SCE-Proposed QF PPA for Firm Power Contracts (Qualifying Facilities with Expiring Contracts) CPUC Workshop November 15, 2007
Introduction This presentation provides a summary level overview of key contract attributes contained in SCE’s proposed Standard Offer PPA for QFs with expiring contracts SCE welcomes feedback from workshop participants on these key terms Terms for “as available” and new QFs will build from these terms and key attributes Page: 1
Proposed QF PPA Structures FIRM AS AVAILABLE � Term: 1-10 years � Term: 1-5 years EXISTING � Capacity Pmt: $91.97/kW-yr � Capacity Pmt: $32.53/kW-yr � Energy Pmt: MIF on all metered energy � Energy Pmt: MIF on all metered energy � Performance Requirements: 95% / 90% � Performance Requirements: None � Capacity Penalties: Applicable � Capacity Penalties: Not Applicable � Compliance with CAISO Tariff � Compliance with CAISO Tariff Above, plus: Above, plus: � Development-Period Security � Development-Period Security NEW � Development-Period Milestone Info � Development-Period Milestone Info � Operating-Period Security � Operating-Period Security Page: 2
Background � KRCC contract is used as the starting point for the following reasons: � Contract is a single, stand-alone PPA appropriate for 1-to-10 year deal structures contemplated in D.07-09-040 � Contract contains commercially proven & contemporary terms � Formed as an arms-length transaction � Approved by the CPUC � Certain revisions have been applied to the KRCC contract: � Revised as well as added new provisions to be compliant with D.07- 09-040 � Alterations applied to remove non-applicable technology and commercial specifications (e.g., removal of dispatchability-related provisions) � Exploring impact of AB 1613 and will incorporate provisions as appropriate � This presentation includes some contract attributes not included in submission of IOU draft contract Page: 3
Product & Commercial Terms/Structure � Product (exclusively dedicated to Utility) � Electric energy net of station use and site host load � Capacity attributes (Resource Adequacy) � Green & other environmental attributes � Commercial Terms/Structure � Conditions precedent prior to term start date � Monthly payments to seller (as per D.07-09-040) � Energy, Capacity and VOM prices � Performance requirements � Operational/scheduling requirements � Utility as scheduling coordinator (preferred) � Termination provisions � Legal and financial provisions Page: 4
Conditions Precedent � FERC certification of QF status obtained and maintained � Grid connection established and grid connection agreements executed � CAISO operational agreements (PGA, MSA, etc.) executed � ISO approved metering installed � Scheduling coordinator assigned � Capacity testing completed � Systems configuration for telemetry link, forecast reporting, and scheduling completed Page: 5
Monthly Payments to Seller � TOD Energy Payment � Function of: � Metered energy � Gas Index � CPUC-approved heat rate � CPUC-approved energy payment allocation factors � Seller receives payments for all metered energy (including MWs in excess of final net contract capacity) � TOD Capacity Payment � Function of: � CPUC-approved capacity price ($91.97/kW-year as per D.07-09-040) � CPUC-approved capacity payment allocation factors � Performance requirements apply (see next slide) � Seller receives capacity credit at net contract capacity (if delivered at net contract capacity or above) for metered energy delivered during each settlement interval – no credit for settlement interval where metered energy is below net contract capacity � Variable Operations & Maintenance Payment (as per D.07-09-040) Page: 6
Performance Requirements � In compliance with D.07-09-040, capacity payment penalty for failure to deliver 95% of the net contract capacity during on-peak months and 90% power during off-peak months � Monthly capacity payment penalty evaluated per TOD period � Capacity payment penalty exceptions for: � Scheduled outages (limitations apply) � CAISO or SCE curtailment � No capacity payment penalty exceptions for: � Outages due to force majeure � Forced outages Page: 7
Operational Requirements � Initial Demonstration Testing � For final net contract capacity � Resource adequacy requirements � CAISO resource parameters (PMAX, PMIN) � Annual Demonstration Testing � Resource adequacy requirements � CAISO resource parameters (PMAX, PMIN) � Daily Forecast Submittal � 30-day rolling forecast � Updated as appropriate before operating hour for accurate energy schedule submittal � QF financially responsible for continued & significant discrepancy between forecast and actual generation Page: 8
Utility as Scheduling Coordinator (SC) � As SC, the Utility shall be responsible for: � Submitting bids and schedules to CAISO � Reporting outages and unit status to the CAISO � All settlement functions with the CAISO � CAISO costs and charges, unless costs or charges are due to actions or inactions of seller � Operations Training � Day-to-day ops (e.g., forecast & schedule submittal, derate reporting) � MRTU basics � PGA, MSA assistance � Commercially reasonable fees for SC services � Start-up fee (training, registration, systems configuration) � Monthly fee (volumetric and flat payment options considered) Page: 9
Utility as SC (continued) � Scheduling and Delivery Deviation Charges � SDD charges shall be in lieu of assessing all generator-specific CAISO charges to Seller � “SDD Charge” � Assessed to seller if metered energy is less than schedule (3% tolerance band) � Calculated as deviated quantity times CAISO real-time price � SDD Administrative Charge � Assessed to seller if metered energy is less than or greater than Schedule (±3% tolerance band) � Calculated as deviated quantity times GMC rate � SDD charges limited to CAISO settlement interval following receipt of QF’s derate notification Page: 10
Termination Provisions � Rights of Non-Defaulting Party � Designation of termination date � Ability to suspend performance � Calculation of termination payment � Termination Payment � Calculated as gains minus losses minus costs � Traditional two way termination payment calculation � Right to terminate permissible if QF is selected pursuant to native utility RFO solicitation Page: 11
Legal and Financial Provisions � Reps and Warranties � Appropriate to D.07-09-040 deal structure � Assignment & Indemnification � Mandatory Dispute Resolution � Informal � Mediation � Binding Arbitration � Seller obligation to provide necessary financial statements � Fin 46 compliance Page: 12
Questions/Discussion Forward feedback to: Mike Marelli Manager of Origination and Analysis Southern California Edison mike.marelli@sce.com 626-302-3408
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