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2011 Local True-up Process. R.09-10-032 Workshop – Golden Gate Room 08/26/2010. Workshop Agenda. 1:00-1:15pm- Introductions and Announcements 1:15-2:00 pm- Background and description of three general mechanisms 2:00- 2:45 pm- Lessons learned from implementation 2:45- 3:00 pm- Break

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2011 local true up process

2011 Local True-up Process


Workshop – Golden Gate Room


Workshop agenda
Workshop Agenda

  • 1:00-1:15pm- Introductions and Announcements

  • 1:15-2:00 pm- Background and description of three general mechanisms

  • 2:00- 2:45 pm- Lessons learned from implementation

  • 2:45- 3:00 pm- Break

  • 3:00- 3:30 pm- Discussion/Summary of White paper

  • 3:30-4:15 pm- Energy Division Staff Proposal

  • 4:15- 4:30 pm- Questions and Comments

Goals for today
Goals for Today

  • To understand the three general mechanisms (True-up, Reallocation, and Transfer payment) and the Energy Division’s staff proposal

  • To inform party comments and inform a sound Commission decision

Background and description of the three general mechanisms
Background and Description of the Three general mechanisms

  • Procedural background

  • True-up Method

  • Reallocation Method

  • Transfer Payment

Procedural background
Procedural Background

  • Pursuant to SB 695 the CPUC adopted D.10-03-022 which re-opened Direct Access. In order to address RA cost inequality issues that were expected to occur due to load migration, a Local RA true-up process was adopted for the remainder of the 2010 compliance period.

  • Proposals for a 2011 Local true-up mechanism were received in R.09-10-032. However Decision (D.)10-06-036 deferred the adoption of a Local true-up methodology for 2011 until experience was gained from the mechanism being employed for the remainder of 2010

True up approach
True-Up Approach

  • LSEs file lists of customers that have migrated and their associated “Local RA” obligation.

  • Total migrating customer Local RA obligation coming or going is then combined with Year Ahead Local RA obligation and LSE shows they have sufficient Local RA to satisfy it.

  • This happens twice in 2010. LSEs coordinate and agree on which customers migrate, when they migrate, and how much Local RA obligation migrates for each particular customer. Once verified and agreed to, LSEs file Local RA compliance filings showing Local RA capacity to meet their Local RA obligation.

Reallocation approach
Reallocation Approach

  • LSEs file load forecast adjustments with the CPUC and CEC. CEC validates Load Forecast adjustments. CPUC reallocates Local RA obligations to LSEs much like CPUC reallocates CAM/RMR credit currently.

  • LSEs transmit info directly to CEC and CPUC, who collect info and make determinations. No need for LSE-LSE coordination and agreement

Transfer payment
Transfer Payment

  • LSEs agree whether they will make payments to each other to offset customer migration

  • LSEs inform CEC-CPUC staff of which LSEs owe which payments to which LSEs, and whether payment has been made.

  • Requires LSEs to agree on how which customers migrate, when they migrate, and how much Local RA obligation migrates for each particular customer.

  • Failure to make payments or come to agreed settlement constitutes violation of RA obligations.

Lessons learned
Lessons Learned

  • Communication between LSEs insufficient to mitigate data reconciliation issues and data confidentiality issues

  • Matching and confirming information very time consuming for LSEs and for agency staff

  • Planning the documentation and implementation before hand is critical to efficient implementation

  • Coordination between LSEs takes time and is hard to verify – LSEs also have restrictions on what data they can transfer. Agencies usually have all data in one place already

Key objectives of local ra process
Key Objectives of Local RA process

  • Equitable and transparent cost allocation according to cost responsibility – are capacity obligations and their associated costs allocated to LSEs consistent with their expected load?

  • Verifiability –can LSE’s reported or forecasted estimates of load migration be verified and confirmed?

  • Administrative simplicity–can the process be done efficiently for LSEs and agency staff so that there is a minimized administrative burden?

  • Timeliness and clarity of compliance obligation and decreased potential for disputes –can the process be streamlined to minimize possibilities for inconsistent information between LSEs, and can LSEs determine their compliance obligation quickly?

Examining the true up approach
Examining the True up approach

  • Added equitability relative to current RA program, but likely not more equitable than reallocation method

  • Verification unclear but likely better than reallocation approach as data is available on customer transfer

  • Less simplicity - placed large data conformance and data entry burden on LSEs and data validation/coordination burden on agency staff

  • Large amount of data transfer between LSEs and need to validate data by agency staff led to less clarity regarding RA compliance targets

Examining the reallocation approach
Examining the Reallocation Approach

  • Added equitability relative to current RA program (readjustments to Local RA after compliance year)

  • Require added information to verify

  • Added simplicity relative to True-up approach

  • Added efficiency and timeliness of RA obligation

Examining the transfer payment
Examining the Transfer Payment

  • Limited value added relative to goals Local RA method (no more equitable or verifiable, no added simplicity, no added efficiency of compliance)

  • Required coordination between LSEs as to billing and invoicing, agreement as to size of payment

Compare and contrast processes
Compare and Contrast Processes

  • True-up approach

    • Based on process in D.10-03-022 for reference

  • Reallocation approach

    • Based on current RA program for reference

  • Diagrams of each process

Reallocation approach from current ra program for reference
Reallocation ApproachFrom current RA Program for reference

Energy division staff proposal
Energy Division Staff Proposal

  • Energy Division proposes the Reallocation approach without the transfer payment

  • Same compliance schedule as in RA Guide – twice in 2011 along with Load Forecast monthly filings

  • Implementation details – edited templates, added instructions for LSEs to file, edited RA Guide

Questions comments

  • Next steps –

    • Energy Division White Paper Published on

    • Local True-Up Methodologies

    • August 15, 2010

    • Workshop August 26, 2010

    • Comments on White Paper Due September 8, 2010

    • Reply Comments Due September 22, 2010

    • Proposed Decision November 2, 2010

    • Final Decision on Commission Agenda December 2, 2010