EVALUATION OF BIDS’ TRANSMISSION COSTS. The valuation methodology assigns estimated transmission costs to the contract price of generation in order to compare Offers fairly, taking into account the full cost of generating power including upgrades required to achieve reliable deliverability for new generation. Many features of the transmission cost methodology are specified by regulatory decisions. The methodology has a few strengths: • It provides a means to level the playing field between Offers that deliver directly into PG&E’s service territory at uncongested locations and those whose proposed facilities will require expensive new transmission upgrades and new substation facilities to maintain grid reliability. • It provides a view of full costs of the project rather than only the energy procurement cost. The transmission cost methodology also has some drawbacks: • The process of estimating transmission adders is analytically burdensome. It requires checking of Participant’s information by transmission experts and consumes a considerable portion of the total time for valuation analysis. • TRCR adders are a generalized, regional proxy for the actual cost of a particular- sized project at a particular interconnection point. There can be rather large deviations between the final cost of network upgrades written into an interconnection agreement and an early TRCR estimate. • In those cases where the TRCR adder turns out to be an underestimate of actual network upgrade cost, PG&E’s prior practice of only performing the full LCBF valuation including transmission adders during solicitations impedes the transparency of decision-making. • TRCR adders are available only for California IOUs, and only for specific transmission clusters that the IOUs have analyzed. They are not available for other balancing authorities in California or outside the state. It would be challenging for the PG&E team to estimate a proxy for network upgrade cost for projects interconnecting, for example, in the Sacramento Municipal Utility District’s or IID’s grid unless the project had obtained a system impact study or facilities study or interconnection agreement from that balancing area authority. Given the focus on new renewables in Imperial Valley, this shortage of information is inconvenient. • CAISO Phase I studies have been known to provide gross early overestimates of the actual network upgrade costs. In some transmission clusters, excessive numbers of new projects have applied for interconnections; their aggregate new...
EVALUATION OF BIDS’ TRANSMISSION COSTS. The valuation methodology has a complex set of algorithms and steps to assign proxies for actual transmission cost to the contract price of generation in order to compare proposals fairly, taking into account the cost of moving power from the delivery point to customers. These include estimates of the cost of moving power from non-CAISO delivery points to PG&E customers, and of the allocated cost of transmission network upgrades required to achieve deliverability for new generation facilities that propose to interconnect in congested locations. Many of the features of the transmission cost methodology are specified by regulatory decisions. The methodology has a few strengths: • It provides a means to level the playing field between Offers that deliver directly into PG&E’s service territory at uncongested locations and those whose proposed facilities will require expensive new transmission upgrades and new substation facilities to maintain grid reliability.
EVALUATION OF BIDS’ TRANSMISSION COSTS. The valuation methodology has a complex set of algorithms and steps to assign proxies for actual transmission cost to the contract price of generation in order to compare proposals fairly, taking into account the cost of moving power from the delivery point to customers. These include estimates of the cost of moving power from non-CAISO delivery points to PG&E customers, and of the allocated cost of transmission network upgrades required to achieve deliverability for new generation facilities that propose to interconnect in congested locations. Many of the features of the transmission cost methodology are specified by regulatory decisions. The methodology has a few strengths: • It provides a means to level the playing field between Offers that deliver directly into PG&E’s service territory at uncongested locations and those whose proposed facilities will require expensive new transmission upgrades and new substation facilities to maintain grid reliability. • It provides a means to level the playing field between projects located within the CAISO and those delivering outside the CAISO for whom the cost of moving power to PG&E customers requires wheeling across foreign control areas, tariff payments to other transmission owners, and/or shaping and firming services needed to achieve firm scheduled deliveries into the CAISO in order to quality as eligible renewable resources under CEC guidelines. The transmission cost methodology also has some obvious drawbacks: • The two-step process of calculating Transmission Cost Ranking Report adders is so analytically burdensome that it slows the turnaround time of the valuation ranking.
