CPUC Orders Procurement of 3,300 MW of System Capacity

On November 8, 2019, the California Public Utilities Commission (“CPUC”) adopted a decision in the Integrated Resources Planning (“IRP”) Proceeding (R.16-02-007). The Procurement Track Decision adopts a procurement structure where load serving entities (“LSEs”) will have an opportunity to individually or collectively procure their allocated shares of the 3,300 MW. The three large Investor Owned Utilities will serve as backstop procurement entities if LSEs within their respective transmission control areas do not meet their individual procurement track obligations.

Throughout the procurement track for the 2017-18 IRP cycle, parties debated the question of how much procurement is needed and what types of resources ought to qualify as incremental. The final Procurement Track Decision directs the following types of procurement:

• 3,300 MW of “incremental” capacity that qualifies as System Capacity in the Resource Adequacy program, subject to the following schedule:
  • 50% delivered by August 2021;
  • 75% delivered by August 2022;
  • 100% delivered by August 2023;
• Recommends the State Water Resources Control Board make certain limited extensions to its Once Through Cooling (“OTC”) policies affecting coastal power plants, such that some of these units may be available to grid operators on a limited basis in the near term;
• Requires procurement of incremental resources compared to a list of “Baseline Resources”;
• Allows new imports to count for up to 20% of an LSE’s procurement target; and
• Disallows new “Fossil-fuel only” greenfield projects from counting towards the procurement target.

LSEs will need to demonstrate their progress towards the procurement target by February 2020 and various solicitations that may lead to the procurement of incremental system capacity are already underway. In addition, in early December 2019, the CPUC will be taking comment on the accuracy of the list of “baseline resources”, against which the Commission will evaluate whether LSE procurement is “incremental”.

Meanwhile, in a separate track of the IRP proceeding, the CPUC is currently developing the 2019-20 Reference System Plan. The Commission is currently soliciting comment on the 2019-20 Draft Reference System Plan, which is scheduled for adoption in the first quarter of 2020. The Reference System Plan and the procurement track decision from the 2017-2018 cycle will inform LSEs' individual IRP submissions due in May 2020.

Contact: Brian S. Biering