THE MIX: FACTS,
FIGURES, AND THE
FUTURE
INDEPENDENT ENERGY PRODUCERS
ANNUAL MEETING
SEPTEMBER 26, 2013
William A . Monsen
M R W & A s s o c i a te s
O a k l a n d , C a l i fo r ni a
wam@mr wassoc.com
OVERVIEW OF PRESENTATION
Key procurement issues in the California
power markets
Regulatory issues related to procurement
The facts and figures related to procurement
The unknowns
Questions?
2
KEY ISSUES
3
KEY ISSUES
 Local Resource Procurement
 Shutdown of SONGS
 Pending shutdown of OTC Units
 Difficulty siting plants in load pockets
 Difficulty siting transmission
 System Level Procurement
 Increasing level of renewables and need for
resources for renewable integration
 Cross-Cutting Issues
 RPS requirements
 Loading order preferences
4
REGULATORY ISSUES
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REGULATORY RESPONSE TO
PROCUREMENT ISSUES
 Local and System Procurement
 Long-Term Procurement Plan (LTPP) (R.12-03-014)




Track
Track
Track
Track
1:
2:
3:
4:
Local Reliability (completed)
System Needs (cancelled on 9/16/2013)
Bundled Procurement (completed)
SONGS-related Issues (ongoing)
 Renewable and Storage Procurement
 Storage OIR (R.10-12-007)
 September 2013 proposed decision set specific energy storage targets for
each IOU totaling 1,325 MW by 2020
 PG&E (580 MW); SCE (580 MW); SDG&E (165 MW )
 RPS Proceeding (R.11-05-005)
 How to meet RPS requirements at a reasonable cost
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REGULATORY RESPONSE TO
PROCUREMENT ISSUES
 Alternatives to Grid-Based Generation
 Post-2008 Energy Efficiency Policies OIR (R.09-11-014)
 D.12-05-015 established specific energy efficiency targets for each IOU
totaling peak savings of 746 MW by 2014
 2013 peak savings: PG&E (150 MW); SCE (187 MW); SDG&E (45 MW)
 2014 peak savings: PG&E (139 MW); SCE (183 MW); SDG&E (42 MW )
 Residential Rate Design Rulemaking and Net Energy
Metering
 New Demand Response Rulemaking
 Fallout from Shutdown of SONGS
 SONGS Investigation (I.12-10-013)
 Determine if over $700 million in 2012 SONGS-related expenses should be
refunded to ratepayers
 Potential to review reasonableness of ongoing replacement power costs
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THE FACTS AND
FIGURES
(NEAR-TERM)
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ELECTRIC DEMAND BEFORE EE OR DG
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Source: CEC Preliminary Demand Forecast 2013
Note: Includes self-generation
FORECASTED DEMAND AFTER EE AND DG
Observed demand
Forecasted demand
Total Peak
before EE and
DG
PV
Non-PV
Self Gen
Non-Res EE
Res EE
Net Demand
10
Source: May 2013 CEC Demand Forecast
SYSTEM RESOURCES NET OF
RETIREMENTS
Retirements from LTPP “Early SONGS Retirement” Scenario
Other NonRenewables
50,000
SONGS
MW
40,000
OTC
30,000
20,000
Net Supply
10,000
2012
11
2013
2014
2015
2016
2017
2018
2019
Source: Appendix C, D.12-12-010 in 2012 LTPP R.12-03-014, December 20, 2012
2020
2021
2022
Retirements
60,000
CAISO SYSTEM RESOURCES
RPS
Non-RPS
Event-Based
DR
Imports
Existing
Supply Net of
Retirements
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CURRENT VIEW ON 2022 LOCAL
RESOURCE NEEDS (MW)
SCE
SDG&E
Yes
Yes
Gas-Fired Generation
1,000-1,200
308
1,308 – 1,508
Storage (minimum)
Preferred Resources
(minimum)
Storage or Preferred
Resources
50
n/a
50
150
n/a
150
400
n/a
400
All Sources (per IOUs)
500
500 - 550
1,000 – 1,050
2,300
808 - 858
3,108 – 3,158
3,022 - 3,722
1,485 - 920
4,507 – 4,642
Transmission
Additions?
Total
CAISO Estimates*
*Does not include any transmission additions
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TOTAL
JOINT STAFF ASSESSMENT
 Preliminary Reliability Plan for LA Basin and San Diego
prepared by the CPUC, CEC, and CAISO released August 30
 Key recommendations:
 Consider procurement of about 1,000 MW of preferred resources—
local energy efficiency, DR, renewable generation, CHP, and storage—
on top of 3,000 MW already targeted
 Consider development of transmission, including infrastructure that
supports resource sharing between Orange County and San Diego
 Procure about 3,000 MW of conventional generation to meet the
remaining needs in the SONGS area—above the 1,700-2,100 MW
already authorized
 Establish backstop permits so that OTC requirements can be quickly
deferred and generation resources can be quickly deployed to
meet needs
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CURRENT VIEW ON SYSTEM RESOURCE
NEEDS IN 2022
 Preliminary Results from LTPP Proceeding
 CAISO (deterministic results)
 Base case: 1,036 MW – 2,621 MW (for 2-4 hours per year)
 Replicating TPP case: 4,253 MW – 5,359 MW (12-16 hours per year)
 High DG/DSM case: 0 MW
 CAISO (stochastic)
 No results yet
 SCE (stochastic results)
 No need for flexible resources
 Won’t know the final answers until next LTPP
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BIG UNKNOWNS
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MAJOR WILDCARDS
 Can new transmission be built in time?
 Managed load growth?
 Energy efficiency
 Behind-the-meter solar
 Ultimate use of OTC plants?
 Will new project development models (such as
Energy Parks, conditional permitting, buying project
development options) prove successful?
 Failure rates for contracted resources?
 How will cost containment affect renewable
program?
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TRANSMISSION PROJECTS
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Source: Southern California Reliability Preliminary Plan Presentation, CEC/CPUC/CAISO, September 9, 2013
MAJOR WILDCARDS
 Ability of uncommitted resources to provide
significant amounts of reliable capacity in local
areas?
 Will changes in demand response prove
effective?
 New resources on the horizon?
 Will low gas prices continue, thereby putting
price pressure on non-gas resources?
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QUESTIONS?
THANKS!
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William A . Monsen
M R W & A s s o c i a te s
O a k l a n d , C a l i fo r ni a
wam@mr wassoc.com