before the public utilities commission of the state of … · 2018-09-12 · before the public...

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE

STATE OF CALIFORNIA

Application of Southern California Edison Company (U 338-E) for Approval of Its Clean Energy Optimization Pilot

Application 18-05-015 (Filed May 15, 2018)

SOUTHERN CALIFORNIA EDISON COMPANY’S (U338-E) REPLY TO COMMENTS TO E-MAIL RULING SETTING QUESTIONS FOR PARTY COMMENT ON CLEAN

ENERGY OPTIMIZATION PILOT WORKSHOP

ANNA VALDBERG ROBIN Z. MEIDHOF

Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY

2244 Walnut Grove Avenue Rosemead, California 91770 Telephone: (626) 302-6054 E-mail: [email protected]

Dated: September 10, 2018

1


STATE OF CALIFORNIA


Application 18-05-015 (Filed May 15, 2018)

SOUTHERN CALIFORNIA EDISON COMPANY’S (U338-E) REPLY TO COMMENTS TO E-MAIL RULING SETTING QUESTIONS FOR PARTY COMMENT ON CLEAN

ENERGY OPTIMIZATION PILOT WORKSHOP

Pursuant to Administrative Law Judge (ALJ) Kline’s E-mail Ruling Setting Questions for

Party Comment on the Energy Division’s Clean Energy Optimization Pilot (CEOP) Workshop

(Ruling), dated August 17, 2018, Southern California Edison Company (SCE) submitted

Comments on August 30th and respectfully submits its Reply to those Comments filed on August

30th by the Public Advocates Office (Cal PA)1 and the Natural Resources Defense Council

(NRDC).2

1 On August 31, 2018, SCE received notice that ORA was renamed Public Advocates Office and was

advised that going forward for proceedings before the Commission, SCE should use the acronym Cal PA, short for Public Advocates Office at the California Public Utilities Commission.

2 NRDC’s Comments reference for support a slide deck presentation SCE presented at the Energy Division’s publicly-noticed August 16th Workshop. To ensure that NRDC’s Comments will be fully considered in the record, SCE provides that deck as Attachment A to these Reply Comments.

2

I. DISCUSSION

A. The CEOP Will Base Performance Payments on Measured and Verified, Incremental and Persistent GHG Emissions Reductions and Activities

SCE appreciates Cal PA’s acknowledgement that “ORA supports the innovative nature of

this Pilot, appreciates the pay-for-performance design, and recognizes the effort invested in its

design.”3 SCE also understands Cal PA’s focus on ensuring that Pilot Participants are not

rewarded for projects or investments that do not result in measurable, incremental, and persistent

reductions in GHG emissions. However, SCE objects to those recommendations that are not

merely “improvements to ensure accurate GHG savings accounting.”4 For example, the

recommendation to require that the Pilot require a meter-based analysis for years beyond the

term of the Pilot expands the scope of the Pilot both financially and administratively. In

addition, the recommendation to remove a key Pilot design element – specifically, the

predetermined average asset life – fundamentally changes the structure of the Pilot and is not

appropriate without other more extensive changes and is unreasonable because it will discourage

the California State University (CSU) and University of California (UC) Systems from

participating in the Pilot. The nature of the Pilot is that it lasts for four years, and any

requirement that SCE change the Pilot design to verify the persistence of GHG emissions

reductions for 15 or 30 years would upend the goal of the Pilot. The major capital investments

with long-lasting environmental impacts that the Pilot seeks to incentivize warrant a

commensurate performance payment. Otherwise, the Pilot design is skewed towards easier,

smaller, and less impactful technologies, and cannot effectively meet the Pilot Participants’

goals. The technologies incentivized by the proposed performance payment are most likely to

manifest as measures that do result in future GHG emissions reductions beyond the term of the

Pilot. For example, it is unlikely the Pilot Participants would invest in the electrification of a

3 Cal PA Comments at p. 1. 4 Id.

3

facility, only to several years later, install a GHG-emitting resource to power any upgrades or

improvements to that same facility.

Cal PA’s objection to “SCE’s proposal to pay participants upfront”5 appears to be

focused on the CEOP’s performance payment structure which includes an estimated asset life

multiplier to ensure that Pilot Participants are fairly compensated for capital investments that are

expected to result in long term GHG emissions reductions. Even with the asset life multiplier

(which the Commission has historically approved for other customer programs), the Pilot

Participants are still assuming the performance risk in investments they pursue to implement

GHG emissions reduction technologies without a guarantee of performance payments. In

addition, Cal PA’s description of CEOP as paying participants for “unverified future GHG

emissions reductions”6 is a mischaracterization of the Pilot given the CEOP has built in

safeguards that if any Pilot Participant does not persist in achieving incremental GHG emissions

reductions, they risk losing the opportunity to earn the full performance payment.

SCE objects to Cal PA’s recommendation that “the Commission require SCE to base

performance payments on measured performance by removing the predetermined average asset

life from its performance payment calculation.”7 The predetermined average asset life is a key

design element of the Pilot that supports other aspects of the overall simplified Pilot design such

as reduced administrative burden, and predictable payments for customers.8 The Pilot

Participants have informed SCE that they will not participate in the CEOP if that design element

is removed, therefore accepting Cal PA’s recommendation would be a major detriment to the

viability of the Pilot.

5 Cal PA Comments at p. 5. 6 Id. 7 Id., p. 6. 8 See SCE Reply to Cal PA Protest at p. 6 (filed June 28, 2018).

4

B. SCE’s Proposal for the Average Asset Life Is Reasonable

At the CEOP workshop, SCE was asked if it had considered any alternative analysis to

support its average expected asset life proposal of 8 years. SCE shared with the workshop

participants that it had conducted additional analysis based on feedback from Cal PA. To

facilitate a complete record, in addition to the formal data requests and responses that Cal PA has

submitted to the record with its Comments, SCE includes as Attachment B to this Reply, an

informal data request from Cal PA to SCE seeking follow-up on the average asset life

calculation.9

As identified by Cal PA in its Comments,10 SCE’s original proposal calculated asset life

utilizing program data from 2015-2016 for the UC/CSU EE Partnership Program and Savings by

Design along with data provided by Pilot Participants on asset life for electrification and solar

generation projects. Based on this information, SCE calculated an average asset life of 15.6

years for the mix of categories (smart growth, energy efficiency, electrification, and on-site solar

generation), and divided the total weighted average asset life for all activities in half to come up

with a conservative estimate of 8 years for the average asset life multiplier to be applied to the

performance payment calculation. During ongoing discussions with Cal PA, Cal PA requested

that SCE look at additional data for asset life to include all Non-Residential Energy Efficiency

programs with 5 years of data, and expand the analysis to include 5 years of program data for

Savings By Design and the UC/CSU EE Partnership Program.11 In addition, Cal PA requested

that SCE re-calculate the asset life for electrification “specifically by using 15 years for

electrification measures (rather than 30 years) and not dividing the final result by two.”12 The

result of applying Cal PA’s recommendations would change the average asset life from SCE’s

9 See Cal PA email titled “Follow up from Friday” to SCE, dated August 15, 2018 (Attachment B). 10 Cal PA Comments at p. 5. 11 See Attachment B. 12 Id.

5

conservative 8 years to 11.4 years, as demonstrated by the two tables below which were provided

to Cal PA in an August 24th response to Cal PA’s August 15th e-mail.

EE Program Data Total 2013 2017

EE ProgramsFirst Year Program

Savings(net kWh)

Lifecycle ProgramSavings(net kWh)

AverageAsset Life(in years)

*Includes New Construction **New Construction Removed

(a) (b) (c) (d) (e) = (b) * (d)

On site GHGReduction Source

Expected AssetLife

(in years)

%of Total GHGReductions

Assuming CEOPPilot Approved1

% of On siteGHG ReductionsAssuming CEOPPilot Approved

WeightedAverage Expected

Asset Life(in years)

Weighted AverageAsset Life for On SiteGHG Reductions 100% 11.4

Note 1: Percentages provided by UC. Analysis assumes that UC GHG reductions are reasonably representative of the entire Pilot. (See UC Testimony Volume 4, p. 12, for more info.) Note 2: ORA requested electrification expected asset life (15 years) Note 3: On-site solar expected asset life per SGIP program and consistent with UC and CSU Testimony (see Volumes 4 and 5). Note 4: Smart Load growth expected useful life per SCE calculation of new construction EE program (i.e., Savings by Design) for 2013-2017. Note 5: Energy efficiency expected useful life per SCE calculation of UC/CSU EE Partnership Program for 2013-2017.

SCE stands behind its proposal for 8 years, but appreciates Cal PA’s engagement on the

average asset life calculation and notes that although Cal PA disagrees with SCE’s proposal, the

number appears to be justified because SCE’s data response (reflected in the tables above) using

Cal PA’s framework for the analysis shows that SCE’s 8 years is not that far removed from the

11.4 years.

6

C. SCE Objects to Cal PA’s Proposal to Limit the Pilot Participants’ Ability to Earn Performance Payments for EV Charging and Resulting Incremental GHG Emissions Reductions

In their Comments, Cal PA “recommends that the Pilot design account for the ramp-up

period after installation of new EV charging stations,” on the basis that “customers need time to

learn of opportunities for EV charging on campuses” so that they can “adapt their behavior.”13

Pilot Participants should be allowed to immediately take credit for all EV charging and

incremental GHG emissions reductions resulting from their participation in the Pilot. Cal PA

acknowledges that “it is not yet clear how long the ramp-up period lasts before consumption

converges to a steady trend,”14 and therefore, SCE proposes to evaluate and report on this

potential ramp-up period as part of the Pilot Evaluation. Limiting the Pilot Participants’ ability

to earn performance payments, as Cal PA proposes, is not the appropriate approach. The desired

outcome would be for the Pilot customers to launch activities that promote GHG emissions

reduction activities including the use of electric vehicles.

D. SCE’s Proposed Method for Measuring the Energy Intensity of Buildings Is Reasonable and Should Be Approved

Cal PA’s Comments reference statements made by SCE at the CEOP workshop with

respect to whether SCE had verified its energy intensity formula that includes both indoor and

covered outdoor space; Cal PA then recommends that the Commission require “SCE to verify

the accuracy of its proposed methodology.”15 SCE’s Comments filed on August 30th provided

key details on controlling for square footage and SCE is optimistic that it has thus addressed Cal

PA’s concern.16 As such, SCE recommends the Commission find SCE’s approach to square

footage normalization reasonable and approve that approach as proposed.

13 Cal PA Comments at pp. 11-12. 14 Id. 15 Id., p. 13 16 SCE Comments at pp. 3-6

7

In its Comments, “NRDC recommends that any normalization of metered energy data to

determine savings be done with consideration of the types of measures adopted by CEOP.”17

SCE clarifies that for the performance payment calculation, weather will be normalized on the

campus master metered energy usages. This method allows for simplicity of the performance

payment calculation, while providing enough statistical rigor to remove the effects of weather

from the performance payment. For the Pilot Evaluation, however, weather normalization will

be done by building segmentation to get at the specificity that NRDC requests. SCE notes that

Cal PA’s Comments are supportive of SCE’s approach to weather normalization: “SCE has

developed a reasonable methodology to account for weather variability.”18 SCE recommends the

Commission find SCE’s approach to weather normalization reasonable and approve that element

of the Pilot design as proposed.

E. SCE Will Analyze the Impacts of Methane Leakage in the Pilot Evaluation

SCE agrees with Cal PA’s proposal “as part of the evaluation plan to estimate the

greenhouse abatement realized through the Pilot, [to also] evaluate the Pilot both with and

without considering the impact of methane leakage.”19 Methane leakage is currently being

evaluated as part of the methane leak abatement proceeding (Rulemaking 15-01-008) and

methods from that rulemaking proceeding can be incorporated into the evaluation of the CEOP.

F. SCE’s Pilot Participants Should Not Have to Choose between Participation in an Innovative Pilot Designed to Incentivize the Acceleration of GHG Emissions Reductions and Participation in Demand Response Programs Focused on Ensuring Grid Reliability

Cal PA’s statement that “demand response program budgets are partially based on the

avoided cost of GHG emissions”20 – which presumably is meant to include all of SCE’s demand

17 NRDC Comments at p. 3 18 Cal PA Comments at p. 2 19 Id., p. 15. 20 Id., p. 16.

8

response (DR) programs – lacks any citation for support and warrants clarification. In addition,

Cal PA’s assertion that CSU’s and UC’s participation in the Capacity Bidding Program (CBP)

“may result in ratepayers paying twice for greenhouse gas mitigation” lacks any Commission

decision, tariff, or filing for support. Cal PA’s reference to the Commission’s Avoided Cost

Calculator does implicate the Demand Response Cost-Effectiveness Protocols (Protocols).21

These Protocols provide a method for measuring the cost-effectiveness of DR programs, but they

are intended for ex ante evaluations of DR programs to help determine whether a program, given

a particular rate structure, is cost-effective.22 The Protocols do not set or determine budgets or

incentives for any demand response program.

As explained in the 2016 Protocols, the avoided cost calculation includes capital costs

incurred to comply with existing environmental regulations including acquisition of offsets for

GHG emissions, “hence the value associated with criteria pollutant-related costs are already

inherently captured in the generation capacity and energy values associated with DR

programs.”23 Because the GHG-emissions related costs that can be avoided by DR programs are

already reflected in estimates of the generation capacity costs avoided by that DR program,

SCE’s DR funding budget for 2018-2022 for its interruptible programs (Base Interruptible

Program, Agricultural Pumping Interruptible and Summer Discount Plan) did not separately

incorporate the avoided cost of GHG emissions to determine the incentives or the administrative

budgets. 24 Moreover, as explained in the 2016 Protocols, energy revenue earned by direct

participation of DR programs (like CBP) in CAISO markets “is a small portion of the overall

21 See e.g., 2010 Demand Response Cost Effectiveness Protocols (2010 Protocols) available in R.07-01-

041 and 2016 Demand Response Cost Effectiveness Protocols (July 2016) (2016 Protocols) available at http://www.cpuc.ca.gov/General.aspx?id=7023

22 See 2016 Protocols at p. 29 (explaining that while the 2010 Protocols did include a value for avoided GHG costs, it was based on avoided energy and was “quite small”).

23 2016 Protocols at p. 29. 24 See 2010 Protocols at p. 30. See also SCE DR 2018-2022 Funding Application in A.17-01-018, SCE-

03, pp. 2-7.

9

benefits of DR programs” therefore, “the avoided renewable energy purchases procurement costs

calculated in the EE and DG Avoided Cost framework are negligible and will not be applied to

DR cost-effectiveness.”25

Although Cal PA offers a proposal for SCE to use the Avoided Cost Calculator or the

Clean Net Short Calculator to “obtain the emissions intensity factor of the grid supply at each

hour affected by DR events” this is an administratively burdensome request (contrary to the Pilot

design) for what Cal PA admits are “relatively small”26 CBP incentive payments and the 2016

Protocols confirm that “because of the relatively tiny amounts associated with avoided GHG

costs for DR, additional adjustments to the methods used to calculate this value will not be made

at this time.”27 It would be contrary to the 2016 Protocols as currently adopted by the

Commission to try and determine or separately calculate the avoided cost of GHG emissions for

the CBP program for purposes of calculating the CEOP baseline. In addition, Cal PA

“acknowledges that it may be challenging to measure actual GHG emissions reductions achieved

under the CBP.”28 Cal PA’s proposal to require SCE “to adjust the CEOP performance baseline

to account for the estimated GHG emissions reductions attributed to CBP”29 would not serve to

protect ratepayers, and therefore is unreasonable.

In addition, SCE objects to Cal PA’s proposal to stipulate that participants in the CEOP

will be ineligible for ratepayer-funded demand response incentives. Historically, DR was largely

employed for reliability purposes during system emergencies and more recently, to alleviate

stress on the grid when the State has been faced with grid challenges like the reduced natural gas

flexibility due to the Aliso Canyon Gas Storage Facility leak. Specifically, in March 2016, the

25 2016 Protocols, pp. 27-28. 26 Cal PA Comments at p. 16. 27 See 2016 Protocols at p. 29. 28 Cal PA Comments at p. 16. 29 Id.

10

Commission directed SCE to take immediate steps to enhance its demand response efforts to

reduce or shift the demand for electricity in the geographic regions most affected by the leak at

Aliso Canyon.30 Because “the CBP incentive payments are relatively small”31 and do not

incorporate the avoided cost of GHG emissions, Cal PA’s concern over “paying twice for

greenhouse gas mitigation” is not at issue. Cal PA’s proposal is unreasonable because it would

force Pilot Participants to choose between an innovative GHG-emissions reducing initiative and

participating in programs designed to ensure grid reliability.32

G. SCE’s Proposal to Use Clean Net Short (CNS) Emissions Factors is Reasonable and Should Be Approved

In NRDC’s Comments, they state that “SCE should explain why it chose to use the CNS

emission factors instead of the long run marginal emission factors developed through the 2018

avoided cost calculator (2018 ACC).”33 Although NRDC characterizes the marginal emissions

factors developed in the 2018 ACC as “long run”, SCE contends that the methods used in the

2018 ACC34 are more consistent with short-run emissions factors and not appropriate for use in

the CEOP, because short-run marginal emissions factors do not consider future renewables built,

or renewables portfolio standard (RPS) targets.35 Long-run emissions factors more accurately

30 See D.16-06-029 Decision Adopting Bridge Funding for 2017 Demand Response Programs and

Activities in R.13-09-011 at p. 16. (issued 6/16/2016). 31 Cal PA Comments at p. 16. 32 The dual participation policies as explained in DR decisions (e.g., D.09-08-027 at p. 155 and D.12-

04-045) are instructive regarding the Commission’s position: “It is not consistent with Commission priorities to limit customers’ ability to reduce peak demand simply because it might result in some customer overpayment in certain rare circumstances.”

33 NRDC Comments at p. 2 34 Page 37, Energy and Environmental Economics, Inc. “Avoided Costs 2018 Update”, available at:

ftp://ftp.cpuc.ca.gov/gopher-data/energy_division/EnergyEfficiency/CostEffectiveness/Updated_Avoided_Cost_Update_Documentation0524.docx

35 The Avoided Costs 2018 Update details the method used to calculate emissions factors for the ACC, which is based on marginal heat rate and an assumed carbon intensity of combusting natural gas use. The 2018 ACC method does not include an adjustment for future renewables built or RPS targets.

11

capture GHG emissions reduction opportunities for large capital investments (such as renewables

or electrification), where emissions reductions will occur over a long period of time.

While the Commission has acknowledged that the CNS methodology will likely evolve

over time,36 SCE recognizes that the CNS methodology and average hourly emissions factors are

the most reasonable and nearest to a hypothetical, long-run marginal emissions factor that can be

applied to evaluate hourly GHG emissions at this time. Further, SCE has consistently supported

the use of the CNS calculator in its Integrated Resource Plan (IRP), stating that the methodology

provides stakeholders the understanding and information they need to plan future portfolios with

a focus on mitigating hourly GHG emissions.37

H. SCE’s Proposal to Aggregate Emissions Factors by Time-Of-Use Periods is Reasonable and Should Be Approved

In NRDC’s Comments, they state that “SCE should explain why it intends to apply

emission factors aggregated to their time-of-use (TOU) periods instead of applying hourly

emissions factors to estimate GHG savings and customer payments.38 Originally, SCE proposed

using annual grid emissions factors because of our concerns that hourly emissions factors would

be difficult for customers to understand and challenging for financial planning. Cal PA

recommended that SCE use hourly emissions factors as a proxy that incorporates a time-of-use

component, thus providing an alternative option for the Pilot that would be easy for Pilot

Participants to understand and plan for.

SCE also clarifies that we plan to use a straight average when aggregating to TOU period.

SCE evaluated a load-weighted average and found that there is not a significant enough

difference between the straight average and load-weighted average for the amount of increased

36 See Administrative Law Judge’s Ruling Finalizing Greenhouse Gas Emissions Accounting Methods,

Load Forecasts, and Greenhouse Gas Benchmarks for Individual Integrated Resource Plan Filings, in R.16-02-007 at p. 9, (filed May 25, 2018), available at: http://docs.cpuc.ca.gov/PublishedDocs/Efile/G000/M214/K861/214861583.pdf

37 See SCE’s IRP (R.16-02-007), p. 145. 38 NRDC Comments at p. 3

12

complexity that would be involved with a load-weighted average. This method to aggregate

emissions factors by TOU period is reasonable and should be approved.

II. CONCLUSION

SCE appreciates the opportunity to provide this Reply to the Cal PA and NRDC

Comments and looks forward to continued productive collaboration with parties to this

proceeding to expeditiously resolve any issues surrounding the proposed Pilot design elements.

Respectfully submitted, ANNA VALDBERG ROBIN Z. MEIDHOF

/s/ Robin Z. Meidhof By: Robin Z. Meidhof

Attorneys for SOUTHERN CALIFORNIA EDISON COMPANY

2244 Walnut Grove Avenue Rosemead, California 91770 Telephone: (626) 302-6054 E-mail: [email protected]

September 10, 2018

Attachment A

SCE August 16, 2018 CEOP Workshop Presentation

Energy Division WorkshopAugust 16, 2018

Clean Energy Optimization Pilot

Southern California Edison

Clean Energy Optimization Pilot Overview

2

Pilot Customer: UC Office of the President and California State University System

Timeline: 4 years after CPUC approval

Short Term Funding: GHG Cap and Trade Auction Revenues(D. 14-10-033)

Objective:

Through this pilot, SCE will demonstrate how a utility can facilitate offerings that directly incent and accelerate on-site behind the meter GHG emissions reduction opportunities with large customers through a performance based GHG incentive.

Alignment with the State’s and customers aggressive GHG reduction goals

Allows the flexibility to focus on multiple technologies

Incentive payouts are performance based

Allows for scalability of opportunities across multiple industry sectors

BENEFITS

• Pilot an incentive framework to encourage customers to reduce GHG emissions

• Determine the effectiveness and impacts of a performance based GHG incentive program

• Determine customer preferences of technology using performance based GHG incentive

GOALS

Background:

Part of SCE’s pathway to enabling a clean energy future, focuses on helping our customers make cleaner energy choices. SCE is continuing to explore the development of programs that specifically focus on GHG emissions reduction that will allow customers to choose and implement technology solutions that best suit their needs, while helping California achieve its aggressive environmental goals.

Behind the Meter Opportunities (On-site)

Gas Meter

• Energy Efficiency• Cogeneration Efficiency• On-Site Renewables• Smart Load Growth• Clean Transportation• Energy Storage/DR

Electric Meter

Opportunity:

Incent and accelerate on-site, behind the meter opportunities


Pilot Customers – UC and CSU

6

UC Santa Barbara

UC Irvine Medical Center

UC Irvine

UC Davis – Veterinary SchoolDisadvantaged Community

UCLA Santa Monica Medical Center

CSU Dominguez HillsDisadvantaged Community

Cal Poly PomonaDisadvantaged Community

CSU San BernardinoDisadvantaged Community

CSU Long Beach

CSU Fullerton

CSU Channel Islands


Customer Eligibility

• Eligible Programs for Participation• Training and Education Programs• Demand Response Programs• Charge Ready Program – Infrastructure Only• *Local Capacity Resource Contracts• *Natural Gas Incentives

• Ineligible Programs for Participation• *All Energy Efficiency Program• Charge Ready Program – All Charging Station Rebates• Self-Generation Incentive Program• Net Energy Metering (also not applicable as no current pilot participants are on NEM)

• Removed from CEOP Baseline• *All inflight Energy Efficiency Projects• *Local Capacity Resource Contracts• *Natural Gas Incentives

NOTE: *Are for those programs that are eligible or ineligible that will be removed from the baseline

4


Performance Payment Overview

• Step 1: Inputs (all meters within the “fence line”)• Electric Meter(s)• Natural Gas Meter(s)

• Both co-generation and heating

• Step 2: Adjustments• Electricity used for Transportation• Control Factors – Weather and Square

Footage

• Step 3: Conversion to GHG

• Output• Baseline GHG trajectory (bold line), or• Performance in GHG tons/sq. ft. (green

arrows)

5

Incentive will be based on Commission approved price for per metric ton of CO2 reduction (IDER Proceeding).

GHGEm

issions

Year

Baseline


Meter-Based Analysis Overview

6

Baseline Period

Installation

Post-Installation Period

Energy

Time

Reduction

Metered Energy Use


Meter-Based Analysis Overview (cont’d)

7

Baseline Period

Installation

Post-Installation Period Normal Conditions Period (e.g TMY or CZ 2010)

Normalized Reduction


Weather Control Factor

• CEOP Performance Payment calculation process will control for two things. Weather and Square Footage.

• We look at baseline period energy usage data, and establish relationships between that with weather (CDD/HDD) and square footage. Using a regression model to forecast this out into the performance period controls for the effects of weather.

• Example: 104-degree days caused usage to be 10,000 kWh per hour in the baseline years. After intervention, 104-degree days still are correlated with energy use, but now only cause usage to be 8,000 kWh per hour.

• We take an additional step to account for anomalous years. We use an annual adjustment factor which normalizes weather years in order to eliminate the impact of entire years that are anomalous either in the baseline or reporting periods.

• Illustrative Example: 2018 had twenty-three 104 degree days and 2019 had twelve. Average for the past 15 years is to have ten 104 degree days. We adjust them both to be “ normal” – ten 104 degree days. This allows calculation of normalized reduction.

8


Performance Payment Process

• Step 1: Pilot Participants Collect Metered Energy Data

• Step 2: SCE Validates Usage Reports• Include items removed from baseline• Input into performance payment tool

• SCE Uses Performance Payment Tool for:

• Step 3: Calculate Baseline• Step 4: Calculate GHG Emissions

Reductions• Step 5: Calculate Performance

Payment• Step 6: M&E Consultant Verifies

Performance Payment Calculation• Step 7: SCE Processes and Distributes

Performance Payments• Step 8: SCE Prepare New Year Baseline

9*Note: Baseline is dynamic and adjusts for prior performance & evolving grid emissions factorsBoth baseline and performance are normalized for weather & square footage


Emission Factors By Source

• Electric Grid Emissions Intensity:• For Planning: Used CARB’s annual statewide grid GHG emissions factors• For Implementation: Will use IRP’s Clean Net Short Calculator for hourly

emissions factors• Bucketed to TOU Periods and averaged by month

• Newly adopted TOU periods (4-9 On-Peak)

• Natural Gas Emissions Intensity:• EIA Natural Gas CO2 equivalent intensity of 0.0532 tCO2/MMBtu

• Electric Vehicle Incremental Savings:• CARB’s Low Carbon Fuel Standard (LCFS) methodology

10

*Note: Baseline is dynamic and adjusts for prior performance & evolving grid emissions factorsBoth baseline and performance are normalized for weather & square footage


Explanation on Performance Based Incentives

• Performance Payments calculated annually based on net GHG emissions reductions

• Goal of performance payments is to pay for incremental and persistent GHG emissions reductions

• Payments for incremental GHG emissions reductions only when the emissions are reduced below prior baseline

• Up-front incentive reduced if GHG emissions do not persist

11


Valuation of GHG Performance Payment for CEOP

• Valuation chosen is the price that has been identified in IRP proceeding (D.18-02-018), adopted in IDER proceeding

12


Asset Life

• As part of the CEOP, SCE will be allowing an asset life to be calculated as part of the incentive payment to pilot participants

• The following programs/benchmarks were used in establishing an asset life for CEOP

• CSU Facility Condition Assessments• UCOP Proposed Project Mix• Self Generation Incentive Program• Savings By Design• UC/CSU Energy Efficiency Partnership Program

• SCE calculated per work paper (WP.2) a weighted expected asset life of 15.5 years

• In taking a conservative approach, SCE opted to reduce the asset life even further and decided to go with an asset life of 8 years

13


Incentive Payment Structure – Optimal Performance

14Note: Adjustment of Baseline is described on Slide 5


Incentive Payment Structure – Suboptimal Performance

15Note: Adjustment of Baseline is described on Slide 5

Part 2: Evaluation Plan


CEOP Evaluation Overview

• SCE had EMI Consulting assist in developing the Pilot Evaluation Plan to support testimony.

• EMI Consulting: 20 years of experience in Program Evaluations/Policy Planning

• Evaluation is separate from Pilot activities, performance payments, etc.

• Plan created separately (SCE EM&V and EMI Consulting)• Separate RFP for Evaluation consultant work.

• NOT a one-time post-pilot Evaluation. Ongoing analysis and outreach. Internal/External feedback.

• Did this Pilot accomplish its goals and to what extent?

17


Effectiveness of Performance Payments to target GHG Mitigation

• Two major components of CEOP Evaluation:• Quantitative Analysis• Process Evaluation

• Quantitative Analysis: What happened? Did we decrease GHG emissions?

• This analysis tells us exactly what happened. Did GHG emissions show a statistically significant decrease? How big or small? It tells us when these things happened.

• Industry standard meter-based methodologies applied to a campus of buildings.

• Hourly analysis of pre/post campus meter time series data. • We will use this (hourly) analysis to inform SCE on time-specific impacts

on the electrical grid from the Pilot.• One of the benefits of using an hourly meter-based approach. • For each campus, hourly shifts in energy usage associated with GHG

reduction

18


Quantitative Analysis

• Naturally occurring GHG Reductions• To account for this in the analysis, SCE proposes incorporating a pre-existing trend

at which campuses were already reducing GHG emissions before pilot participation. • Measuring GHG reductions from that trend line would indicate the extent to which

a GHG-based performance payment shifted activities and investments that would not have otherwise happened.

• Cost-Effectiveness• SCE also plans to use the meter-based analysis to inform pilot cost-effectiveness.• Given information about reductions and which investments Participants made,

this is possible in Evaluation.

• Quantitative Analysis does not tell us why, or how reductions were achieved.

• How is this different from Performance Payment calculation? Simplicity, scalability and engagement vs. rigorous study of pilot impacts. We do not pay on evaluations.

19


Process Evaluation

• Investigate the why, and the how.

• Using meetings, workshops and interviews, this would evaluate the workings of the Pilot to understand how the Pilot and performance payment affect participant decision-making, both financial and otherwise.

• Naturally Occurring Reductions: This would also assess how the Pilot and performance payment accelerate on-site GHG emissions reductions and behind-the-meter results.

• Finally, implications would be considered for a future full-scale meter-based program design.

20


Process Evaluation:Track Impact of Performance Payment on OperationsDocument participant decision-making process, the criteria used to make those decisions, and reflections on what role the Pilot played in their portfolio-level decisions.

Understand the impact of the performance payment structure on the participants’ original GHG reduction plans, if available, and the extent to which on-site reductions occurred sooner than originally planned.

Explore how well the participants’ GHG-saving technologies and management approaches worked as a portfolio in terms of annual reductions and persistence.

Provide a qualitative assessment of GHG reduction persistence, tracking whether operational changes and behaviors are being sustained over the course of the Pilot. Ideally, this would validate the original assumptions used for the performance payment.

21


Process Evaluation:Participant Meetings and Interviews

Documenting changes to participants’ GHG reduction plans, including:(1) types and timing of resource investments and allocations, (2) GHG reduction quantification data (participants’ definitions and tracking of consumption segments, decisions that influence the persistence of GHG reduction estimates), and (3) metrics used and their relevance.

The evaluation team would attend meetings with and interview participants and SCE to assess and document the following: • How Pilot design principles, attributes, and operational guidelines are

being implemented in practice. • Important differences between the Pilot as designed and the Pilot as

implemented, noting how and why participants may have changed course.

• How engagement within and across organizations evolves, and what impact that will have on Pilot implementation, investment decisions, and annual planning processes.

22


Reporting and Stakeholder Engagement

Pilot Objective #3: Communicate lessons learned from the new pilot framework through proactive engagement with key stakeholders

23


Lessons Learned for Future Policy and Reporting

• From the Evaluation Plan: Work with stakeholders to analyze how the Pilot could work for other customer groups.

• What can be ported to other customer groups?• What would need to be changed?• Unintended consequences of shifting to a P4P GHG framework? Good or

Bad?• Detail this in a Report to Stakeholders.

The Bottom Line:• Evaluation geared at: Is this Pilot working? Why or why not?

• Are we reducing GHG? Quantitative Analysis tells us yes or no. Process Evaluation tells us how the participant is successful. What is working? What isn’t?

• Both Quantitative and Process Evaluations are designed to get at naturally occurring reductions.

• What would we change or keep the same if we did this again?

24

Part 3: Impact with Existing Programs


Eligibility• Eligible Programs for Participation

• Training and Education Programs• Demand Response Programs• Charge Ready Program – Infrastructure Only• *Local Capacity Resource Contracts• *Natural Gas Incentives

• Ineligible Programs for Participation• *All Energy Efficiency Program• Charge Ready Program – All Charging Station Rebates• Self-Generation Incentive Program• Net Energy Metering (also not applicable as no current pilot participants are on NEM)

• Removed from CEOP Baseline • All inflight Energy Efficiency Projects• *Local Capacity Resource Contracts• *Natural Gas Incentives

NOTE: *Are for those programs that are eligible or ineligible that will be removed from the baseline

26


Applicability to Other Programs

• Participation in Programs: During pilot period, Pilot Participants will not be able to participate in SCE’s Net Energy Metering, Self Generation Incentive Program, or Energy Efficiency Incentive Programs

• Goals of Other Programs: Pilot Participants’ GHG savings results will not be claimed under SCE’s Self Generation Incentive program or Energy Efficiency Incentive Programs

• Goal of this Program: Success will be evaluated based on GHG emissions reduction but no goals will be established

27


Scalability

• SCE will be utilizing the evaluation process within the pilot to determine the success of the pilot and a potential strategy for expansion to future program offering

• The pilot participants have a large load profile representing multiple market segments (commercial, industrial, residential, agriculture, water, high intensity spaces including medical centers and laboratories) with the capability to demonstrate innovative energy approaches

• Primarily focused on Large/Medium size customers• Align GHG reduction programs with IRP directive to integrate

customer programs in the future• End-use customer needs• Incentives

28


Funding Source – Cap and Trade Auction Revenues

• Statutes enacted in 2012 direct the use of auction revenue to GHG reduction activities.

• Revenues must be used to facilitate GHG emission reductions in California. In addition to reducing GHGs, to the extent feasible, funds must be used to achieve other goals, such as:

• Maximizing overall economic, environmental, and public health benefits to the state• Complementing efforts to improve air quality• Lessening the effects of climate change on the state (also known as climate adaptation)• Directing investment toward the most disadvantaged communities and households in the

state

• Requires the following:• Be established pursuant to statute• Be administered by the electrical corporation• Not otherwise be funded

• 3 step process• Step 1: Seek and receive approval in relevant proceedings where EE or clean energy

programs are being comprehensively reviewed• Step 2: Use approval to modify GHG emissions cap-and-trade auction revenue balancing

account tariff sheets• Step 3: Include approved funding amount

29


Funding Source Details

• Clean Energy Optimization Pilot - $21.4M over 4 years• Other Programs accessing funds:

• DAC-SASH – D.18-06-027• DAC-GT & CSGT – D.18-06-027

30

2019 2020 2021 2022Estimated GHG Allowance Sales Revenue (100%)* $414,338 $467,054 $543,462 $615,78515% Max Set Aside $62,151 $70,058 $81,519 $92,368

Assumed SOMAH Program Set Aside(D.17-12-022) $46,000 $46,000 $46,000 $46,000

Available for Other Qualifying Programs/Clean Energy Projects $16,151 $24,058 $35,519 $46,368

*Assumes Revised 2017 IEPR Carbon Price Projections Mid Price

Attachment B

Cal PA's August 15, 2018 Informal Data Request

1

Jake Huttner

From: Morgans, Lucy <[email protected]>Sent: Wednesday, August 15, 2018 4:13 PMTo: Jake HuttnerCc: Burton, HenrySubject: (External):Follow up from Friday

Hi Jake,

Thanks very much for the call last week. It was very helpful to talk through the CEOP design in further detail.

There were a number of items that you were going to provide following this, for example:Providing a spreadsheet that details the average asset life for the full range of energy efficiency measuresdeployed (not restricted to the UC/SCE EE partnership program for 2016). You referred to this spreadsheetduring the call and from memory it only resulted in a small change in the proposed EE asset life.Using five years’ worth of data for the savings by design program (instead of three years) to calculate the smartgrowth asset lifeA re calculation of asset life for the purposes of feeding into the performance payment calculations, specificallyby using 15 years for electrification measures (rather than 30 years) and not dividing the final result by two. Weagreed that it would be helpful to understand how this alternative approach impacts on the budget.Confirmation as to whether data on internal and covered external area is available across the campuses.

Furthermore, you confirmed with respect to EV charging stations that you will only be taking the electricity usageassociated with these into account within the CEOP where sub metering exists (in order to establish an accuratebaseline calculation and enable use of actual electricity usage readings in all years). You will not be using estimatedreadings (as is currently included within the workbooks). I don’t think there was anything outstanding on this matter butplease do shout if I am mistaken.

If you could provide the information listed above at the workshop tomorrow that would be very helpful.

Best Wishes

Lucy650.733.5921


STATE OF CALIFORNIA


Application 18-05-015 (Filed May15, 2018)

CERTIFICATE OF SERVICE

I hereby certify that, pursuant to the Commission’s Rules of Practice and Procedure, I have this day served a true copy of SOUTHERN CALIFORNIA EDISON COMPANY’S (U338-E) REPLY TO COMMENTS TO E-MAIL RULING SETTING QUESTIONS FOR PARTY COMMENT ON CLEAN ENERGY OPTIMIZATION PILOT WORKSHOP on all parties identified on the attached service list(s) for A.18-05-015. Service was effected by one or more means indicated below:

Transmitting the copies via e-mail to all parties who have provided an e-mail address.

Placing the copies in sealed envelopes and causing such envelopes to be delivered by US Mail to the offices of the Commissioners(s) or other addresses(s).

ALJ Zita Kline CPUC 505 Van Ness Avenue San Francisco, CA 94102

Executed this day September 10, 2018, at Rosemead, California.

/s/ Sandra Sedano Sandra Sedano Legal Administrative Assistant SOUTHERN CALIFORNIA EDISON COMPANY

2244 Walnut Grove Avenue Post Office Box 800 Rosemead, California 91770

CPUC Home

CALIFORNIA PUBLIC UTILITIES COMMISSIONService Lists

PROCEEDING: A1805015 - EDISON - FOR APPROVA FILER: SOUTHERN CALIFORNIA EDISON COMPANY LIST NAME: LIST LAST CHANGED: SEPTEMBER 5, 2018

Download the Comma-delimited File About Comma-delimited Files

Back to Service Lists Index

Parties

GREGORY KLATT ROBIN Z. MEIDHOF DOUGLASS & LIDDELL SR. ATTORNEY 411 E. HUNTINGTON DRIVE, NO. 107-356 SOUTHERN CALIFORNIA EDISON COMPANY ARCADIA, CA 91006 2244 WALNUT GROVE AVENUE / BOX 800 FOR: CALIFORNIA STATE UNIVERSITY ROSEMEAD, CA 91770 FOR: SOUTHERN CALIFORNIA EDISON COMPANY (SCE)

JON GRIESSER MATT MILEY CHAIR, RHTR CALIF PUBLIC UTILITIES COMMISSION RURAL HARD TO REACH LOCAL GOVT LEGAL DIVISION COUNTY OF SAN LUIS OBISPO ROOM 5135 976 OSOS STREET, SUITE 300 505 VAN NESS AVENUE SAN LUIS OBISPO, CA 93401 SAN FRANCISCO, CA 94102-3214 FOR: RURAL HARD TO REACH LOCAL FOR: OFFICE OF RATEPAYER ADVOCATES GOVERNMENT PARTNERSHIPSâ€™ WORKING GROUP (RHTR)

MOHIT CHHABRA MARK WILSON SR. SCIENTIST THE REGENTS OF THE UNIVERSITY OF CA NATURAL RESOURCES DEFENSE COUNCIL 1111 FRANKLIN STREET 111 SUTTER STREET, 21ST FL. OAKLAND, CA 94607 SAN FRANCISCO, CA 94104 FOR: THE REGENTS OF THE UNIVERSITY OF FOR: NATURAL RESOURCES DEFENSE COUNCIL CALIFORNIA

Information Only

Page 1 of 3CPUC - Service Lists - A1805015

9/10/2018https://ia.cpuc.ca.gov/servicelists/A1805015_85537.htm

CASE COORDINATION MEGHAN DEWEY PACIFIC GAS AND ELECTRIC COMPANY MGR - EE POLICY / STRATEGY EMAIL ONLY PACIFIC GAS AND ELECTRIC COMPANY EMAIL ONLY, CA 00000 EMAIL ONLY EMAIL ONLY, CA 00000

MICHAEL CADE MRW & ASSOCIATES, LLC BUCHALTER EMAIL ONLY EMAIL ONLY EMAIL ONLY, CA 00000 EMAIL ONLY, CA 00000

CORINNE SIERZANT ERIN BROOKS REGULATORY AFFAIRS REGULATORY POLICY & REPORTING MANAGER SOUTHERN CALIFORNIA GAS COMPANY SOCALGAS 555 W. 5TH STREET, GT14D6 555 W 5TH ST LOS ANGELES, CA 90013 LOS ANGELES, CA 90013

JOSEPH MOCK AARON KLEMM REGULATORY CASE MGR. CHIEF - ENERGY SOUTHERN CALIFORNIA GAS COMPANY CSU OFFICE OF THE CHANCELLOR 555 WEST 5TH ST., STE 1400, GT14D6 401 GOLDEN SHORE 2/F LOS ANGELES, CA 90013 LONG BEACH, CA 90802-4210

CASE ADMINISTRATION JAKE HUTTNER SOUTHERN CALIFORNIA EDISON COMPANY CASE MGR 8631 RUSH STREET SOUTHERN CALIFORNIA EDISON COMPANY ROSEMEAD, CA 91770 2244 WALNUT GROVE AVE. ROSEMEAD, CA 91770

DONALD C. LIDDELL JOHN W. LESLIE, ESQ ATTORNEY ATTORNEY DOUGLASS & LIDDELL DENTONS US LLP 2928 2ND AVENUE EMAIL ONLY SAN DIEGO, CA 92103 EMAIL ONLY, CA 92121

COURTNEY KALASHIAN DIANA S. GENASCI CP-CHAIR, RHTR REGULATORY AFFAIRS SAN JOAQUIN VALLEY CLEAN ENERGY ORG. SOUTHERN CALIFORNIA EDISON COMPANY 4747 NORTH FIRST STREET, SUITE 140 601 VAN NESS AVENUE, SUITE 2030 FRESNO, CA 93726 SAN FRANCISCO, CA 94102 FOR: RURAL HARD TO REACH LOCAL GOVERNMENT PARTNERSHIPS WORKING GROUP (RHTR)

LUCY MORGANS STANLEY KUAN CALIF PUBLIC UTILITIES COMMISSION CALIF PUBLIC UTILITIES COMMISSION ELECTRICITY PRICING AND CUSTOMER PROGRAM ELECTRICITY PRICING AND CUSTOMER PROGRAM AREA AREA 505 VAN NESS AVENUE 505 VAN NESS AVENUE SAN FRANCISCO, CA 94102-3214 SAN FRANCISCO, CA 94102-3214

MERRIAN BORGESON ANDREW MEIMAN, PE SR. SCIENTIST, ENERGY PROGRAM PRINCIPAL NATURAL RESOURCES DEFENSE COUNCIL ARC ALTERNATIVES



111 SUTTER ST., 21ST FL. 222 SUTTER STREET, STE. 600 SAN FRANCISCO, CA 94104 SAN FRANCISCO, CA 94108

MATTHEW LEWIS MEGAN M. MYERS CASE MGR - ENERGY PROCEEDINGS ATTORNEY PACIFIC GAS AND ELECTRIC COMPANY LAW OFFICES OF SARA STECK MYERS PO BOX 7442, MC B9A 122 - 28TH AVENUE SAN FRANCISCO, CA 94120 SAN FRANCISCO, CA 94121

PHILLIP MULLER CAROLYN KEHREIN SCD ENERGY SOLUTIONS PRINCIPAL 436 NOVA ALBION WAY ENERGY MANAGEMENT SERVICES SAN RAFAEL, CA 94903 2602 CELEBRATION WAY WOODLAND, CA 95776

I ANTHONY PH.D DIRECTOR CENTER FOR ENERGY EFFICIENCY 1100 11TH STREET, STE. 311 SACRAMENTO, CA 95814

State Service

DANIEL BUCH FOREST KASER CALIF PUBLIC UTILITIES COMMISSION CALIF PUBLIC UTILITIES COMMISSION ELECTRICITY PRICING AND CUSTOMER PROGRAM PRESIDENT PICKER AREA 4-A AREA 505 VAN NESS AVENUE 505 VAN NESS AVENUE SAN FRANCISCO, CA 94102-3214 SAN FRANCISCO, CA 94102-3214

HENRY BURTON ZITA KLINE CALIF PUBLIC UTILITIES COMMISSION CALIF PUBLIC UTILITIES COMMISSION ELECTRICITY PRICING AND CUSTOMER PROGRAM DIVISION OF ADMINISTRATIVE LAW JUDGES AREA ROOM 5115 505 VAN NESS AVENUE 505 VAN NESS AVENUE SAN FRANCISCO, CA 94102-3214 SAN FRANCISCO, CA 94102-3214 FOR: ORA

TOP OF PAGE BACK TO INDEX OF SERVICE LISTS



before the public utilities commission of the state of … · 2018-09-12 · before the public...

Documents