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Community choice aggregators and others are opposing a request by investor-owned utilities to shift the allocation of costs for certain renewable-energy contracts from IOU customers to departing customers.

CCAs, Shell Energy North America and Alliance for Retail Energy Markets told state regulators they oppose the Feb. 11 petition by two IOUs regarding contracts for the Renewable Market Adjusting Tariff, or ReMAT, program. Pacific Gas & Electric and Southern California Edison filed the petition for modification with the California Public Utilities Commission, saying there are cost-allocation inequities around the contracts.

Under current rules, ReMAT contract costs are allocated to bundled utility service customers only, while customers that depart to CCAs or direct access pay only the above-market costs of the ReMAT contracts signed when they were under utility service. Those above-market costs are recovered in the Power Charge Indifference Adjustment fee that departing utility customers pay [R11-05-005].

"Departing load customers do not pay for any ReMAT contracts signed after their departure, even though the IOUs procure these small distributed generation resources to serve California's broader public policy goals and irrespective of the Utilities' customers' needs. The resulting cost shift can be significant," the IOUs said in their petition for modification.

The utilities requested the CPUC modify a previous decision so that the costs of all existing and future ReMAT contracts are recovered through the Public Policy Program charge, as is done for Bioenergy Market Adjusting Tariff contracts and Public Utility Regulatory Policies Act standard-offer contracts. This would avoid continued cost shifts and establish consistency for mandated IOU-only procurement programs, they said. Alternatively, they requested that a new phase of the CPUC's renewables portfolio standard proceeding be opened or that the issue be addressed as part of the next RPS scoping effort.

The ReMAT was created to implement 2009 legislation requiring IOUs to purchase output from small distributed generation resources under 3 MW, up to a statewide cap of 750 MW, through a feed-in tariff program. In 2012, 250 MW of bioenergy projects were added to the requirement. The CPUC developed a tariff and standard-offer contract for eligible renewable-energy facilities. As CCAs have proliferated since then, the cost inequities have increased as the bundled-customer base shrinks and procurement costs grow, the companies said. 

The IOUs had previously requested modifications to the ReMAT charge in a separate proceeding, but the CPUC declared the request beyond the scope of the proceeding and did not rule on its merits. Cost allocation is not a live issue in any proceeding, the IOUs said.

The CPUC previously broadened the cost allocation for the BioMAT program and PURPA standard-offer contract, according to the filing. The IOUs put the total potential cost exposure of future ReMAT contracts at about $665 million over 20 years.

The California Community Choice Association in March 15 comments told the CPUC it is concerned about continued eroding of the PCIA methodology by shifting IOU costs onto departing customers. The IOUs' customers would retain the prime benefits of the contracts, including resource-adequacy and RPS attributes, CalCCA said.

"To ask all customers to pay the costs of the resources without sharing equally in the benefit effectuates a cost shift from bundled to departing load customers," CalCCA said, asking the CPUC to reject the petition.

If the CPUC grants the request, it should clarify that recovery of ReMAT costs through the Public Policy Program charge would recover all ReMAT costs, not just the above-market costs, and the commission should ensure that all customers paying the costs of the resources benefit equally, the group said.

CalCCA argued that the ReMAT contracts serve public-policy goals as the IOUs state, but the benefits are not unique and are not the only benefits of the resources. CCA customers bear sole cost responsibility for unique requirements such as RPS and greenhouse gas-free energy procurement requirements that also have broad public-policy goals, CalCCA said.

"Beyond a doubt, bundled customers alone receive the direct benefits of these contracts," it said.

Shell and AReM also urged the CPUC to reject the utilities' petition, saying the benefits of the ReMAT contracts rest with bundled customers, who should retain their costs. CCAs and energy service providers have their own RPS procurement obligations, which are not offset by the ReMAT contracts, the filing says.

"In contrast to the BioMAT program, the ReMAT program does not confer public policy 'benefits' upon all ratepayers on an IOU's system," the filing says. "The cost of an IOU's ReMAT procurement contracts, therefore, are properly borne by the IOU's bundled sales customers." The IOUs seek to justify universal allocation of the ReMAT costs because they have excess RPS procurement and do not need the ReMAT procurement to meet RPS obligations, Shell and AReM said.

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