Details for: SCE Reply to Joint DR Parties Protest of Advice 3629-E.pdf

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Russell G. Worden
Managing Director, State Regulatory Operations

August 3, 2017

Energy Division
Attention: Tariff Unit
California Public Utilities Commission
505 Van Ness Avenue
San Francisco, CA 94102


Reply of Southern California Edison Company to the Protest
of Joint Demand Response Parties to Advice 3629-E

Dear Energy Division Tariff Unit:
In accordance with Section 7.4.3 of General Order (GO) 96-B, Southern California
Edison Company (SCE) replies to the protests of CPower, EnerNOC, Inc., and
EnergyHub (collectively, the Joint DR Parties) filed on July 27, 2017 (the Protest).
A. Introduction
SCE filed Advice Letter (AL) 3629-E on July 7, 2017, in compliance with Resolution
E-4817, to request approval of 18 Purchase Agreements executed between SCE and
five counterparties, as a result of SCE’s 2018-2019 Demand Response Auction
Mechanism Request for Offers (2018-2019 DRAM RFO). On July 27, 2017, the Joint
DR Parties submitted a protest pursuant to Sections 3.11 and 7.4 of GO 96-B. The Joint
DR Parties do not contest the results of the auction and support Commission approval
of the contracts, but they ask the Commission to examine certain aspects of the auction
and to make certain confidential information public.
B. SCE’s Responses to the Joint DR Parties
Joint DR Parties make an unsubstantiated conclusion that because DRAM 3 received
lower offer prices and fewer bidders, further Commission direction or revision is needed
for future solicitations. It is unclear on what basis the Joint DR Parties are objecting to a
competitively administered solicitation that resulted in lower offer prices for more
megawatts. It is further unclear on what basis the Joint DR Parties – as market

P.O. Box 800

8631 Rush Street

Rosemead, California 91770

(626) 302-4177 FAX (626) 302-6396


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Energy Division Tariff Unit Page 2 August 3, 2017 participants in this competitive solicitation – need to understand why the number of participants has not expanded significantly or why residential offerors are declining to participate. Joint DR Parties provide no rationale for their request to understand the business decisions of other market participants. While this information may be informative, SCE is not necessarily privy to why sellers declined to execute their contracts. Joint DR Parties presume that their competitors will have no objection to presenting and discussing their internal business decisions at a public Workshop. The Joint DR Parties further raise concerns over their inability to discern “how much SCE was setting aside for administrative costs.”1 While SCE acknowledges the desire for Investor Owned Utilities (IOUs) to be judicious in their use of ratepayer funds, the exact amount spent on the auction and the amount allocated for administrative costs, is confidential information. SCE confirms, however, that administrative costs did not impact the selection – had SCE allocated $0 to the DRAM solicitation and contract administration efforts, the same contracts would have been selected. The Joint DR Parties’ assertions that many aspects of the DRAM are not transparent to bidders, including how DRAM bids will be evaluated and selected,2 ignores the record; the evaluation and selection process has been discussed and described at length in the DRAM Advice Letters and Solicitation materials.3 The only information that has been restricted from public release is IOU specific market sensitive information, such as Seller bids and IOU Resource Adequacy (RA) value forecasts. The Utilities restrict the release of this information pursuant to Commission directives to protect ratepayers and the competitive nature of the auction.4 Releasing this information as the Joint DR Parties request would remove the incentive for market participants to offer bids at the bidders’ lowest costs. SCE is supportive of a long-term viable market where participants can recover their costs and make a reasonable profit, but disclosing confidential information would serve only to undermine the purpose of a competitive solicitation process. The Joint DR Parties also expressed concerns over SCE’s evaluation methodology, however, that methodology is aligned with Commission decisions and directives, has been reviewed by the Independent Evaluator (IE), and is applied fairly and equally to all participants. As with Pacific Gas and Electric Company (PG&E) and San Diego Gas and Electric Company (SDG&E), SCE followed the Commission’s evaluation guidelines as prescribed in Resolution E-4728, Resolution E-4754, and Decision (D.)16-06-029. The 1 2 3 4 Joint DR Parties Protest, p. 3. Joint DR Parties Protest, pp. 4-5. AL 3208-E, Section VI, AL 3292-E Section V, and AL 3466-E Section V. See D.06-06-066, Appendix A, IOU Matrix, Item VIII B) Specific quantitative analysis involved in scoring and evaluation of participating bids.
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Energy Division Tariff Unit Page 3 August 3, 2017 only cap permitted in Resolution E-4817 on the 2018-2019 DRAM RFO was the budget, or until a point at which there is a clear price outlier in bids, whichever comes first. SCE’s IE Report also concurs, and states, “SCE’s evaluation and selection process resulted in SCE meeting its targets subject to the budget amounts and residential target requirements identified in the Commission Resolution for the DRAM 3 RFO.”5 RA values are used to make varying bid types comparable to each other by using a consistent evaluation methodology, based on the value those bids provide the utility, which is used to develop the order of bids in the bid stack. The Joint DR Parties also incorrectly cite the IE Report and claim that “the IE states that each of the IOUs uses a different methodology and criteria for selecting offers.”6 This statement misconstrues the IE report, which only states that the qualitative criteria differ. The Commission approved the qualitative criteria and weights used in Resolution E4817. SCE does agree with the Joint DR Parties’ request that the Commission re-examine the residential set-aside in the future. C. Conclusion SCE appreciates the opportunity to file this response. The Commission should approve the contracts in SCE’s AL 3629-E as filed, and deny the Joint DR Parties’ request to have a public workshop to require disclosure of confidential business decisions or confidential market information. Sincerely, /s/ Russell G. Worden Russell G. Worden cc: 5 6 Edward Randolph, Director, CPUC Energy Division James Loewen, CPUC Energy Division Sara Steck Myers, Attorney Mona Tierney-Lloyd, EnerNOC, Inc. Jennifer A. Chamberlin, CPower Erika Diamond, EnergyHub R.13-09-011 Service List SCE AL 3629-E, Redacted Attachment K, p. 29. Joint DR Parties Protest at p. 4.
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