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Marginal Generation Costs

Explore the purposes and topics covered in an energy workshop focusing on settlement agreements. Review data sources for NP15 Day-Ahead Price Data and gas prices. Understand transparent modeling approaches and financial data sources for portfolio modification.

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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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