On May 20, 2022, the California Public Utilities Commission (CPUC or Commission) issued a proposed decision (PD) that would, among other things, adopt Southern California Edison’s (SCE) 24-hour-slice proposal as the new resource adequacy (RA) framework applicable to load-serving entities (LSEs) under the CPUC’s jurisdiction. Generally, the proposal would require each LSE to show that it has enough capacity to meet its specific gross-load profile, including a planning-reserve margin, or PRM, for all 24 hours for the “worst day” of each month. The “worst day” would be defined as the day of the month that has the highest coincident-peak-load forecast. This new RA framework would likely be implemented in 2025, with 2024 serving as a “test year” for the new framework.
The Commission initially began examining potential changes to its RA framework due to significant and ongoing changes in California’s generation-resource mix, with the increasing reliance on variable resources such as solar and wind, and use-limited resources, such as energy storage and demand response, as well as the retirement of older natural gas generation. The Commission solicited proposals for a new RA framework starting in 2020, and in 2021 it tentatively adopted Pacific Gas and Electric’s (PG&E) slice-of-day proposal in decision 21-07-014. The Commission ordered a series of workshops to further develop the proposal, culminating in a workshop report submitted March 1, 2022. During the workshops, two alternate proposals were developed: SCE’s 24-hour-slice proposal, and a two-slice proposal developed by Gridwell Consulting. The parties generally favored one of the two alternate proposals, rather than the PG&E slice-of-day proposal. The selection of SCE’s 24-hour-slice proposal will set the direction for further development of the new RA framework.
The selected RA framework will have implications for how generation and energy-storage resources are counted for RA-compliance purposes. The PD contends that existing contracts for RA capacity will require little to no modification under the SCE RA framework. However, wind and solar resources that are currently valued under an effective-load-carrying-capability (ELCC) methodology, would be valued under an exceedance methodology, the details of which are to be further developed in the RA proceeding. Energy-storage resources will be valued pursuant to their Pmax[1], as they are under the current framework, although the PD also suggests that dispatchable resources (e.g., energy storage, natural gas-fired generation) may be subject to a “UCAP[2]-light” mechanism, which would adjust the Pmax value of these resources to account for ambient derates due to temperature. Details of how the UCAP-light mechanism might be implemented are also to be further developed in the RA proceeding, along with other implementation details.
To further develop required implementation details for the SCE RA framework, the PD directs the parties to engage in additional workshops. Those workshops will be conducted from July through October 2022, with final proposals submitted by November 15, 2022, opening comments on final proposals due December 1, 2022, reply comments due December 12, 2022, and a PD on the remaining implementation details to be issued the first quarter of 2023. Within 20 days of the effective date of the PD, the parties are required to reach agreement and provide the Commission with the following: (1) the date for the first workshop and placeholder dates for at least two subsequent workshops, (2) the scope of issues for each workshop, (3) the parties who will facilitate each workshop, and (4) the parties who will prepare and submit the workshop report to the Commission.
The PD also provides additional direction for the current RA framework, which will remain in place until the new SCE RA framework goes into effect. Among other things, the PD adopts local RA capacity requirements for 2023 through 2025, adopts flexible RA capacity requirements for 2023, adopts revised ELCC values for wind and solar, and declines to apply the ELCC methodology to hybrid and energy-storage resources.
Comments on the PD are due June 9, 2022, and the earliest the PD could appear on a Commission voting meeting agenda will be for its June 23, 2022 meeting.
[1] Defined in the California Independent System Operator tariff, Appendix A, as “[t]he maximum normal capability of the Generating Unit, as measured at the Point of Interconnection or Point of Delivery, as applicable.”
[2] Unforced capacity.
