ALJ/DMG/sbf/rs6 Date of Issuance 6/27/2012

Decision 12-06-025 June, 21, 2012

BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Order Instituting Rulemaking to Oversee the Resource Adequacy Program, Consider Program Refinements, and Establish Annual Local Procurement Obligations.

Rulemaking 11-10-023 (Filed October 20, 2011)

DECISION ADOPTING LOCAL PROCUREMENT OBLIGATIONS
FOR 2013 AND FURTHER REFINING THE
RESOURCE ADEQUACY PROGRAM

DECISION ADOPTING LOCAL PROCUREMENT OBLIGATIONS FOR 2013 AND FURTHER REFINING THE RESOURCE ADEQUACY PROGRAM 11

1. Summary 2

2. Background 3

3. Local RA for 2013 6

3.1. 2013 Local Capacity Requirements Study 6

3.2. Refinements to the Resource Adequacy Program 10

3.2.1. Continuation of the Local RA Program 10

3.2.2. Flexible Capacity and Maximum Cumulative Capacity Buckets Proposals 11

3.2.3. Coincident Adjustment Factor 23

4. Rounding Convention 28

5. Dynamically Scheduled Resources 30

6. CAC Petition for Modification 30

7. Demand Response Counting Issues 32

8. Comments on Proposed Decision 34

9. Assignment of Proceeding 35

Findings of Fact 35

Conclusions of Law 37

ORDER 39

DECISION ADOPTING LOCAL PROCUREMENT OBLIGATIONS
FOR 2013 AND FURTHER REFINING THE
RESOURCE ADEQUACY PROGRAM

1. Summary

This decision establishes local capacity procurement obligations for
2013 applicable to Commission-jurisdictional electric load-serving entities. These procurement obligations are based on an annual study of local capacity requirements performed by the California Independent System Operator (ISO) for 2013. The total local capacity requirements determined by the ISO for all local areas combined decreased slightly from the prior year; the decrease is from 26,788 Megawatts (MW) in 2012 to 25, 769 MW in 2013. The existing capacity needed decreased from 26,158 MW in 2012 to 25,189 in 2013.

In this decision, we consider proposals by the ISO and the Energy Division to address flexible capacity needs with regard to local capacity requirements over the next several years. We agree that there are good reasons to define "flexibility" for Resource Adequacy purposes and identify the types of flexible resources needed to maintain reliability. While both proposals have appealing elements and move toward potential solutions, parties are largely in consensus that neither proposal is sufficiently detailed and ready for implementation at this time. As the ISO and parties agree, there is no compelling need to resolve this issue for the 2013 Resource Adequacy year; however, the ISO seeks resolution well ahead of 2014. Therefore, we will study flexible capacity proposals further in this proceeding, and intend to issue a decision by or near the end of 2012 on this topic. We will coordinate our efforts in this proceeding with efforts in the Long-Term Procurement Process proceeding (Rulemaking 12-03-014).

In addition, this decision modifies the Resource Adequacy program to adopt a different calculation for the coincidence adjustment factor in order to more accurately reflect cost causation, provides for a new Maximum Cumulative Capacity bucket for Demand Response resources, and continues certain Resource Adequacy exemptions for Pacific Gas and Electric Company's demand response programs for 2013.