1. Transmission Access Charges (TAC)
CAISO is avoiding a fix to a massive market distortion that harms local renewables and California ratepayers
Katie Ramsey
Staff Attorney
Clean Coalition
mobile
Daryl Michalik
Executive Director
Dynamic Grid Council
mobile
December 1, 2016

2. Today’s presenter
Katie Ramsey
Staff Attorney
Clean Coalition

3. TAC distortion overview and our proposed solution
Agenda
TAC distortion overview and our proposed solution
Who benefits from the fix?
Why resolve the TAC before CAISO expansion?
CAISO’s delays to date
Next steps & how to get involved

4. Distributed Generation (DG) = Wholesale DG and Retail DG export (often referred to as NEM export)
Project Size
Central Generation
Serves Remote Loads
50+ MW
Wholesale DG
Serves Local Loads
500 kW
Retail DG
Serves Onsite Loads
5 kW
Behind the Meter
Distribution Grid
Transmission Grid

5. TAC are growing fast to ~4.5 cents/kWh over 20 years
Forecasted PG&E Total TAC Rate
$0.03/kWh when levelized over 20 years
$/kWh
The 20-year levelized TAC is about 3 cents/kWh, which is roughly 50% of the current wholesale cost of new energy contracts in California!

6. TAC metering fix is needed
Proper interface for metering all
High Voltage TAC (based on TED, as is already done in non-PTO utility service territories)
Proper interface for metering all
Low Voltage TAC (based on TED as is already done in non-PTO utility service territories)
Current interface for metering TAC in PTO utility service territories
(at customer meters based on Customer Energy Downflow)

7. California TAC before and after TAC fix
Before TAC Fix
After TAC Fix
Change
California
HV TAC based on
CED (PTO) and
TED (non-PTO)
California
HV TAC based on HV-LV TED
High
Voltage
(HV) TAC
PTOs adopt non-PTO TAC methodology; consistent TAC treatment throughout CAISO territory
200 kV
PG&E-specific LV TAC
SCE-specific LV TAC
SDG&E-specific LV TAC
Other utility-specific LV TAC
PG&E-specific LV TAC on TED
SCE-specific LV TAC on TED
SDG&E-specific LV TAC on TED
Other utility LV TAC on TED
Low
Voltage
(LV) TAC
69 kV
Distribution

8. CAISO expansion means regional governance & investments
CAISO is currently addressing whether and how to expand its balancing authority area; it is likely to introduce relevant legislation in January 2017
CAISO’s expansion is expected to include large investments in Super- High Voltage (SHV) transmission between states
Key issues: creating a multi-state governance structure, adjusting TAC, SHV cost allocation between sub- regions
Image source: CAISO

9. Clean Coalition’s TED-based SHV allocation proposal is better than CAISO’s current TAC Straw Proposal
Regionalized ISO
SHV TAC socialized across the regionalized ISO based on SHV-HV TED ONLY if new, 300+kV projects with interties in multiple sub-regions
Super High
Voltage
(SHV) TAC
The SHV-HV firewall protects each sub-region from HV & LV transmission investments that serve other sub-regions. Similarly, the HV-LV firewall currently protects each utility service territory in CAISO from LV transmission investments that serve other utility service territories.
300 kV
California
sub-region
HV TAC based on HV-LV TED
Sub-region 1
HV TAC does not need to change
Sub-region X
HV TAC does not need to change
High
Voltage
(HV) TAC
200 kV
PG&E-specific LV TAC
SCE-specific LV TAC
SDG&E-specific LV TAC
Other utility-specific LV TAC
LV TAC does not need to change
LV TAC does not need to change
Low
Voltage
(LV) TAC
69 kV
Distribution
California retains control of its HV & LV TAC

10. TED-based TAC: simple & objective

11. Agenda
TAC distortion overview and our proposed solution
Who benefits from the fix?
Why resolve the TAC before CAISO expansion?
CAISO’s delays to date
Next steps & how to get involved

12. Ratepayers benefit through avoided transmission costs
Forecasted PG&E Total TAC Rate
$0.03/kWh when levelized over 20 years
TAC rate ($/kWh)

13. Ratepayers benefit through avoided transmission costs
Forecasted PG&E Total TAC Rate
Notes & Assumptions
All 3 scenarios assume generation from new DG never exceeds new CED
11.0%
15.2%
$0.03/kWh when levelized over 20 years
Year 20 share of total load served by DG
19.5%
27.6%
TAC rate ($/kWh)
Year after TAC Fix implementation

14. Ratepayers benefit through avoided transmission costs
Forecasted PG&E Total TAC Rate
$6.7 billion TAC savings vs. BAU
$0.03/kWh when levelized over 20 years
$13.5 billion TAC savings vs. BAU
TAC rate ($/kWh)
$26.3 billion TAC savings vs. BAU
Ratepayer avoided TAC costs over 20-year period in the 1.5x, 2x, and 3x BAU DG scenarios
Year after TAC Fix implementation

15. DG Developers benefit from full valuation of DG resources
Cost in $/MWh
Cost in $/MWh
Winning contract price
Winning contract price
Current TAC assessment unfairly increases the cost of local distributed generation (DG) even though it almost never uses the transmission system
Fixing the TAC market distortion makes local generation more competitive
Over time, more local generation will be built, decreasing the need for transmission upgrades, and decreasing overall system costs

16. NEM customers benefit from higher values for exports
Alameda Municipal Power (AMP) released their plan to credit their customers with DG resources for avoided transmission charges, meaning participating customers will see higher payouts for their exported energy.
$0.07
Avoided transmission
charges
$0.05
Capacity & REC value
Capacity & REC value
Cost $/kWh
$0.03
Generation
AMP’s Previous Net Energy Metering (NEM) Export Value
AMP’s Current NEM Export Value

17. Marin Clean Energy (MCE) 2016 service offerings
LSEs with significant DG resources benefit from more competitive pricing
Marin Clean Energy (MCE) 2016 service offerings
MCE defines local as “located in an MCE member community”
Based on a typical usage of 463 kWh at current PG&E rates and MCE rates effective September 1, 2016 under the Res-1/E-1 rate schedule. Actual differences may vary depending on usage, rate schedule, and other factors. Estimate is an average of seasonal rates.

18. Potential Marin Clean Energy savings for 100% local solar
LSEs with significant DG resources benefit from more competitive pricing
Potential Marin Clean Energy savings for 100% local solar
$0.06 premium now
$0.04 premium after TAC fix
$/kWh
TAC fix

19. Agenda
TAC distortion overview and our proposed solution
Who benefits from the fix?
Why resolve the TAC before CAISO expansion?
CAISO’s delays to date
Next steps & how to get involved

20. Why fix TAC before regionalization?
SIMPLICITY: The Clean Coalition’s SHV proposal simplifies cost allocation for regionalization. Our proposal is more straightforward than CAISO’s current proposal.
PRESERVES CALIFORNIA POLICY PRIORITIES: The SHV proposal resolves the TAC question and preserves California’s policy priorities and commitment to renewable energy, including DG resources.
HEDGES AGAINST DILUTED GOVERNANCE: Our proposal fixes the cost allocation mechanisms for all levels of TAC hedges against diluted governance. In a regionalized ISO, California will not have as much control over the market signals for energy resources.

21. Agenda
TAC distortion overview and our proposed solution
Who benefits from the fix?
Why resolve the TAC before CAISO expansion?
CAISO’s delays to date
Next steps & how to get involved

22. Timeline of key events shows CAISO avoiding fix
May: CAISO announces will address TAC market distortion in Wholesale Billing determinant (WBD) initiative
CAISO admits DG reduces transmission investment
Apr: CAISO agrees with CC on basic facts of TAC market distortion
Jan: CAISO regionalization legislation, including SHV TAC
Sep: CAISO closes WBD initiative, does not address factual disputes
Mar: CAISO announces will address TAC market distortion in ESDER Phase 2 initiative
Nov: CAISO announces 2017 Review TAC Structure initiative
2015
2016
2017
Aug: CA legislative session ends
Nov: CC testifies in front of CAISO BoG about the TAC market distortion in TAC Options initiative
Jun: CC files detailed TAC fix proposal in WBD initiative. CLECA files comments disputing info provided by CAISO: TAC facts cited in CC proposal, details of TAC billing process
Sep: scheduled end of TAC Structure initiative
Apr: CC files TAC fix proposal in ESDER Phase 2 initiative
Nov: CC testifies in front of CAISO BoG about the TAC market distortion, urging action and highlighting delays

23. Agenda
TAC distortion overview and our proposed solution
Who benefits from the fix?
Why resolve the TAC before CAISO expansion?
CAISO’s delays to date
Next steps & how to get involved

24. Recruit other stakeholders to support the TAC Campaign
How you can help
Write a letter to CAISO & Governor Brown stating you would like the TAC market distortion resolved before CAISO regionalization (template available)
Formally support the TAC Campaign by authorizing use of your logo on the TAC Campaign Supporters web page
Recruit other stakeholders to support the TAC Campaign

25. The TAC Fix is backed by a broad range of organizations

26. Endorse the TAC Campaign
Getting involved
For more information on the TAC Campaign, visit or
Endorse the TAC Campaign
Contact Daryl Michalik, Executive Director of the Dynamic Grid Council
Add your voice directly by filing your own comments to CAISO and key influencers

27. Thank you for attending!
For more information on the Clean Coalition’s TAC Campaign, go to:
If you’re interested in supporting the campaign,
Daryl Michalik at