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Market Price Referent (MPR)

Background

Pursuant to Senate Bill (SB) 1078 (Sher, Chapter 516, Statutes of 2002) and SB 107 (Simitian, Chapter 464, Statutes of 2006) the Commission determined through a series of decisions that the MPR is best reflected by the long-term ownership, operating, and fixed-price fuel costs for a new 500 MW natural gas-fired combined cycle gas turbine (CCGT).  The baseload proxy CCGT is adjusted to account for the value of different products by applying the utilities time-of-delivery factors to the Commission adopted MPR value.

 

Process for Updating MPR Values

Pursuant to Commission decisions, the utilities' RPS solicitation triggers an MPR update.  Specifically, the MPR gas forecasting methodology relies on a 12-day trading day average of NYMEX prices leading up to the close of the RPS solicitation bidding window, and only after the close of the RPS solicitation may staff release the MPR values by Draft Resolution.  Energy Division staff propose updated MPR values by issuing a Draft Resolution, which requires a 30 day public comment period before it can be adopted by the Commission. Until the Commission adopts new MPR values, the current MPR values are effective.

MPR Methodology

  • The MPR represents the levelized price, calculated using a cash flow modeling approach, at which the proxy CCGT revenues exactly equal the expected proxy CCGT costs on a net-present value (NPV) basis.
  • The fixed and variable components of the MPR are calculated iteratively (using the MS-Excel goal seek function) and then summed to produce an all-in MPR price.
  • The MPR Model inputs include installed capital costs, fixed and variable operations and maintenance costs, natural gas fuel costs, cost of capital, and environmental permitting and compliance costs.

2011 MPR Documents

Past MPR Documents




Last Modified: 12/8/2011



 
 
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