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Marginal Generation Costs

Marginal Generation Costs. APPENDIX. Thursday, April 19, 2012. Agenda. Portfolio Modification. This set of slide highlights the purposes of the workshop indicated in the Settlement Agreement and the topics covered in the workshop. I. Publicly available data sources items.

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Marginal Generation Costs

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  1. Marginal Generation Costs APPENDIX Thursday, April 19, 2012

  2. Agenda Portfolio Modification • This set of slide highlights the purposes of the workshop indicated in the Settlement Agreement and the topics covered in the workshop

  3. I. Publicly available data sources items • MRTU NP15 Day-Ahead Price Data • Selection of time period • 2010 • 2011 • Other • Adjustment Required to MRTU NP15 Day-Ahead Price Data to apply to future period • Calculate hourly heat rates driven from the historical day-ahead price data and daily burnertip gas price to • Daily gas prices: from public day-ahead price report in ICE • Gas transportation cost: PG&E’s G-EG and G-SUR rates • Gas Hedging Cost in the MPR model • Apply hourly heat rates to the forecast gas prices • From NYMEX futures price data, with some extrapolation Portfolio Modification

  4. II. Possible means for more transparent modeling items • Portions of PG&E’s modeling that involve sensitive confidential data or model • Gross Margin Modeling • Model logic is confidential • Market inputs to the model is confidential (forward price, volatility, correlation) • Possible development of a transparent modeling approach instead of confidential modeling for Gross Margin Calculation • Deterministic model (i.e., calculating the intrinsic values) rather than stochastic model? • Spreadsheet-based calculation rather than VBA code? • Uses of Other Models and Inputs Portfolio Modification

  5. III. Financial and Operating Characteristics Data Sources Items • Operating Data • Heat rate, Variable O&M, Start-up Cost, Start-up Gas, Capacity degradation, Outage Rate, Fixed O&M • Installed cost • Fixed O&M • Sources: • CEC Cost of Generation Report? • Specific Unit Information LMS100, LM6000, Frame 7, etc.? • Financial Data • Inflation Rate • Insurance cost as % of installed capacity cost of plant • Additional inputs for new units • Cost of Equity, Interest rate on Debt, Debt Term, Debt as % of total investment • Sources: MPR model? Portfolio Modification

  6. IV. Developments that may provide guidance • IDSM working group’s review of cost effectiveness analysis • Quantify ancillary services adders • Quantity renewable resource adders • Public sources for PG&E’s year-of-need Portfolio Modification

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