California Allows Utilities to Procure Local Capacity, With Nonbypassable Recovery

A decision from the California PUC authorizes two utilities to procure generation to meet local capacity requirements, with recovery authorized through the nonbypassable Cost Allocation Mechanism.

The order authorizes Southern California Edison (SCE) to procure between 500 MW and 700 MW and authorized San Diego Gas & Electric (SDG&E) to procure between 500 MW and 800 MW by 2022 to meet local capacity needs stemming from the retirement of the San Onofre Nuclear Generation Stations (SONGS).

SCE is required to procure at least 400 MW, and up to the full 700 MW of authorized additional capacity, from preferred resources or energy storage. SDG&E is required to procure at least 200 MW, and up to the full 800 MW of authorized additional capacity, from preferred resources or energy storage.

Both SCE and SDG&E are authorized to recover the costs of the procurement through the Cost Allocation Mechanism.

"We find that the procurement authorized in this decision is for the purpose of ensuring local reliability in the SONGS service area, for the benefit of all utility distribution customers in that area," the order says of the decision to grant CAM treatment.

"In most cases we expect this allocation to be consistent with D.13-02-015 and the CAM adopted in D.06-07-029, D.07-09-044, D.08-09-012 and D.11-05-005, but there may be resources where an existing alternative method of allocating resources costs may be preferred; for example, cost may be recoverable through the Energy Program Investment Charge," the PUC said

Rulemaking 12-03-014