Currently, through the Power Charge Indifference Adjustment (PCIA), CCA customers are required to pay a portion of the costs to operate IOU generation assets, such as large hydropower and nuclear facilities (utility-owned generation resources), which carry GHG-free value. The GHG-free attributes of such resources can be sold in the market.
PCIA charges are only supposed to cover the difference in cost between the price at which IOUs bought the resources and the price at which IOUs can now sell the resources. IOUs sell the electricity from these resources in the market administered by the California Independent System Operation (CAISO). Therefore, the total cost CCA customers pay for these GHG-free resources in the PCIA is reduced by the revenue IOUs receive in the CAISO market for the energy generated from these assets. However, the CAISO revenue does not reflect any value for the GHG-free attributes of this energy.
CCAs requested the California Public Utilities Commission (CPUC) establish a GHG-free benchmark to reflect the value of the GHG-free attribute and reduce the PCIA fee by that amount. This is a similar approach to the existing Renewable Portfolio Standard and Resource Adequacy benchmarks that reflect the value of those resources and reduce the PCIA rates.
The CPUC denied the request to establish a GHG-free benchmark; this results in a cost shift from IOU to CCA customers because CCA customers are paying for a portion of the GHG-free attributes that the IOUs claim for its own customers (aka bundled customers). Under SB 612, CCAs would have equitable access to GHG-free attributes.