Cgas Price Index Calculation Rules

CGas Price Index Calculation Rules

C.1Background

The Gas Price Index (GPI) is the index that is used in the calculation of the Default Energy Bids, as well as the generated bids including Start-up Costs, and Minimum Load Costs. The GPI has a number of key components, including principally the gas price indices themselves and the intra-state gas transport costs. Gas Price Indexes consist of a single price ($/mmBTU) for each GPI Region, of which there is at least one for each of the main LSEs. Each Resource is associated with the GPI Region in which it resides, or to which it is geographically closest

C.2Gas Transport Cost

The proxy gas transport costs are based on the cost of gas transport in the respective service territories of the main LSEs. It is calculated in the following manner:

Units served by SDG&E: The Southern California Gas Company intrastate transportation rate (currently GT-SD) plus the volumetric component of the SDG&E gas transportation rate for electric generation service, including the ITCS[1] (currently GTUEG – SD), or any successor rate for electric generation service applicable to deliveries to the Facility, divided by one minus the applicable in-kind shrinkage allowance, if any.

Units served by Southern California Gas: The Southern California Gas Company intrastate transportation rate for firm electric generation service, including the ITCS (GT-F) plus the G-ITC Wheeler Ridge Interconnection Access fee, if applicable, or any successor rate for firm electric generation service applicable to deliveries to the Facility, divided by one minus the applicable in-kind shrinkage allowance, if any.

Units served by PG&E: The PG&E intrastate transportation charge stated in Rate Schedule G-EG, or any successor rate for electric generation service applicable to deliveries to the Facility, divided by one minus the applicable in-kind shrinkage allowance, if any.[2]

C.3Gas Prices

The industry sources for gas prices have been identified as:

Natural Gas Intelligence

SNL Energy/Btu Daily Gas Wire

Platt’s Gas Daily

Intercontinental Exchange (ICE).

A key input in deciding how the GPI should be calculated is the timing and availability of the gas prices. The table below summarizes the current timing/availability of gas prices from each of these vendors. All times are in PST on the day before the gas flow date except as noted for NGI.

Based on the availability and timing of data from vendors and the need to ensure accuracy, reliability and consistency the following principles were established:

The GPI should be a one-day index, not a multi-day index. This allows for a more accurate index.

At no stage will the number of gas prices used fall below two. Should fewer than two current gas prices be available the most recent GPI based on two or more prices will be used.

A prior GPI will also be used whenever a current GPI is unavailable for any reason.

For Default Energy Bids, the GPI may be different between DA and RT to allow for a more accurate gas price. For generated bids, the DA and RT will use the same gas price, namely tThe gas price will be updated between the hours of 19:00 and 212:00.

 The GPI published on TD-2 will be used for the DA market for any given TD. The GPI published on TD-1 will be used for the RT market for any given TD.

The GPI will normally be based on three or four prices.

C.4Day-Ahead Timeline for Default Energy Bids

For default energy bids, the Day-Ahead, the GPI will be updated between the hours of 12:00 AM and 2:00 AM PST. Based on this schedule the default energy bids used in the DA for Market Date t will normally include data from ICE, SNL Energy, NGI and Platt’s for Gas Flow Date t-1. That is, the electrical DA market that trades on Tuesday for Wednesday will be indexed to the DA gas market for flow-date Tuesday that traded on Monday. Put differently, very early on Tuesday morning the independent entity will gather the relevant gas prices from Monday’s trading to form the GPI, which is then used for default energy bids forTuesday’s DAM. Generally the DAM DEBs will be formulated using gas prices that are one day old, with the exception of those days that are affected by the lack of weekend gas trading. The expected updates to the GPI for the day-ahead electric market are summarized in the Table below.

Expected Day Ahead Market Update Timing and Available Gas Prices

C.5Real-Time Timeline for Default Energy Bids

For the Real-Time DEBs, the GPI will be updated by 22:00. Based on this schedule, the DEBs for the RT Market Date t will normally include data from the same 3 sources (ICE, SNL Energy, and Platt’s) for Gas Flow Date t and may also include NGI when NGI publishes between 19:00 and 21:00.. That is, for DEBs, the real-time market beginning Tuesday will be indexed to the gas market for Tuesday that traded on Monday. Put differently, the DEBs for the RT market on Tuesday will use Monday’s DA Gas prices, so they will as accurate as is feasible. The expected updates to the GPI for the real-time electric market are summarized in the Table below.

Expected Real-Time Market Update Timing and Available Gas Prices

C.6Timeline for Generated Bids in the DAM and RTM for a Trading Day

For generated bids, including Start-up and Minimum Load Costs, the gas price index published at approximately 22:00 on the day prior to the Day-Ahead Market will be used for the Day-Ahead Market for any given Trading Day (T), i.e. the Day-Ahead Market uses the GPI published T-2. The gas price index published at approximately 22:00 on the day prior to the Real-Market will be used for the Real-Time for any given Trading Day, i..e the Real-Time Market uses the GPI published T-1. Bids submitted in the Real-Time Market prior to the availability of the TD-1 GPI will be initially validated by the GPI published on T-2 and then revalidated based on the TD-1 GPI.

The overall policy for the formulation of the GPI is that it be as accurate as possible given software constraints..

[1] ITCS means Interstate Transition Cost Surcharges.

[2] If the Facility does not qualify for service under Rate Schedule G-EG, the applicable rate shall be given by Rate Schedule G-NT.