JUICE: Finding Equal Footing for Small Renewable Wholesalers

8 Sep 2016

Getting recognition in a large family was no easy feat. Being heard above the din of seven older siblings and three younger ones was an ongoing challenge, but the biggest one was overcoming the special treatment my heavily-outnumbered parents gave their first born.

The first step in my long road to getting individual recognition was breaking free from “the little kids” label. Then it took until my mid-30s to make meaningful headway.

It may thus not come as any surprise that my sympathies lie with stakeholders whose voices get dismissed or muted.

The way the grid operator and state energy regulators treat investor-owned utilities is much like my beloved parents preferential treatment of their oldest child. The utilities concerns and complaints about financial losses, real or perceived, get the undivided attention of the California Public Utilities Commission and Independent System Operator. But it’s a long and winding road for the little kids, including distributed renewable energy interests, to get their complaints about financial disadvantages heard.

Case in point, earlier this month a coalition of wholesale distributed renewable energy advocates went to the press to highlight their effort to be taken seriously by the grid operator regarding their complaints about the transmission access charge.

This charge is collected by CAISO to cover both its costs of operating the high voltage lines and the transmission revenue requirements of participating transmission owners. The grid operator distributes the revenue requirements, including to private utilities. The private utilities’ revenue requirements fold in transmission and distribution costs, operation and maintenance, deprecation and approximately 10 percent rate of return.

CAISO’s transmission access charge is slapped on every measured kWh flowing through the grid.

The controversy is over where the grid operator measures the flow of power going to investor-owned utility customers.

The Clean Coalition insists that revisions to the transmission access charge, being driven by the planned grid regionalization, are necessary because where CAISO measures the flow improperly includes juice traveling across both transmission and distribution lines. That disproportionally impacts wholesale renewables and excess power from solar rooftops that feed only into low voltage lines.

Both distributed resources and surplus power from net metered solar systems—neither of which travel on the transmission highway—get a toll slapped on for something they don’t use.

The Clean Coalition estimates the transmission access charge adds an unjust 3 cents/kWh to wholesale distributed resources between 5 kW and 20 MW. That additional cost on solar and wind power drives up its cost, although on a generation basis it’s cheaper than some fossil fuel generation. The extra cost makes these desired resources uncompetitive in a least-cost, best-fit market.

It’s worth noting that renewable developers supplying municipal power agency grids don’t face a gross transmission charge on par with the CAISO’s.

Craig Lewis, Clean Coalition executive director, is leading the charge to get CAISO to change where it measures power flows upon which the transmission access charge is imposed to reflect the true cost of local renewables use of the grid, as well as its benefits.

The grid operator told me it was working on a modifying its transmission access charge and launched a stakeholder initiative in June. But, it “has not taken a position on the Clean Coalition proposal,” but does “appreciate the work and details included in their analysis,” according to CAISO spokesperson Steve Greenlee. Flashback to my 20s where I wasn’t dismissed but knew I’d have to continue to be a squeaky wheel to have any chance of being taken seriously.

I can’t vouch for the Clean Coalition’s claim that reforming the transmission access charge to make local renewable resources competitive would cost customers $20 million to install the meters needed at substations to properly measure distributed resources while saving them at least $20 billion over the next 20 years. But after covering the energy business for almost 20 years, I can vouch for the disparity in how utilities’ costs and benefits are treated compared with those of renewable stakeholders lower on the grid totem pole. More significantly, having the charge apply to resources fueling Pacific Gas & Electric, San Diego Gas & Electric and Southern California Edison territories that don’t touch the high-voltage lines interferes with the expansion of distributed renewable power, a goal supported expressly by state law and policy.

Hopefully the younger, cleaner members in California’s energy family won’t have to wait until their mid-30s to be given serious consideration, more so because the outcome impacts the health of all of us.

Elizabeth McCarthy

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