CPUC Issues Decision Modifying The Central Procurement Entity Structure

On February 10, 2022 the California Public Utilities Commission (CPUC) issued a proposed decision recommending several program modifications to facilitate implementation of the new California Central Procurement Entity (CPE) structure for procurement of local Resource Adequacy (RA) resources in the Pacific Gas and Electric Company (PG&E) and Southern California Edison Company (SCE) transmission access charge (TAC) areas. See CPUC Proposes Changes in California’s Central Procurement Entity (CPE) Framework for details of the proposed decision.

Starting in 2023, PG&E and SCE will be responsible for all local RA procurement and procure on behalf of all Load Serving Entities (LSEs) operating in their respective service territories. Since power plants can create multiple RA products (i.e., local, system and flexible Resource Adequacy), and CCAs and other suppliers are still responsible for system and flexible resource adequacy, the CPE requirements create a situation where CCAs and other suppliers may wish to retain the system and flexible attributes of their RA resources, while receiving some value for the local RA attributes of those resources. Decision 22-03-034, issued on March 18, 2022, adopts the proposed decision, with a number of revisions, including the process for showing local RA resources under contract with CCAs and other buyers. D.22-03-034 updates the process for CPE implementation, with the following changes in process:

• In response to concerns about deadlines, and in light of PG&E’s procurement shortfalls for the 2023 compliance year, LSEs in PG&E’s TAC area will have additional flexibility in securing their year-ahead system and flexible RA portfolios for the 2023 RA compliance year.
• To address fairness arguments and reduce disincentives to self-showing procured local resources, backstop costs for non-performing resources will be allocated pro-rata to all LSEs, commensurate with the benefits received. In light of this change, the requirement that LSEs provide planned outage notices 60 days before the showing month is eliminated.
• An LSE may substitute a non-performing resource with a like-for-like resource, if feasible, under the framework.
• Procedural modifications will simplify the self-show process for LSEs and CPEs, and payment process for LSEs.
• Recognizing that there may be insufficient time to consult the Procurement Review Group (PRG) prior to conducting procurement for broker and bilateral contracts, the prior consultation requirement is replaced with requirements for the CPE to provide notice as soon as practicable, and consult with the PRG on plans for procurement outside of solicitations.
• The CPUC’s Energy Division is ordered to assess the effectiveness of the CPE structure and provide a report in 2024.

Contact: Andy Brown or Brian Biering