6. Assignment of Proceeding
Michael R. Peevey is the Assigned Commissioner. Mark S. Wetzell, Meg Gottstein, and Carol Brown are the assigned ALJs and Principal Hearing Officers in this proceeding.
1. Allowing LSEs to acquire a mix of resources capable of satisfying the number of hours for each month that their loads are within 10% of their maximum contribution to monthly system peak gives them flexibility to cover load plus reserves requirements.
2. For purposes of implementing the requirement that LSEs make forward commitments a year in advance of each May through September period, compliance filings made on the prior September 30 will provide the Commission and other parties adequate notice of any shortages or other concerns, yet will enable meaningful preparation and evaluation of forecasts.
3. The July 8 Ruling provided notice that this decision on resource adequacy issues may address the proposed acceleration of the 15-17% PRM requirement, and it invited comments and replies on accelerating the phase-in of the full planning reserve margin from January 1, 2008 to June 1, 2006.
4. Every year of load growth will stretch existing resources even more tightly, and retirements of aging power plants without long-term contracts are a continuing threat.
5. Maintaining and enhancing grid reliability in the near term by accelerating the 15-17% PRM requirement from January 1, 2008 to June 1, 2006 is consistent with the policy to maintain near-term reliability underlying D.04-07-028.
6. The CEC has expressed its willingness to conduct a coincidence analysis based on the LSEs' own hourly load forecasts, and process this data to determine both the control area hourly loads and each LSE's contribution to control area aggregate loads.
7. LSEs will need to acquire information from program operators and evaluators that will permit reasonable estimates of impacts for each LSE's customers.
8. Typical patterns of DG energy production by customer classes must be developed so that hourly load impacts can be deducted from LSE hourly load forecasts for each month.
9. Demand response programs over which the LSE has dispatch control are comparable to other resources.
10. An adjustment for forced outage rates is contrary to conventional practice in resource accounting, and the 15-17% PRM adopted in D.04-01-050 already includes assumptions about average forced outage rates.
11. Intra-control area system contracts with liquidated damage provisions as compensation for performance failure have issues of uncertain deliverability.
12. QFs have contractual incentives to be online during peak periods.
13. Our overarching policy is to avoid the risk to California's grid reliability that is associated with ignoring contract features, such as deliverability, that can impact reliability.
14. Failure of a resource to be deliverable undercuts the whole concept of resource adequacy.
15. Creating a local reliability requirement as part of resource adequacy requirements is consistent with prior Commission decisions, in which the Commission has held that LSEs are responsible for procuring the resources to meet their customers' needs.
16. A 100% forward commitment obligation for a month-ahead time horizon means that for the five summer months of May to September, each LSE would have to acquire the incremental remaining 10% of forward commitments needed to satisfy resource adequacy requirements, and that for the seven non-summer months, a new forward commitment obligation would be created.
17. A 100% month-ahead forward commitment obligation is intended to ensure that sufficient capacity will be available if it is required while allowing LSEs ample flexibility to procure their energy needs economically.
18. It is pointless to create a body of resource adequacy requirements that create contractual obligations for generators to serve load, and then not require generators to do so.
1. The Commission intends to implement a comprehensive RAR program during 2005.
2. LSEs should acquire a mix of resources capable of satisfying the number of hours for each month that their loads are within 10% of their maximum contribution to monthly system peak.
3. For purposes of implementing the requirement that LSEs make forward commitments a year in advance, we will require that LSEs submit compliance filings on September 30 of each year demonstrating 90% forward commitments for the following May through September period.
4. To maintain and enhance near-term reliability, full implementation of the 15-17% PRM adopted in D.04-01-050 should be reached by June 1, 2006.
5. A coincidence adjustment of each LSE's load forecasts should be conducted as generally described in the workshop report, and the resulting LSE load at the time of monthly system peak should be the basis for forward commitment obligations.
6. LSEs shall file their historic hourly loads for the preceding calendar year when they submit hourly load forecasts so that the CEC may readily determine how loads may have changed, in both aggregate characteristics and hourly patterns.
7. LSEs shall prepare load forecasts on the basis of their best estimate of future customers and their loads.
8. The recommendations for development of LSE load forecasts included in Appendix B of the Workshop Report should be adopted except as specifically modified in this interim opinion.
9. LSEs shall include all losses in their load forecasts, including distribution losses, transmission losses, and appropriate estimates of unaccounted for energy.
10. Load forecast reductions reflecting the impacts of energy efficiency programs should be based on (1) assurance that a program will take place either through funding authorization or a contract between parties and (2) sufficient program detail so that impacts can be assessed.
11. Load forecast reductions reflecting customer-side-of-the-meter DG impacts should reflect the output that these DG facilities are actually producing, not nameplate ratings.
12. Non-dispatchable demand response programs such as real-time price tariffs should be treated as debits from load forecasts, while demand response programs over which the LSE has dispatch control should be counted as other resources.
13. The qualifying capacity formulas set forth in Section 5 of the Workshop Report are accepted except where specifically addressed herein.
14. The general formulas for qualifying capacity set forth in Section 5 of the Workshop Report should not be further adjusted for forced outages.
15. Wind and solar resources without backup should be counted on the basis of historic performance determined in such a way as to reveal monthly differences in performance, and for this purpose historic performance should be computed over the QF Standard Offer 1 (SO 1) on-peak period only.
16. QF qualifying capacity should be based on historic performance at peak as noted by the Group B table on p. 26 of the Workshop Report.
17. A generating resource should not be eligible to satisfy resource adequacy requirements unless it is able to operate for 4 hours per day for three consecutive days and the unit satisfies a minimum aggregate number of hours per month based on the number of hours that loads in the control area exceed 90% of peak demand in that month. For the year 2006, the 90 percent rule shall be enforced only for the five summer months. Its application in future years will be a subject for evaluation in Phase 2.
18. Because demand response considered as a resource should not be penalized simply because it is not debited from load forecasts, reserve requirements should not be imposed for demand response counted as resources.
19. Allowing a special demand response minimal seasonal performance level of 48 hours in conjunction with the 0.89% of monthly system peak limit on
two-hour demand resources is reasonable; these limits are therefore imposed on what qualifies and how much in aggregate may satisfy each LSE's monthly peak.
20. The databases maintained by the CEC and CAISO are the appropriate foundation for determining CODs for resources still under construction.
21. The long-term contracts executed by DWR should be eligible as resources even if certain features would otherwise exclude a non-DWR contract with the same terms and conditions, but the deliverability screens that will be developed in this proceeding should be applied to them.
22. Because we are persuaded that the likely benefits of a local deliverability requirement outweigh the likely costs, we adopt this requirement and direct parties to address the implementation details of a local reliability requirement in future proceedings.
23. A 100% month-ahead forward commitment obligation is adopted for all LSEs.
24. The LSE who has a contract with a generator should have first call on that generator, but if the system demands that a generator be called upon for the benefit of the system, then the generator must be required to operate.
25. We adopt this as our policy: all resources identified as satisfying RAR shall conform to a sequence of requirements to first be scheduled by the LSE, then to bid into Day-Ahead markets if not scheduled, and then be subject to RUC if the bid is not accepted.
26. We do not intend to conduct any prudency reviews as part of the annual or monthly RAR compliance filings.
27. To give effect to the RAR policies adopted in D.04-01-050 and in this decision, a second phase of the RAR track of this rulemaking should be established, consistent with the foregoing discussion.
IT IS ORDERED that:
1. All respondent utilities, energy service providers, and community choice aggregators are subject to the load forecasting protocols and resource counting conventions adopted in this interim order as the basis for resource adequacy requirements until directed otherwise by subsequent orders or decisions.
2. Phase 2 of the Resource Adequacy track of this proceeding is established to consider the implementation topics described in the foregoing discussion, findings, and conclusions. The procedures and schedule for Phase 2 shall be those established by the Assigned Commissioner or Administrative Law Judge. The Assigned Commissioner or Administrative Law Judge may narrow the scope of Phase 2 with respect to individual topics if it appears that resolution of the issues associated with a topic will unduly delay completion of Phase 2.
3. This proceeding remains open.
This order is effective today.
Dated October 28, 2004, at San Francisco, California.
MICHAEL R. PEEVEY
President
GEOFFREY F. BROWN
SUSAN P. KENNEDY
Commissioners
I will file a dissent.
/s/ CARL W. WOOD
Commissioner
I will file a dissent.
/s/ LORETTA M. LYNCH
Commissioner
