22 - Laserfiche WebLink

for incremental renewable procurement to meet RPS requirements, MRW added in the necessary renewable generation to meet current statutory requirements(i.e., 33% of procurement in 2020, increasing to 50% of procurement in 2030).22 To project PG&E's cost of this incremental renewable generation, MRW used the same renewable prices used for Alameda CCA's renewable power cost forecast(see 0). Fixed Cost of Non-Renewable Utility-Owned Generation PG&E's rates include payment for the fixed costs of the PG&E-owned non-renewable generation facilities, which are primarily natural gas, nuclear, and hydroelectric power plants. Because these costs are not tied to the volume of electricity that PG&E sells, their annual escalation is not driven by the price of fuel and other variable inputs. Instead,they escalate at a rate that stems from a combination of cost increases and depreciation reductions. These escalation rates are determined in General Rate Case(GRC)proceedings, which occur roughly every three years. As a starting point for the forecast, MRW used the adopted 2016 fixed costs for these facilities.23 For the period between 2017 and 2019, MRW estimated escalation rates based on PG&E's proposal in its 2017 GRC application,24 estimating in the base case that PG&E would receive 2/3 of its requested GRC increases and in an alternate scenario that PG&E would receive 50% of its requested increases in order to evaluate a window of potential GRC outcomes. For subsequent years, MRW estimated in the base case that PG&E's generation fixed costs would increase by the 6.2% annual average growth rate approved and implemented for these cost over the last ten years. In the alternate scenarios, we instead applied a 4.9% annual average growth rate, calculated as 20% discount off the base case growth rate.25 These escalation rates are in nominal dollars (i.e., some of the escalation is accounted for by inflation). 22 MRW additionally allowed for the purchase of additional renewable generation when renewable prices are below market prices,subject to some purchase limits,including a 50%cap on renewable generation relative to the entire generation portfolio.This leads to additional renewable purchases from 2027-2029 in the Low Renewable Price scenario.Starting in 2030,the RPS requirement is 50%,and no additional renewable purchases are allowed,per the rules of the model,in order to maintain grid reliability. 23 Pacific Gas&Electric.Annual Electric True-Ups for 2016.Advice Letter 4696 E-A.January 4,2016.Table 2. 24 Pacific Gas&Electric 2017 GRC Request,A.15-09-001,Exhibit PG&E-10,Tables E-3 and E-4. 25 Historic growth rates calculated from Pacific Gas&Electric Advice Letters 2706-E-A,AL 3773-E,4459-E,4647- E,and 4755-E.New power plant costs were excluded from these calculations since costs of new plants are offset,at least in part,by a reduction in fuel and purchased power costs. C-2