UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION California Independent System Operator Corporation ) ) ) Docket No. ER08-760-001 MOTION OF SOUTHERN CALIFORNIA EDISON COMPANY FOR LEAVE TO ANSWER AND ANSWER TO REQUESTS FOR CLARIFICATION/REHEARING Southern California Edison Company ( SCE ) hereby moves for leave to answer and answers the Request For Clarification, Or In The Alternative, Rehearing Of The California Independent System Operator Corporation ( CAISO Request for Clarification ) and the Request for Clarification and Rehearing of Dynegy Morro Bay, LLC, Dynegy Moss Landing, LLC, El Segundo Power LLC, and Reliant Energy, Inc ( California Generators Request for Clarification ) filed on June 30, 2008 in the above-captioned docket. I. MOTION FOR LEAVE TO ANSWER Although Answers to Requests for Rehearing are generally prohibited under Rule 213(a)(2) of the Commission s regulations, the Commission has made it clear that it will waive the application of Rule 213(a)(2) and allow such Answers when they ensure a complete and accurate record in the case and where, as here, the information provided will aid in the Commission s understanding and resolution of the issues raised in reply comments. 1 Because this Answer provides additional information that is critical to the correct resolution of the issues 1 See, e.g., Delmarva Power & Light Co., 93 FERC 61,098 at 61,259 (2000) (allowing answer in order to insure a complete and accurate record ); Northern Natural Gas Co., 91 FERC 61,212 at 61,769 (2000) (allowing an answer to achieve a complete and accurate record ). - 1 -
before the Commission, SCE respectfully requests that the Commission consider this response to aid in its resolution of the issue. 2 II. ANSWER A. Answer to CAISO Request for Clarification 1. Cost Allocation As the CAISO notes in its Request for Clarification, The TCPM Order does not expressly specify how the CAISO should allocate the costs associated with TCPM designations that result from MOWDs. 3 The CAISO, in its filing, requests clarification that the Amendment 60 method of allocating must-offer minimum load costs should also apply to the allocation of single-event Transitional Capacity Procurement Mechanism ( TCPM ) capacity contract costs. SCE also submitted a Request for Clarification on this exact issue on June 30, 2008. 4 However, SCE s filing requested that the CAISO allocate these single-event TCPM capacity costs in accordance with the filed method for allocating Significant Event TCPM capacity costs. 5 The CAISO acknowledges that there are only two primary options for allocating the costs of single-event TCPM capacity contract designations: the Amendment 60 method or the Significant Event method. 6 2 See, e.g., Carolina Power & Light Co., 93 FERC 61,032 at 61,068 (2000) (allowing an answer where the answer would assist in the Commission s understanding and resolution of the issues raised ); El Paso Natural Gas Co., 56 FERC 61,038, at 61,139 (1991) (explaining that the utility conceded that the Commission in its discretion may accept an answer to a request for rehearing in order to have a more complete record on which to base its decision, and allowing the answer because it will not delay the proceeding or otherwise prejudice any party... ). To the extent necessary, SCE requests waiver of Rule 213(a)(2). 3 CAISO Request for Clarification, p. 18. 4 Request For Rehearing And Clarification Of Southern California Edison Company On Order Accepting Tariff Filing Subject To Modification ( SCE Request for Clarification ). 5 SCE Request for Rehearing and Clarification, pp. 8-10. 6 CAISO Request for Clarification, p. 18. - 2 -
SCE disagrees that the Amendment 60 allocation method applicable to MOWD costs is the more reasonable alternative. SCE believes that the capacity associated with a TCPM contract, regardless of the basis for designation, represents a backstop capacity product acquired, and compensated at market prices, to be available on a going-forward basis to meet RA-type reliability needs as determined by the CAISO. As such, backstop capacity costs incurred via a TCPM contract are equivalent to, and should be allocated comparably to, capacity costs incurred via an RA contract. Specifically for capacity associated with a TCPM designated to meet a local reliability requirement, the capacity costs should be allocated to SCs with load in the Transmission Access Charge ( TAC ) Area 7 in which the deficiency was located and not, as proposed by the CAISO, 8 to the PTO as would occur per the Amendment 60 cost allocation method. It is the SC whose load presumably benefits from the going-forward availability of the TCPM designated capacity and not the PTOs, and the costs should be allocated accordingly. The Commission approved many aspects of the CAISO s TCPM proposal in the May 30 Order, including specifically the CAISO s proposed TCPM cost allocation method. 9 Notably, all of the costs of TCPM capacity contracts were proposed to be allocated to Scheduling Coordinators under CAISO Tariff section 43.8 in the CAISO s original filing. In some cases the TCPM capacity costs are allocated to a particular set of SCs that are deficient (see parts 1-4 of 43.8), and in the case of Significant Event TCPM capacity costs, section 43.8 (5) allocates these costs to SCs with load in the affected TAC Area. No TCPM capacity costs were proposed to be allocated to PTOs in the CAISO s proposal. 7 This is consistent with the cost allocation method applicable to Significant Event based TCPM capacity as described in Tariff Section 43.8(5). 8 CAISO Request for Clarification, p. 18. 9 May 30 Order at P 92. - 3 -
SCE therefore offers that it is most reasonable, in this case where the Commission has created an additional category of single event TCPM capacity costs that must be allocated, to allocate the costs in line with the originally-filed proposal. Allocating single-event TCPM capacity contract costs in line with the proposed method of Significant Event costs allocation is consistent with this. It is not reasonable to revert back to the Amendment 60 cost allocation method, which applies to minimum load costs, to this conceptually completely different category of costs. 2. TCPM designation of non-ra portion of partial RA units: SCE supports the CAISO s request for clarification 10 that in those situations where Real Time Dispatch ( RTD ) software limitations prevent the inclusion of all applicable costs (e.g. TCPM capacity costs) in the dispatch rate for the incremental energy associated with the non- Resource Adequacy ( RA ) capacity portion of a partial RA unit, which could result in non-ra energy falsely appearing to be more economic and therefore being dispatched prior to energy from an RA unit, that the non-ra capacity associated with this incrementally dispatched energy will not be eligible for a 30-day TCPM contract should it be dispatched through the RTD process when RA or Reliability Must Run ( RMR ) capacity was available for dispatch but was not dispatched. As the CAISO states, the policies and procedures within the TCPM Tariff were developed and are specific to addressing unexpected capacity-related reliability issues, and are not applicable to energy that is dispatched during normal operating conditions. SCE s support of the CAISO in this instance includes a recommendation that the CAISO should develop and implement policies that minimize these types of occurrences as well as create appropriate reporting criteria. 10 CAISO Request for Clarification, pp. 6-13. - 4 -
3. Potential double capacity payment: SCE supports the CAISO request for clarification that a 30-day TCPM designation following a MOWD will not result in a double capacity payment (or double minimum load and start-up payments) to a FERC Must Offer Generator that becomes a Resource Adequacy Resource during the 30-day designation period. 11 Under such circumstances the TCPM designation resulting from a MOWD should expire on the date that the FERC Must Offer Generator becomes a Resource Adequacy Resource. SCE submits that the basis of the MOWD based TCPM contract is to provide adequate compensation to a unit that is providing RA-type services. A unit that has an RA contract is explicitly being duly compensated for providing RA services and therefore should not be eligible, if providing RA-type services under a TCPM contract that was initiated prior to and extends into the period of a newly activated RA contact, to continue receiving capacity payments via the TCPM contract. B. Answer to California Generators Requests for Clarification/Rehearing SCE submits that the FERC should not give credence to the California Generators request for a rehearing on the FERC-approved TCPM capacity price. 12 The California Generators argue that the Consumer Price Index for urban areas ( CPI-U ), which was approved by the Commission as the source of the appropriate price escalator to apply to the capacity cost within the RCST, is an irrelevant index for this purpose and suggest that the circa 2006 $73/kwyr value in the RCST should be escalated using factors contained in the Power Capital Cost Index ( PCCI ). SCE s understanding is that mention of the PCCI within the California Generators clarification filing is the first time that this reference material has been introduced in this 11 CAISO Request for Clarification, pp. 13-16. 12 Request for Clarification and Rehearing of Dynegy Morro Bay, LLC, Dynegy Moss Landing, LLC, El Segundo Power LLC, and Reliant Energy, Inc. (collectively the California Generators ), filed June 30, 2008, in Docket No. ER08-760-000, at pp. 13-14. - 5 -
proceeding and as such no parties have had the opportunity review and offer comments. SCE respectfully requests the FERC disallow the California Generators request on the basis that a clarification filing is not the appropriate forum to introduce new reference material. III. CONCLUSION SCE respectfully requests that the Commission accept SCE s answer to the Requests for Clarification/Rehearing of the CAISO and the California Generators. SCE further requests that the Commission clarify that the Amendment 60 method of allocating must-offer minimum load costs does not apply to the allocation of single-event TCPM capacity contract costs. Finally, SCE requests that the Commission disallow the Request for Clarification/Rehearing of the California Generators as discussed above. Respectfully submitted, MICHAEL D. MACKNESS ERIN K. MOORE By: Erin K. Moore Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California 91770 Telephone: (626) 302-6848 Facsimile: (626) 302-3540 E-mail: Erin.Moore@SCE.com Dated: July 15, 2008-6 -
CERTIFICATE OF SERVICE I hereby certify that I have this day served the foregoing MOTION OF SOUTHERN CALIFORNIA EDISON COMPANY FOR LEAVE TO ANSWER AND ANSWER TO REQUESTS FOR CLARIFICATION/REHEARING upon each person designated on the official service list compiled by the Secretary in this proceeding. Dated at Rosemead, California, this 15 th day of July, 2008. Case Analyst SOUTHERN CALIFORNIA EDISON COMPANY 2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California 91770 7