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made at other times to make up for the annual shortfall." The cost of managing excess renewable energy supply could be reduced through the use of unbundled RECs. For example, in hours when the CCA is long on renewable energy, it could simply resell the energy in the spot market and keep the REC rather than selling the bundled REC at a discount in one hour when it has excess supply and purchasing a bundled REC in another hour. Non-Renewable Energy Cost Forecast MRW separated the costs of non-renewable energy generation into two components: power production costs and greenhouse gas costs. The forecast methodologies for these cost elements, described below, are consistent with the forecast methodologies used for these cost elements in the PG&E rate forecast. Since natural gas generation is typically on the margin in the California wholesale power market, power production costs for market power are driven by the price for natural gas. MRW forecasted natural gas prices based on current NYMEX market futures prices for natural gas, projected long-term natural gas prices in the EIA's 2015 Annual Energy Outlook,12 and PG&E's tariffed natural gas transportation rates.13 MRW used a standard methodology of multiplying the natural gas price by the expected heat rate for a gas-fired unit and adding in variable operations and maintenance costs to calculate total power production costs. In addition to power production costs, the cost of energy generated in or delivered to California also includes the cost of greenhouse gas allowances that, per the state's cap-and-trade program, must be procured to cover the greenhouse gases emitted by the energy generation. MRW developed a forecast of the prices for these allowances based on the results of the California Air Resources Board's (ARB's)auctions for Vintage 2015 allowances,i4 increased annually in proportion to the auction floor price increases stipulated by the ARB's cap-and-trade regulation.15 MRW estimated the emissions rate of Alameda CCA non-renewable power supply based on an estimated heat rate for market power multiplied by the emissions factor for natural gas combustion.16 Capacity Cost Forecast for Non-Renewable Power 11 This is because it is likely that other potential buyers of renewable energy at times when Alameda has excess supply will also have lower need for additional renewable energy. 12 U.S. Energy Information Administration."2015 Annual Energy Outlook,"Table 13. 13 Pacific Gas&Electric,Burnertip Transporation Charges.Tariff G-EG,Advice Letter 3664-G,January 2016 and Tariff G-SUR,Advice Letter 3699-G,April 2016. 14 Auction results available at http://www.arb.ca.gov/cc/capandtrade/auction/results summary.pdf. 15 California Code of Regulations,Title 17,Article 5,Section 95911. 16 U.S.EIA.Electric Power Annual(EPA),February 16,2016,Table A.3. https://www.eia.gov/electricity/annual/html/epa_a_03.html July,2016 B-4 MRW&Associates,LLC