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William A. Monsen MRW & Associates Oakland, California wam@mrwassoc

The Mix: Facts, figures, and the future independent energy producers annual meeting September 26, 2013. William A. Monsen MRW & Associates Oakland, California wam@mrwassoc.com. Overview of Presentation. Key procurement issues in the California power markets

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William A. Monsen MRW & Associates Oakland, California wam@mrwassoc

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  1. The Mix: Facts, figures, and the futureindependent energy producers annual meetingSeptember 26, 2013 William A. Monsen MRW & Associates Oakland, California wam@mrwassoc.com

  2. 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?

  3. Key issues

  4. 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

  5. Regulatory Issues

  6. Regulatory Response to procurement issues • Local and System Procurement • Long-Term Procurement Plan (LTPP) (R.12-03-014) • Track 1: Local Reliability (completed) • Track 2: System Needs (cancelled on 9/16/2013) • Track 3: Bundled Procurement (completed) • Track 4: 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

  7. 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

  8. The Facts and figures(near-term)

  9. ELECTRIC Demand BEFORE EE OR DG Source: CEC Preliminary Demand Forecast 2013 Note: Includes self-generation

  10. Forecasted demand AFTER EE AND DG Total Peak before EE and DG Observed demand Forecasted demand PV Non-PV Self Gen Non-Res EE Res EE Net Demand Source: May 2013 CEC Demand Forecast

  11. System resources NET OF retirements Other Non-Renewables Retirements SONGS OTC Net Supply Source: Appendix C, D.12-12-010 in 2012 LTPP R.12-03-014, December 20, 2012

  12. CAISO System Resources RPS Non-RPS Event-Based DR Imports Existing Supply Net of Retirements

  13. Current view on 2022 local resource needs (MW) *Does not include any transmission additions

  14. 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

  15. 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

  16. Big Unknowns

  17. 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?

  18. Transmission projects Source: Southern California Reliability Preliminary Plan Presentation, CEC/CPUC/CAISO, September 9, 2013

  19. 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?

  20. Questions?Thanks! William A. Monsen MRW & Associates Oakland, California wam@mrwassoc.com

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