Coordinated planning among different types of load-serving entities with an array of available resources will be key to meeting California's reliability and decarbonization goals, speakers said during a Jan. 29 panel discussion.
Representatives from publicly owned utilities (POUs), community choice aggregators and an investor-owned utility offered their perspectives during the 40-minute session, "Resource Adequacy Functions and Responsibilities: California Load-Serving Entities," part of a webinar co-hosted by NewsData and CJB Energy Economics.
Ultimately, California does not have a single RA program but several of them, Peter Griffes, chief of Pacific Gas & Electric's comprehensive procurement framework, said during the session. While the California PUC sets RA requirements for its jurisdictional load-serving entities, each POU acts as its own local regulatory authority in the context of resource adequacy.
"All of these multiple RA programs need to be able to act and to behave nicely, because what we really don't want is to have conflicting RA programs and conflicting RA requirements," Griffes said. In the near term, there is risk involved in the California ISO and the CPUC having different RA requirements—such as different planning reserve margins or different counting rules—and in LSEs having to meet both requirements.
California's evolving resource-adequacy program is a joint process between the California Energy Commission, the CPUC and CAISO. The program directs LSEs to procure enough capacity to meet demand plus a 15-percent reserve margin, which might increase 2.5 percent as a consequence of the rolling blackouts in August. Alongside examining reserve-margin requirements, CAISO is also developing a three-year "roadmap" to increase the reliability of its RA fleet.
The RA program is made even more complex by the introduction of retail competition and by other state goals including decarbonization and the renewables portfolio standard. There is a tension between reliability and decarbonization in a diverse LSE landscape, Griffes said.
The CPUC in June issued a decision directing IOUs to serve as central entities for RA procurement in their service areas, in response to the proliferation of CCAs and growing concern about the fragmentation of the RA process. The decision will be implemented beginning in 2023, with PG&E and Southern California Edison operating as central entities for Northern and Central California.
Beth Vaughan, executive director of the California Community Choice Association, during her panel presentation pointed to a section of the California Public Utilities Code that states the RA program should maximize the ability of CCAs to determine their generation resources. There are currently 23 CCAs in California that collectively serve around 11 million customers. CCAs, like IOUs, are subject to CPUC compliance in the context of RA.
"CCAs must be allowed to continue to self-procure for their customers," Vaughan said during the webinar.
From the CCAs' perspective, RA reforms should also complement the state's other goals and requirements, including decarbonization, the RPS and integrated resource planning, Vaughan said. Regulators should avoid disrupting the market and not introduce major modifications to the nature of the RA product.
"I simply cannot stress enough the importance of regulatory certainty for long-term procurement investments," she said.
Vaughan said CCAs are currently issuing requests for proposals for energy resources such as long-duration storage, and that the timeline for those procurements runs concurrently with RA reform decisions.
In the longer term, agencies will need to revise the counting rules for energy storage resources, Griffes said. They are currently counted like natural gas-fired resources, by the maximum amount of power they can produce over a set time frame. However, a storage device is not a source of energy, but a way to move energy through time, he said.
"We're going to need more sources of energy as we move forward," Griffes said. "Does the current counting requirement for storage make sense given that it's not a source of energy, and we're likely to need more sources of energy going forward, particularly as the fossil-fired fleet retires and as Diablo Canyon retires?"
Resource scarcity, higher penetration of renewable resources, and coordinated planning that considers diversity of investment and risk balancing are key variables in the Northern California Power Agency's resource-adequacy planning, Tony Zimmer, assistant general manager of power management for the group, said during the session. NCPA represents 16 POUs that operate in Central and Northern California, serving 25 percent of the state's load and 8 percent of CAISO's.
"We strongly believe that no one-size-fits-all [approach] will satisfy the needs of the state," Zimmer said, adding, "From a historic standpoint, POUs have actively invested in capacity and generation and, in particular, diverse generation, so we tend to focus on trying to ensure our portfolios are not heavily weighted in one type of technology.
"One of the big concerns we'll be focused on is ensuring that resources that are needed for flexibility, including thermal, hydro and other types of technology, are retained and that the policy doesn't unnecessarily strand those resources as we move forward."
Decisions regarding a resource mix to meet the state's RA obligations and long-term decarbonization goals should be made in a "measured and thoughtful way," Zimmer added.