California regulators order PacifiCorp to commit to coal plant retirements

California utility regulators cut PacifiCorp's rate request, saying they will not require the utility's 45,000 customers in the state to pay for accelerated depreciation of coal plants unless the company commits to specific retirement dates for those facilities. Separately, the state Public Utilities Commission took certain steps aimed at assisting self-generation customers.

The PUC on February 6 denied PacifiCorp's request for $5.24 million in 2019 costs for accelerated depreciation of its coal plant units, none of which are in California. In total, the commissioners cut $6.64 million from PacifiCorp's $78.59 million annual revenue request, which would have been an $800,000 increase over present rates that were set in 2011.

Commissioner Liane Randolph, who presided over the proceedings leading to the unanimously approved decision, said that without a formal commitment to retiring coal units, the company was asking for accelerated depreciation of assets it might continue using anyway despite the added expense to ratepayers.

Commissioner Martha Guzman Aceves accused PacifiCorp of "having the audacity to seek such a rate benefit without committing to the retirement of coal," despite California's goal to "drive coal away." Maintaining that the resource no longer is cost-effective, she applauded the PUC's decision to require PacifiCorp to prove that its coal resources are more economical than alternative resources.

Randolph said the decision orders PacifiCorp to file a new rate case for implementation in 2022 and present its plan for specific coal retirement dates in that rate case if it wants California customers to pay accelerated depreciation costs for those retirements.

The commissioners also decided to require a stricter review of PacifiCorp's compliance with California's greenhouse gas performance standard, which prohibits utilities from making long-term commitments to baseload generating facilities that have emissions rates exceeding 1,100 lb of carbon dioxide per megawatt-hour. PacifiCorp no longer will be allowed to use an alternative compliance mechanism based on its system-wide emissions average across the six states it serves, including California. Instead, the Berkshire Hathaway Energy subsidiary will have to meet the standard based on a compliance process the PUC requires for small electrical corporations, community choice aggregators and other electric service providers.

Randolph said that requirement will allow more robust scrutiny of PacifiCorp's rationale for each generating unit that serves California and will increase visibility into the company's generation portfolio. PacifiCorp in late 2019 released an integrated resource plan showing its planned coal retirements.

PUC AIMS TO HELP SELF-GENERATION CUSTOMERS

Turning to rooftop solar customers, the commissioners directed the PUC's enforcement division to develop and propose a citation program to collect penalties from any utilities that fail to comply with consumer protection requirements. Those requirements include obtaining license and registration numbers of solar equipment and service vendors as well as information regarding financial institutions involved in solar transactions with customers.

Guzman Aceves, who issued the proposed decision for the citation program, said she intends to propose a restitution fund for customers who are victims of solar fraud. Revenues for that fund would come from fees customers pay utilities to interconnect their solar systems.

In another proceeding concerning customer-sited generation, the commission decided to eliminate an application fee for the state's Self-Generation Incentive Program, which now is largely aimed at behind-the-meter energy storage in areas exposed to high wildfire risks. The state's four largest investor-owned energy utilities have collected the fee, representing 5% of the requested incentive amount for residential projects they administer through the program. The average fee is $7,000 per customer, the PUC said in its decision.

However, the utilities said the number of applications in the $1.2 billion program has risen substantially over the past two years, increasing the burden of processing and refunding the fee. The fee was intended to discourage frivolous applications, but few self-generation projects are withdrawn and the benefits of the fee are outweighed by the administrative burden of processing thousands of payments and returns, the utilities said.