Details for: PGE Reply to Protest of 5435-E.pdf

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Erik Jacobson
Regulatory Relations

Pacific Gas and Electric Company
77 Beale St., Mail Code B13U
P.O. Box 770000
San Francisco, CA 94177
Fax: 415-973-3582

December 21, 2018

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

Pacific Gas and Electric Company’s Reply to Responses and Protest
Received for Advice Letter 5435-E Regarding Request for Approval to
Issue Competitive Solicitations for Distributed Energy Resource
(DER) Pursuant to D.18-02-004

Dear Energy Division Tariff Unit:

Pacific Gas and Electric Company (PG&E) hereby replies to the protest dated December
17, 2018 from the Public Advocates Office (PAO), and the responses received from the
California Energy Storage Alliance (CESA) and the California Efficiency + Demand
Management Council (Council) to PG&E’s Advice Letter (AL) 5435-E. In AL 5435-E,
PG&E requests the Commission approve issuance of a Competitive Solicitation
Framework (CSF) Request for Offers (RFO) to procure distributed energy resources
(DERs) for three Tier 1 candidate distribution deferral sites. No parties protested PG&E’s
request for approval of the advice letter. As such, PG&E requests that Energy Division
approve the advice letter promptly so that PG&E can launch Distribution Investment
Deferral Framework (DIDF) solicitations in a timely manner.
PAO filed a protest that “recommends approval of the distribution deferral projects
recommended by the IOUs in the ALs.” 1 PG&E appreciates PAO’s recognition that the
AL is in conformance with the requirements outlined in Decision (D.) 18-02-004 and the
assigned Administrative Law Judge’s (ALJ’s) November 19, 2018 Ruling and that the
projects are consistent with what was presented in Distribution Planning Advisory Group
(DPAG) meetings. CESA filed a response that “generally supports the approval of each
of the IOU advice letters as they comply with the requirements of Decision (“D.”) 18-02004…” 2 and “supports the advancement of PG&E’s three tier 1 projects… as well as the

Public Advocates Office Protest of PG&E AL 5435-E, p. 2.
California Energy Storage Alliance Response to AL 5435-E, p. 2.


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PG&E’s Reply to Responses and Protests of Advice Letter 5435-E -2- December 21, 2018 exclusion of the Tier 2 and Tier 3 projects.” 3 The Council filed a response in the “form of comments to some of the approaches and requirements for the DER projects for the DIDF described in the Advice Letter.” 4 Again, no parties protested the approval of the advice letters, and PG&E therefore requests that Energy Division provide written approval of the advice letter to enable PG&E to initiate the RFO in a timely manner. PG&E appreciates the suggestions provided by PAO, CESA, and the Council on how to improve the DIDF and looks forward to engaging with stakeholders in early 2019 on improving the DIDF. As clarified in the ALJ's November 19, 2018 Ruling, the advice letters do not “constitute the only opportunity for IOUs or others to offer suggestions for improving the DIDF process. Instead, we anticipate inviting more detailed feedback on the DIDF process from all parties following the issuance of competitive solicitations in early 2019, with a view towards implementing any appropriate changes prior to June 1.” 5 Additionally, the Commission directed that any future policy recommendations assessed and adopted in the Integrated Distributed Energy Resources (IDER) rulemaking would apply to the DIDF. 6 PG&E therefore looks forward to engaging with all stakeholders in early 2019 in this proceeding and/or the IDER proceeding to identify opportunities to improve the DIDF. In the meantime, PG&E offers the following reply to some of the recommendations that address issues that are not part of the relief sought by PG&E’s advice letter. DER Performance Requirements and Incrementality Rules CESA comments that they “appreciate the refinement of the expected performance and operational requirements since [the candidate deferral] opportunities were presented in the DPAG meetings – i.e., grid need (MW), hours duration, and maximum calls per year are achievable by DERs.” 7 PAO “does not object to the revisions that have occurred and may continue to occur between now and issuance of the final RFO” 8. PG&E appreciates the support of CESA and PAO and looks forward to discussions in future DIDF cycles about how such changes impact DER providers. The Council recommends that “the Commission should require PG&E (and the other IOUs) to include detailed load forecast information at the circuit level in its RFOs so that bidders can determine with certainty the incrementality of their DER solutions.” 9 PG&E intends to provide detailed load forecast information similar to the information that the CPUC directed PG&E to provide in the IDER RFO. The 2019 DIDF Solicitation Protocol 3 Ibid, p. 3. California Efficiency + Demand Management Council Response to AL 5435-E, p. 1. 5 Administrative Law Judge’s Ruling on the Application of the Competitive Solicitation Framework for Distribution Investment Deferrals in the Distribution Resource Planning Proceeding, November 19, 2018, p. 5. 6 See D.18-02-004, p. 70. 7 California Energy Storage Alliance Response to AL 5435-E, p. 3. 8 Public Advocates Office Protest of AL 5435-E, p. 2. 9 California Efficiency + Demand Management Council Response to AL 5435-E, p. 3. 4
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PG&E’s Reply to Responses and Protests of Advice Letter 5435-E -3- December 21, 2018 will also include detailed incrementality criteria similar to what was applied in the IDER Incentive Pilot. In addition, the Council notes that “PG&E’s Advice Letter and RFO for the IDER Incentive Pilot offered an alternative option for offers containing energy efficiency resources” and recommends that “PG&E include this option in their RFOs for the DIDF projects to provide more flexibility to energy efficiency DER providers.” 10 PG&E intends to offer bidders the option to have their bids evaluated based on a pre-specified overlap factor in its 2019 DIDF RFO Solicitation Protocol. PG&E intends to use the same approach that it used in the IDER Incentive Pilot RFO. The IDER Incentive Pilot RFO protocol includes the following language, in Section IV.C Resource Double Payment/Double Counting, of the protocol: Only DERs that are categorized as wholly incremental or partially incremental will be considered eligible for the purposes of this Solicitation. Energy efficiency Participants will have the option of having their Offer evaluated for incrementality on a project-specific basis or having their Offer evaluated based on a pre-specified overlap factor. If the overlap factor option is selected, the savings value of the Offer will be discounted by 15% to reflect the overlap between the Participant’s proposal and energy efficiency resources that are projected to be deployed in the local area in the absence of the Offer. All other resource types must go through the project specific review. Administrative Costs and Deferral Costs PAO comments that it is their “understanding that the Commission intended for administrative costs and deferral values to be made public with the adoption of D.18-02004.” 11 D.18-02-004 states that “it is reasonable to conclude that distribution unit costs included in the IOUs’ Rule 21 Unit Cost Guides adopted by D.16-06-052 are not marketsensitive and confidential.” 12 PG&E published its unit costs for the traditional mitigation for the planned investments publicly in PG&E’s 2018 Distribution Deferral Opportunity Report (DDOR), consistent with the intent of D.18-02-004. PAO recommends that future DDORs define and document proposed distribution deferral projects in sufficient detail to allow the Independent Professional Engineer (IPE) to determine if the deferral project is a reasonable baseline for evaluation of DER costeffectiveness. 13 PG&E supports the Commission approved methodology of using General Rate Case (GRC) project cost estimates because it integrates with PG&E’s 10 California Efficiency + Demand Management Council Response to AL 5435-E, p. 3. Public Advocates Office Protest of AL 5435-E, p. 11. 12 D.18-02-004, p. 81. 13 PAO Protest, p. 8. 11
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PG&E’s Reply to Responses and Protests of Advice Letter 5435-E -4- December 21, 2018 existing Distribution Resources Plan (DRP) and minimizes DIDF administrative costs, while providing a sufficient level of cost detail. PAO also states the IOUs have had a financial benefit from erring in favor or new or upgraded equipment. 14 This is not true or correct. IOUs are given a budget each GRC to build and maintain distribution infrastructure to meet safety and reliability standards. PG&E continuously re-prioritizes distribution infrastructure projects to address the most emergent needs. If PG&E “errs” in upgrading equipment, this means there is less funds available to meet other emergent work that may be necessary to reinforce and/or expand for safety and reliability. In other words, there is no financial incentive for PG&E to utilize its budget on unnecessary upgrades. PG&E respectively disagrees with PAO’s assertion. PAO additionally comments that “spending on planned investments while the projects are being bid out for distribution deferral should not occur in future DIDF cycles.” 15 PG&E respectfully disagrees and argues that it must act reasonably to ensure grid safety and reliability and taking some measured pre-investment is a sound approach. As noted in PG&E’s Advice Letter filing, “in order to ensure the safe and reliable provision of distribution services should a contingency arise, the engineering, design and major equipment procurement for the planned investment will continue until contract approval by the Commission of any DER deferral solution” 16. IPE Scope of Work PAO recommends that the scope of work be clearly defined for the IPE through a ruling. 17 PG&E disagrees with PAO’s characterization of the IPE’s role in the 2018 DIDF. PG&E believes the IPE provided “neutral expertise on distribution planning activities and the selection of candidate deferral opportunities” as required by D.18-02-004. 18 The IPE incorporated feedback from DPAG members in both the IPE Report and in discussions with PG&E prior to the Advice Letter filing. PG&E believes that an expanded scope for the IPE (e.g., re-creating the GNA) is unnecessary, inefficient and costly. Conclusion PG&E thanks the Commission for the opportunity to provide these reply comments, and since no parties protested the relief requested by PG&E in its advice letter, PG&E requests that the advice letter be approved. 14 PAO Protest, p. 9. PAO Protest, p. 2. 16 PG&E Advice Letter 5435-E, p. 16. 17 PAO Protest, p. 12. 18 D. 18-02-004, p. 63. 15
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PG&E’s Reply to Responses and Protests of Advice Letter 5435-E -5- December 21, 2018 Respectfully submitted, /S/ Erik Jacobson Director, Regulatory Relations cc: Service Lists R.14-08-013 and R.14-10-003 Gabe Petlin, Energy Division, Dina Mackin, Energy Division, Fred Wellington, Energy Division, Chloe Lukins, The Public Advocates Office, Tim Drew, The Public Advocates Office, Thomas Roberts, The Public Advocates Office, Alex J. Morris, CESA,, Melanie Gillette, The California Efficiency + Demand Management Council,
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