ALJ/DMG/jyc Date of Issuance 6/25/2010

Decision 10-06-036 June 24, 2010

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 09-10-032 (Filed October 29, 2009)

DECISION ADOPTING LOCAL PROCUREMENT OBLIGATIONS
FOR 2011 AND FURTHER REFINING THE RESOURCE
ADEQUACY PROGRAM

DECISION ADOPTING LOCAL PROCUREMENT OBLIGATIONS FOR 2011 AND FURTHER REFINING THE RESOURCE ADEQUACY PROGRAM 1

1. Summary 2

2. Procedural Background 2

3. Local RA for 2011 4

3.1. 2011 LCR Study 4

3.2. Local Procurement Obligations for 2011 8

3.2.1. Continuation of the Local RA Program 8

3.2.2. Local Resource Adequacy True-ups 9

3.2.2.1. The "True-Up Approach" and
"Reallocation Method" Proposals 11

3.2.2.2. Discussion 15

3.2.3. Aggregation of Local Areas 17

3.2.4. Local Area Deficiency 18

4. RA Program Modifications 19

4.1. Standard Capacity Product 19

4.1.1. Continue the Exemption for Demand Response 20

4.1.2. No Change to Replacement Obligation 21

4.2. Qualifying Capacity 24

4.2.1. Resource Classification Proposals 25

4.2.2. Counting Rules for Non-Dispatchable Resources
(QC Report - Section 10) 27

4.2.3. No Change to the Counting of Distribution Resources 29

4.2.4. Eliminate Forced Outages and Derates from Data to
Calculate QC and Possibly Include Resources Using
Historical Data in the SCP 31

4.2.5. Demand Response 35

4.2.5.1. Counting Proxy Demand Resource and
Supply-Side DR 36

4.2.5.2. Grossing-Up DR for Avoided Line Losses 39

4.2.5.3. Continued Full Year Local RA Credit for Air Conditioner Cycling (AC Cycling) Programs 41

4.2.5.4. Changes to Measurement Hours will be
Effective in 2012 42

4.3. Implementation Proposals 45

4.3.1. Resource Adequacy Penalties 45

4.3.2. Discussion 50

4.3.3. Load forecast timeline 52

4.3.4. RA Record Retention Policy 53

4.3.5. Local Area Substitution 53

5. Comments on Proposed Decision 56

6. Assignment of Proceeding 57

Findings of Fact 57

Conclusions of Law 60

ORDER 62

Appendix A - Load-Serving Entities as Defined in Section 380(j)

Appendix B - Qualifying Capacity Methodology Manual

DECISION ADOPTING LOCAL PROCUREMENT OBLIGATIONS
FOR 2011 AND FURTHER REFINING THE RESOURCE
ADEQUACY PROGRAM

1. Summary

This decision establishes local capacity procurement obligations for
2011 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 for 2011. For the first time in three years, the total local capacity requirements determined by the California Independent System Operator for all local areas combined increased slightly from the prior year; the increase is from
27,727 megawatts in 2010 to 28,058 megawatts in 2011.

In addition, this decision adopts several proposed resource adequacy (RA) program refinements. A Qualifying Capacity Methodology Manual is adopted to provide load-serving entities with clear direction for procuring RA resources. The penalty for failure to timely procure adequate capacity is modified. Finally, several issues are deferred to later portions of this proceeding, including a RA local true-up mechanism.