During its June 24, 2021 Voting Meeting, the California Public Utilities Commission (CPUC) unanimously approved two major decisions.
First, the CPUC issued a decision (Procurement Order) requiring at least 11,500 MW of incremental net qualifying capacity to be collectively procured by all load-serving entities (LSEs) subject to the CPUC’s integrated resource planning (IRP) authority between 2023 and 2026. The Procurement Order is designed to assist California achieve its goal of 100 percent zero-carbon electricity resources by 2045, as well as help the state replace lost capacity from the retirement of the Diablo Canyon Nuclear Power Plant and several once-through-cooling (OTC) thermal power plants. The adopted timeline includes procuring 2,000 MW by August 1, 2023, 6,000 MW in June 1, 2024, 1,500 MW in June 1, 2025, and 2,000 MW in June 1, 2026. Highlights from the Procurement Order include:
- The CPUC expects that all resources procured pursuant to the Procurement Order will be zero carbon-emitting, unless they otherwise qualify under the renewable portfolio standard (RPS) eligibility requirements.
- Resources procured by 2026 must be long lead-time (LLT) resources, e., long-duration storage (able to deliver at maximum capacity for at least eight hours from a single resource).
- Incremental capacity from fossil-fueled resources will not qualify to meet the 11,500 MW requirement, but the CPUC will coordinate with the California Energy Commission (CEC) to conduct additional analysis in the next few months to help inform the preferred system portfolio (PSP) decision this year, where the CPUC may consider additional capacity procurement requirements.
- Contracted imported power may be used to count toward the capacity requirements in the Procurement Order, under certain conditions.
- The procurement requirement set forth by the Procurement Order will be allocated to all LSEs in proportion to their overall load on the electric system, as adjusted by their peak load contribution.
- Deficient LSEs may be subject to penalties.
Second, the CPUC approved an Order Instituting Rulemaking (OIR) to prepare the electric grid for a high number of distributed energy resources (DER) (DER OIR). The CPUC casts a wide net in the DER OIR, seeking to evaluate a broad range of issues, which the CPUC will address along three tracks: (1) Track 1 will focus on high-level policy issues regarding Distribution System Operator (DSO) roles and responsibilities as well as investor-owned utility (IOU) and aggregator business models; (2) Track 2 will focus on the near-term development of a “holistic” Distribution Planning Process (DPP); and (3) Track 3 will consider grid modernization in the near and medium term, operationalizing smart inverters to enhance grid services, and aligning General Rate Case filings with planned infrastructure investments identified during IOU distribution planning. During the Voting Meeting, Commissioner Houck mentioned that the CPUC will be relying heavily on party comments to help refine the proceeding’s scope and announced that the CPUC will be launching two additional DER-related rulemakings later this year – one as a successor to the Integrated Distributed Energy Resources (IDER) proceeding and focusing on DER sourcing mechanisms, and the other to consider customer demand for DERs.
The Decision Requiring Procurement to Address Mid-Term Reliability (2023-2026) (Procurement Order), CPUC Docket No. R.20-05-003, is available here.
The Order Instituting Rulemaking to Modernize the Electric Grid for a High Distributed Resources Future, (DER OIR), CPUC Docket No. R.21-06-017, is available here.
For more information, please contact Lisa S. Gast, Sean M. Neal, or Sylwia Dakowicz.
