LNBA avoided transmission subgroup_statements_draft - KDW Comments - 9-14 v1

LNBA avoided transmission subgroup

09/13/17

The following statements or considerations for methodology principles were taken from existing subgroup presentations and discussions. Please use the tracked changes function to make comments with attribution. Please identify, when possible, whether your organization agrees with consensus (with or without proposed changes), is in non-consensus (with rationale), and identify when possible a proposed next step your organization might volunteer to take on behalf of the subgroup (e.g., further fleshing out an existing proposal). Please return your tracked changes by 9/20 to .

  1. DERs, through reduction of peak load, can may reduce transmission investment relative to planned forecast. CAISO currently uses a peak-shift scenario analysis to review previously-approved procurements[K1]. However, not all transmission projects are driven by peak load forecasts, and may thus not be avoided by DERs.
  2. DERs can may avoid both new transmission projects and reduce the size of proposed transmission projects. These latter incremental values should also count as avoided costs.
  3. The transmission revenue requirement (TRR) [K2]adequately reflects the full avoided cost visible to ratepayers or associated with the investment into a transmission project should include all incremental revenue requirements such investment would cause (e.g., return of and return on capital, incremental O&M, etc.), and is consistent to how distribution deferral and marginal transmission cost is treated today by the joint IOUs.[1]
  4. The proposed methodology, or a separate methodology to account for “unplanned” projects, should account for unplanned investments not yet identified in the planning process, as forecasted DER growth reduces expected future need.
  5. A system-level marginal transmission cost may exist. A proposed methodology can start at the system-level and add or subtract locationally-granular values.; however, it is possible that locational values may be independent of the system value. [Either we include the additional sentence or TURN does not agree with the first sentence]

A proposed methodology should:

•Avoid double counting between system-level and local-level avoided costs. [agree]

•Be forward looking (start with a list of approved planned projects); capture timing and magnitude of investments; and be based on design and operation of each IOUs’ system [agree]

•Improve upon existing approaches, especially with respect to locational variation [agree]

•Estimate vValuate of “avoided transmission” benefits of DERs incremental to those DERs already included in planning forecasts. Such estimates should reflect the need for certain threshold quantities of DERs to be reached to avoid transmission investment. Such estimates should also reflect the potential for such DER values to vary as the amount of DERs increases if aggregate DER capacity exceeds the capacity of the avoided transmission upgrade.

•Balance analytical complexity with a need for indicative results

•Add locational signal in DER program cost-effectiveness analysis (but not evaluate DER solutions to defer or avoid transmission needs)

•Build off how CAISO currently identifies transmission needs, conducts sensitivity analysis, and identifies mitigation solutions through preferred resources in the TPP

•Meet FERC cost allocation principles; cost responsibility should track cost causation

Additional TURN Principles for Avoided Transmission Cost

(These are not in any order of importance)

  1. All values must correspond to revenue requirement reductions for the IOUs and CAISO. Otherwise ratepayers may pay twice.
  2. Forecast impacts from DERs that are intended to reduce transmission investments must flow through appropriate CPUC or CEC forecasts to impact CAISO TPP.
  3. All values must reflect a probability estimate that ratepayer costs will be avoided (e.g. the full value for 100% probability, etc.).
  4. Values must be determined in an analytical fashion and be based in known fact.
  5. Ratepayers should not pay more for non-wires alternatives than the wires alternative unless there is a clear societal reason to do so (e.g. cleaner energy)
  6. Estimated avoided cost values should be for evaluation purposes only; actual payments to procure DERs should be based on competitive solicitations.

[1] The “NERA method” for computing transmission or distribution marginal costs reflects such additional revenue requirements.

[K1]Does this statement count as a “principle”?

[K2]The term “TRR” should not be used for computing marginal Tx costs. TRR has a very particular meaning: the amount of revenue the CAISO will recover from customers and shippers so that transmission owners can recover their full transmission revenue requirement.