An LMP framework is likely to increase the volatility in the costs of transmitting energy from its source to the end user. CRRs are a market commodity that will act as a hedge to protect LSE's from transmission congestion costs. More information on CRRs is available on the CAISO website.
The CPUC’s Position:
The CPUC proposed changes to CRR product design and distribution methodology to prevent impediments to the expansion of reliance upon renewable energy resources that could arise from the use of nodal LMP Initially, the CAISO proposed to base its allocation of long-term CRRs, a product of up to ten-year duration, upon LSEs’ prior grid usage. The CPUC believed that this allocation method would prevent LSEs from engaging in long-term contracts with new renewable energy resources, which tend to be located in areas remote from customer load centers. The CPUC recognizes that new energy generation resources are unlikely to be built without long-term power sale agreements in place (See D.05-12-042). The CPUC proposed a more gradual allocation of long-term CRRs to facilitate LSE acquisition of CRRs necessary to hedge new contracts with renewable resources. The CPUC also proposed to allow market participants to obtain CRRs in a way that more closely matches their current and future physical use of the grid. A gradual implementation of CRRs should offer market participants sufficient experience to learn how the CRR system works and should prevent uninformed CRR commitments that could result in long-run losses as congestion patterns change over time.
In 2007, the two changes proposed by the CPUC were adopted by the FERC and CAISO. The CPUC continues to monitor the CRR initiative through close supervision of CPUC jurisdictional LSE acquisition of CRRs and active involvement in the CAISO’s development of CRR product and process development. The CPUC also continues to litigate at the FERC regarding potential CRR-related impediments to the CPUC meeting its renewable energy goals.
The CPUC Filings: Highlights:
19. CRRs/Rehearing Request to FERC/August 6, 2007/FERC Docket ER06-615-000, ER07-475-001, ER07-869-000
20. CRRs/Comments on CRR Allocation and Auction under MRTU filing to FERC/June 15, 2007/FERC Docket ER06-615-000 and ER07-869