Proposed Calif. PUC Order Would Assign Responsibility For Procuring Portion Of Incremental Reliability Resources & Renewable Integration Resources To Retail Suppliers

Would Assign Responsibility To Retail Suppliers Rather Than Having Utility Conduct Procurement, With Use Of CAM

September 13, 2019

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Reporting by Paul Ring • ring@energychoicematters.com

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A proposed order for a California PUC ALJ would require competitive retail suppliers (electric service providers, or ESPs), community choice aggregations, and investor-owned utilities to procure their assigned share of incremental reliability and renewable integration resources identified by the proposed order

The draft would require LSEs to collectively procure 2,500 MW as discussed below

The draft states, "We prefer to assume at the outset that the LSEs with procurement obligations for system reliability and renewable integration would prefer to conduct their own procurement to fulfill their individual requirements. We also note that in many venues for many years, many parties have expressed some degree of dissatisfaction with the CAM, utilized to allocate costs of procurement done by IOUs on behalf of customers of ESPs and CCAs. In response to these criticisms, we will implement a requirement that each LSE, regardless of whether it is an IOU or an ESP or CCA, is responsible for its own share of the incremental reliability and renewable integration resources identified herein as needed."

"Our preference is that a cost allocation framework where IOUs procure on behalf of other LSEs in their territories be used as a backup plan, in the event that the LSEs with the primary responsibility fail to fulfill their obligations. We may need to utilize the CAM or a similar mechanism, as TURN and other parties suggest, but for the primary procurement responsibility, we prefer to assign responsibility where we believe it should be with the LSEs directly. We also note here that procurement conducted by SCE in response to this decision is required to be non-bypassable, for purposes of any additional load departure that occurs after the effective date of this decision.," the draft states

"This is also an appropriate place to test how well at least a cross-section of the obligated LSEs perform when given a procurement requirement for system reliability and renewable integration resources in the context of IRP," the draft says

Specifically, the draft would require that the 2,500 MW of incremental capacity required to be procured as a result of the draft be procured for the SCE portion of the CAISO balancing authority area only, by all Commission-jurisdictional LSEs serving load within the SCE TAC area. The procurement requirement will be shared by all LSEs (CCAs, ESPs, and SCE) that serve load in the SCE territory, on the basis of projected load share for 2021 in gigawatt hours (GWh) identified in Form 1.1c, 'California Energy Demand Update Forecast 2018-2030, Mid Demand Baseline Case, Mid Additional Achievable Energy Efficiency and Additional Achievable Photovoltaics,' of the 2018 IEPR, which was adopted by the CEC in February 2019. The ESPs’ share of load would be calculated based on the portion of its customers within SCE territory only, instead of statewide load share

"The IEPR forecast represents the most recent adopted and publicly-available source of load forecasts for these LSEs. We considered utilizing the 2020 year-ahead forecasts for resource adequacy, which are not public, but which do capture load projections for some new CCAs which began service in 2019, albeit for 2020 and not 2021. However, we prefer to utilize publicly-available information whenever possible. In addition, it may be difficult for newly formed entities to take on this procurement obligation in the near-term. Our expectation is that analysis in the current cycle of IRP will help identify if additional obligations by new LSEs may be needed," the draft says

Direct access accounts for 14.2% of load at SCE, and ESPs would in aggregate be assigned an obligation to procure 355 MW

"By requiring procurement in this way, we will support system resources in the TAC area that needs them most, while avoiding exacerbating some of the potential mismatches between the system resources needed and the LSEs with customer load to support them. Lessons learned from this round can help inform future reliability-related procurement requirements in IRP, while the next round of analysis is being conducted in parallel, to inform the 2019 RSP and any associated procurement that may be required subsequent to that analysis," the draft states

The proposal would require entities to conduct 'all-source' procurement, soliciting offers from battery storage, demand response, energy efficiency, and renewable energy resources, alongside existing gas-fired generation plants. The PUC said in a news release that, "Given cost trends from similar recent all-source solicitations in California and other states, the CPUC anticipates that renewable energy and battery storage will compete well. Deploying renewable energy and battery storage, as well as gas-fired generation, to meet the reliability needs identified by the CPUC and stakeholders will advance California toward a low-carbon, reliable future."

Rulemaking 16-02-007

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