The Energy Division Maximum Cumulative Capacity Buckets Proposal

The RA program guides resource procurement by requiring that LSEs procure capacity so that it is available to the ISO when and where needed. During the development of the RA program in 2004 and 2005, concerns surfaced that LSEs might meet their RA obligations by procuring a large number of resources that were either contractually or operationally limited. This would have had an adverse impact on the reliability of the ISO's grid operations. To ensure that LSEs restricted their dependence on limited availability contracts, Energy Division, pursuant to the directives in D.05-10-042, created four resource categories known as the MCC buckets based on the hours of contractual availability. The RA Program now imposes procurement caps in the form of maximum percentage limits on resources procured that fall within each bucket.

Ordering Paragraph 1(b) of D.11-10-003 stated: "A new Maximum Cumulative Capacity bucket is created for demand response resources, subject to the parameters of the bucket to be determined by the Commission for the 2013 Resource Adequacy year." In the event that neither the Energy Division's proposal to redefine the bucket concept nor the ISO's flexible capacity proposal would be adopted, Energy Division proposed to update the load data that made up the buckets in the existing policy framework and to add a bucket for Demand Response explicitly designed to allow Demand Response resources to contribute to RA as supply side resources. Energy Division staff presented these redefined buckets during RA workshops in January as the default proposal.

In the Scoping Memo, Energy Division was directed to prepare and issue a staff proposal to improve implementation of the RA Program by revising the MCC bucket percentages. The current MCC buckets were last evaluated in 2005, using data from 2003 through 2005. Load shapes have changed since then, necessitating a review of the percentages that have been used to determine the amount of resources that the LSEs could procure in each bucket. Energy Division presented a proposal at the January 26-27, 2012 Resource Adequacy workshop, followed by a revised version at the March 30, 2012 workshop. Parties have had the opportunity to comment on both versions.

Energy Division proposes to redefine the MCC buckets to reflect the changing composition of the resource mix by defining MCC buckets based on contractual hours of operation and dispatchability. Dispatchability is defined based on contractual requirements for ISO dispatch, minimum ramp rate, as well as ability of the resource to start and ramp to minimum load between the close of the day-ahead market and the start of the next day. Therefore, the new MCC buckets are distinguishable from each other by being dispatchable or
non-dispatchable and operate for unlimited hours or restricted hours. Unlimited hours refer to the capability of a resource to run for predictable continuous hours and not strictly for every hour in the day. Based on these characteristics, generation will be assigned to one of the four buckets.

This proposal specifically highlights that standard energy contracts no longer comprise the majority of the RA fleet, since most of the contracts have expired. The changing conditions in the ISO balancing authority area make dispatchability more important for maintaining grid reliability. The current bucket structure and the proposed bucket structure are highlighted in the table below.

	Current Bucket Structure			Proposed Bucket Structure
Bucket Name	Monthly hours of operation	Maximum cumulative percentage of resources	Operational Characteristics	Hours of operation	Maximum percentage of resources	Operational Characteristics
Bucket 4	All hours	100%	None	All hours	100%	Dispatchable
Bucket 3	415	30.1%	None	All hours	69%	Non-dispatchable
Bucket 2	171	18.6%	None	Limited hours	45%	Dispatchable
Bucket 1	87	13.6%	None	Limited hours	5%	Non-dispatchable