Calif. PUC President Says Competitive LSEs Such As Retail Providers Present "Challenge" In Building Generation Needed For Resource Adequacy

During a California legislative hearing yesterday, California PUC President Michael Picker reiterated his concerns with the current hybrid market in the state, and the implications for resource adequacy

"Here's where we get into uncharted and potentially dangerous territory -- we're neither here nor there," Picker said, as with increased migration from bundled service, the state has moved away from its initial post-crisis structure of the early 21st century where utilities were essentially solely responsible for resource adequacy through long-term contracting, but hasn't fully moved to a system where competitive LSEs are solely responsible for RA.

"The cleanest way would be if we had vertically integrated utilities or we went to full competition where everybody picked their electricity provider and then you had discrete transmission and discrete distribution companies. That's what Texas and New York do. It works for them ... not clear if it would work for here, but it's also clear we're not going to go back to a vertically integrated system," Picker said

"So the question is, 'What do you do,'" Picker said

"I think it's going to be a challenge," for community choice aggregations to meet the forecast needs of new generation for RA, Picker said

Picker noted that while CCAs have customers, they don't have the financial assets or large balance sheets to get financing for generation projects. Picker contrasted CCAs to large companies with big balance sheets that can finance large amounts of generation

Picker also said that electric service providers (retail suppliers) generally present the same problems, though Picker did note that many of the ESPs are large, successful out of state "utilities"

Still, ESPs do face, "significant procurement challenges," Picker said

Picker said the potential market-wide impact of even a small LSE failing in its RA obligation "scares" him

Picker again cited that after granting only two RA waivers the year before, the PUC granted 11 in the most recent year, mostly from CCAs

As previously reported, Picker chastised electric service providers (ESPs, retail suppliers) and CCAs who could not meet the "legislative requirement" to keep the grid reliable via the RA program

Picker also told legislators the PUC continues to evaluate a central buyer mechanism for RA