEs as well as resource adequacy allocations; ///
Item 20
2 WHEREAS, for calendar year 2025 PG&E is again offering LSEs large hydro and nuclear GHG-free attributes.
NOW, THEREFORE, the Board of Directors of Valley Clean Energy Alliance resolves as follows:
1. Accept the 2025 allocation of large hydro GHG-free attributes;
2. Accept the 2025 allocation of nuclear power GHG-free attributes;
3. Authorize the Executive Officer’s approval to enter into agreement(s) with PG&E to accept the 2025 Large Hydro and Nuclear GHG free allocations.
PASSED, APPROVED AND ADOPTED, at a regular meeting of the Valley Clean Energy Alliance, held on the ____ day of _______________, 2024, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
_____________________________________
Lucas Frerichs, VCE Chair
__________________________________
Alisa M. Lembke, VCEA Board Secretary