Laserfiche WebLink
Community Choice Aggregation Feasibility Analysis Alameda County <br />June, 2016 25 MRW & Associates, LLC <br />Chapter 4: Sensitivity of Results to Key Inputs <br />In addition to the base case forecast described above, MRW has assessed alternative cases to evaluate the sensitivity of the results to possible conditions that would have an impact on <br />Alameda CCA’s feasibility study. The metric considered to compare the alternative sensitivity <br />cases to the base case is the differential between the annual average generation rates for PG&E <br />bundled customers and for Alameda CCA customers.31 <br />The base-case analysis (Chapter 3 –Scenario 1) was developed as a reasonable and conservative assessment of the Alameda CCA. In addition to the base case analysis, MRW analyzed <br />alternative cases to address six risks: (1) the relicensing of the Diablo Canyon nuclear units, (2) <br />higher renewable supply costs, (3) higher PCIA charges, (4) higher natural gas prices, (5) lower <br />PG&E portfolio costs, and (6) a combination of the last four of these five risks (stress scenario). <br />Diablo Canyon Relicensing Sensitivity <br />In the base case the Diablo Canyon nuclear units are retired at the end of their current operating licenses (Unit 1 in 2024 and Unit 2 in 2025).32 At this time, nuclear retirement appears to be the <br />lower-cost option for PG&E ratepayers given, on the one hand, low market prices for <br />replacement power (both gas-fired and renewable) and, on the other hand, the significant costs <br />PG&E would likely incur to undertake a cooling system modification and potentially other <br />upgrades that would be required to relicense the plant and continue operations.33 Under the relicensing scenario, PG&E’s generation rate would therefore increase, providing a competitive benefit to the Alameda CCA.34 As shown in Table 8, MRW anticipates that the average rate <br />differential over the 2017-2030 period would increase by 1.35¢/kWh under the Diablo Canyon <br />relicensing scenario. <br /> <br />31The Alameda CCA rate includes the PG&E exit fees (PCIA charges) that will be charged to CCA customers but does not include the rate adjustment for the reserve fund. <br />32 This assumption is consistent with the CPUC’s proposed assumptions for long-term transmission planning. “Administrative Law Judge’s Ruling Seeking Comment on Assumptions and Scenarios for use in the California <br />Independent System Operator’s 2016-17 Transmission Planning Process and Future Commission Proceedings,” CPUC proceeding R.13-12-010, February 8, 2016, page 41. <br />33 The new cooling system, which would be required per state regulations implementing the Federal Clean Water <br />Act, Section 316(b), would have an estimated cost of $4.5 billion. Subcommittee Comments on Bechtel’s Assessment of Alternatives to Once-Through-Cooling for Diablo Canyon Power Plant. November 18, 2014, page <br />10. 34 An increase in PG&E’s rates results in an increase to the CCA customers’ exit fees (which pay for the above- <br />market costs of PG&E’s rates). However, this exit fee increase is much smaller than the PG&E rate increase, and the relicensing scenario provides an overall benefit to the CCA.