CPUC Avoided Cost Workshop

1
CPUC Avoided Cost Workshop

• Reliability Multiplier

2
Objectives

• To produce a 20-year forecast of avoidable
  ancillary service costs
• Why not include an adder for reliability of firm
  load service?
• Short-run avoided cost methodology assumes
  surplus
• Long-run methodology assumes equilibrium
  condition
• Why not include adder for planning reserve
  requirement?
• E3 methodology already results in 15-19 margin
  (8 planned and unplanned outage rate, 7-10
  capacity for ancillary services)

3
Do efficiency programs reduce A/S costs?

• Quantities of A/S supplied to CA-ISO vary by hour
  of day
• In lieu of sophisticated modeling, we can
  conclude that efficiency programs do result in
  avoided incremental A/S purchases
• May see additional effect through reduced prices

4
Historical Ancillary Service prices

• Price range before and after crisis period
• 5-20 per MWh of A/S supplied to ISO
• 0.50 - 2.00 per MWh of load
• 1 - 5 of total energy costs

5
Ancillary Services (A/S) Costs

• Average of A/S costs as percent of total energy
  costs, during non-crisis period (8/99-5/00,
  8/01-7/03) 2.84
• Apply 2.84 to shaped hourly energy price
• 2004 2.84 45.57/MWh 1.29/MWh of load
• 2005 2.84 46.65/MWh 1.32/MWh of load
• 2013 2.84 60.00/MWh 1.70/MWh of load