The California Public Utilities Commission on June 25 approved a slew of new and revised resource-adequacy rules in order to solve "really difficult issues as the market tightens," Commissioner Liane Randolph said.
"Resource adequacy is really where the rubber meets the road," Randolph said at the CPUC's voting meeting on June 25. "We have been very, very busy in the RA world over the past month . . . Everyone participating in this subject has very strong ideas about the right solutions."
In its rulemaking, the CPUC revised its definition of imported resource adequacy, and broke RA imports into the following two categories: resource-specific imports and non-resource-specific imports [R17-09-020].
Resource-specific imports are identified in the California Independent System Operator's supply plans with specific scheduling-coordinator resource IDs, whereas non-resource-specific imports are not associated with a specific resource or unit, the decision says. In 2019, between 10 and 20 percent of system RA requirements were met with imports, according to the CPUC's Energy Division.
A resource-specific import contract will count toward RA needs if the resource is pseudo-tied or dynamically scheduled into the CAISO day-ahead and real-time markets, and if the load-serving entity includes a resource-specific resource ID in its filings that is on a matching CAISO supply plan and listed in the CPUC's net qualifying capacity list, according to the decision.
A non-resource-specific import will count toward RA needs if the following conditions are met:
- The contract is an energy contract with no economic curtailment provisions.
- The energy self-schedules (or, alternatively, bids in at levels between negative $150/MWh and $0/MWh) into the day-ahead and real-time CAISO markets for delivery.
- The energy self-schedules (or, alternatively, bids in at levels between negative $150/MWh and $0/MWh) during the availability assessment hours throughout the RA compliance month.
- The energy contract includes the following terms: the sale of energy to the load-serving entity is denominated in $/MWh or $/kWh; the energy delivery is to the load-serving entity specifically, not to CAISO generally; and the import is not sourced from resources internal to the CAISO balancing area.
CAISO previously raised concerns about import RA tracking, stating that RA import provisions could allow some RA import resources to be shown to meet RA obligations while also representing speculative supply. Speculative supply occurs when no true physical resource exists, or when no contractual obligation backing the RA is shown, or when the RA resource is committed to other regions and therefore being double-counted, according to the decision. Speculative RA supply can have negative impacts, such as undermining the integrity of the California RA program and threatening system reliability, the decision says.
The CPUC addressed speculative-supply concerns in its decision by "reasonably ensuring" that bids in the day-ahead market will be backed by adequate physical supply, the decision says.
The new requirements for RA imports will apply to the 2021 RA compliance year. The CPUC in its 2019-2020 Integrated Resource Planning report set the state's electricity import value for resource adequacy at 5,000 MW, a revision that some energy experts strongly objected to (see CEM No. 1571).
Separately, the CPUC approved local RA capacity requirements for various regions throughout California, agreeing in most cases with CAISO's projections.
CAISO each year produces a study that outlines local capacity requirement criteria. The agency's latest study recommended increasing the Greater San Francisco Bay Area region's capacity requirement by 1,850 MW—i.e., about a 40-percent increase compared with CAISO's previous study, according to the CPUC's decision. CAISO said it could not find a transmission solution to reduce the Bay Area local capacity requirement, but the commission said the grid operator's proposed significant increase in local capacity for the Greater Bay Area is concerning. The Utility Reform Network added that CAISO's projection for the Bay Area is the largest year-over-year megawatt increase in any local area requirement since enforcement of local requirements began in 2007. TURN said the requirement "will have a significant impact on costs for [Pacific Gas & Electric]'s customers."
The commission decided to reject CAISO's local capacity requirements for the Greater Bay Area for 2022 and 2023, but accepted the requirement for that area in 2021. The commission approved the other regions' local capacity requirements, as shown in the table below.
As part of the RA decision, the CPUC also considered whether to allow solar-plus-storage resources that are installed behind the customer meter to count as RA resources, and to count in a similar way as in-front-of-the-meter resources currently do.
Some participants in the rulemaking, including the California Community Choice Association, Southern California Edison and PG&E, said fundamental issues remain unresolved on the subject, including how and whether BTM resources are reflected in load forecasts.
The commission agreed that numerous issues must be addressed before treating BTM resources as RA in a similar way to in-front-of-the-meter resources. The commission said approval of BTM resources as RA resources would require coordination across multiple proceedings and CAISO stakeholder initiatives.
However, the commission "remains interested in the possibility of increasing value for BTM hybrid resources," the decision says, and the CPUC will request CAISO and California Energy Commission participation in a joint public workshop later this calendar year with the goal of counting BTM resources in the RA program. In the meantime, hybrid BTM resources may continue to participate in the RA program as demand-response resources.