The California Public Utilities Commission on Nov. 7 recommended that five once-through-cooling natural gas power plants remain on line for up to three years beyond their planned retirement date of Dec. 31, 2020. The commission also approved delaying by up to 2.5 years the start dates of three solar and two battery storage contracts signed by Pacific Gas & Electric, and directed that 3,300 MW of new resources be procured to meet reliability needs.
"The reality is as we look at the next few years those [OTC] resources are needed," Commissioner Liane Randolph said at the meeting in San Francisco.
How long the plants will be needed in the future is "impossible to predict," the CPUC's decision says, adding, "It seems most prudent to . . . let the markets answer these [extension time] questions."
"Everyone agreed to the [original retirement] date," City of Redondo Beach Mayor Bill Brand said at the meeting. "Redondo Beach is a very densely populated area. This is the last place you want to be extending these deadlines." The CPUC recommended extending the life of the Redondo Beach Generating Station for two years.
"I will never support another extension," Commissioner Martha Guzman Aceves said, as she voted affirmatively on the proposal.
In 2010, the State Water Resources Control Board began requiring a phaseout of OTC power plants in order to address environmental effects from the diversion of what the California Energy Commission estimates is 16 billion gallons of the state's coastal and estuarine waters daily. OTC power plants "entrap billions of aquatic organisms annually, including fish larvae and shellfish, and also remove water from habitats used by aquatic organisms and fauna," the CEC said.
In recommending that the power plants stay operations, the CPUC said it is concerned about a projected gap in power generation resources in the coming years due to peak demand shifting to a later time in the evening, when less renewable power is available; annual peak demand shifting from August to September, when the days are shorter; and less reliable quantities of imported electricity due to nearby regions diversifying their energy resource portfolios.
The California Independent System Operator projects an electric resource-adequacy capacity shortfall in California of at least 2,300 MW by 2021 and 2,200 MW by 2022. However, opponents of the OTC plant extensions, such as the Alliance for Retail Energy Markets, say that CAISO's projected resource-adequacy shortfall could be manufactured—i.e., caused by investor-owned utilities holding onto RA capacity in excess of their needs.
The California Community Choice Association also argued for further analysis of the projected RA shortfall, and specifically requested a "more rigorous examination" of the pace and magnitude of resource retirement, the availability of import supplies, and the likely contribution of already-contracted new resources coming on line between 2021 and 2025, according to the CPUC decision.
Furthermore, CalCCA said that a separate CAISO study—its 2019 summer loads and resources assessment—concluded that the CAISO balancing area is unlikely to face a substantial reliability-deficiency event, unless there is a confluence of several exceptional circumstances placing stress on the electric system.
But the CPUC said the issue is more complicated. Too few system resources could lead to actual shortages and/or market-manipulation opportunities, leading to the risk of additional ratepayer costs, the commission said. On the other hand, too much system capacity represents unnecessary ratepayer costs as well, according to the CPUC.
"Our job is to weigh these tradeoffs and find a reasonable path forward to achieve an appropriate balance of risks and ratepayer costs," the commission said in the decision.
The CPUC decision will now be reviewed for final approval by the State Water Resources Control Board. The proposed plant extensions are as follows:
- Alamitos Generating Station for three more years of about 1,200 MW of capacity.
- Huntington Beach Generating Station for three more years of about 200 MW of capacity.
- Redondo Beach Generating Station for two more years of about 850 MW of capacity.
- Ormond Beach Generating Station for one more year of 1,500 MW of capacity.
- A temporary extension for the Moss Landing power plant, which is in the process of upgrading to comply with OTC requirements, but may not be certified compliant by the water board in time to meet its Dec. 31, 2020 compliance date, according to the CPUC.
At the meeting, the CPUC also approved a proposal by PG&E to delay three of its solar and two of its battery storage contracts.
Three 20-MW solar power-purchase agreements will be pushed out 29 months, from June 30, 2020, to Dec. 1, 2022, and their price will be reduced by 10 percent. Recurrent Energy and Gaskell West are building the projects in Corcoran, Joaquin and Five Points.
The Hummingbird 75-MW battery storage project will be delayed one year, from Dec. 1, 2020, to Dec. 1, 2021, and its contracted price will be reduced by 10 percent. The mNOC 10-MW battery storage project will be delayed by about 15 months, moving from Oct. 1, 2019, to Jan. 1, 2021, and will have its contract price reduced by 11 percent.
The CPUC's green light to delay the PG&E solar and battery storage PPAs comes days after U.S. Bankruptcy Judge Dennis Montali also approved PG&E's request to delay contracts with two other significant renewable-energy projects—a 300-MW storage project and a 15-MW solar farm (see related story).
The CPUC decision also directs load-serving entities in CAISO's balancing authority area to procure 3,300 MW of new RA resources, "on an all-source basis." At least 50 percent are required to be on line by 2021, 75 percent by 2022, and 100 percent by 2023.
"Load-serving entities were encouraged to exceed the minimum level of required procurement to help minimize or eliminate the requested OTC compliance extensions," the CPUC said in a Nov. 8 news release. "Load-serving entities were also encouraged to consider grid resiliency in pursuing procurement, in light of the recent wildfires and power shutoffs." All LSEs are required to provide a procurement progress report by Feb. 15, 2020.