AB 2368: System reliability and outages.
- Session Year: 2023-2024
- House: Assembly
- Latest Version Date: 2024-09-27
Current Status:
Passed
(2024-09-27: Chaptered by Secretary of State - Chapter 713, Statutes of 2024.)
Introduced
In Committee
First Chamber
In Committee
Second Chamber
Enacted
What does this bill do?
The bill strengthens planning and transparency for California’s electric grid by requiring the Public Utilities Commission to use probabilistic modeling to assess short‑, mid‑, and long‑term reliability, aggregate procurement data from all load‑serving entities, and ensure the resource adequacy program can meet a standard reliability metric. It also allows the Independent System Operator to amend its tariff (its operating rules and charges) with federal approval and requires the ISO to post and share findings and recommendations when a major outage was caused mainly by insufficient available electricity.
The summary is provided by generative AI which can make mistakes. For original language, please view the details in the table below.
Existing law requires the Independent System Operator to ensure the efficient use and reliable operation of the transmission grid, as provided.
This bill would authorize the Independent System Operator to amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission, to be consistent with the efficient use and reliable operation of the transmission grid.
Existing law requires the Independent System Operator to perform a review following a major outage that affects at least 10% of customers of the entity providing the local distribution service, as provided.
This bill would require the Independent System Operator, if it finds that the primary cause of the outage was the insufficiency of the available electricity supply, to post the finding and recommendations to prevent future shortfalls on its internet website and share the finding and recommendations with the Public Utilities Commission (PUC), the State Energy Resources Conservation and Development Commission, and the Legislature.
Existing law requires the PUC, in consultation with the Independent System Operator, to establish resource adequacy requirements for all load-serving entities and requires the PUC in establishing those requirements to ensure the reliability of electrical service in California. Existing law requires the PUC to determine and authorize the most efficient and equitable means of achieving certain objectives.
This bill would require that the resource adequacy program consider mitigation measures, if the commission determines they are needed, to reduce costs to ratepayers. The bill would require the PUC to determine and authorize the most efficient and equitable means of ensuring that the resource adequacy program can reasonably maintain a standard measure of reliability and use it for planning purposes.
Existing law requires the PUC to ensure that load-serving entities ensure system and local reliability and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls, as provided.
This bill would require the PUC, as part of the integrated planning process, to assess short-term, midterm, and long-term reliability by conducting specified modeling. The bill would require the PUC to review the results, as specified.
Under the Public Utilities Act, a violation of an order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because a violation of a PUC action implementing certain provisions of this bill would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law requires the Independent System Operator to ensure the efficient use and reliable operation of the transmission grid, as provided.
This bill would authorize the Independent System Operator to amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission, to be consistent with the efficient use and reliable operation of the transmission grid.
Existing law requires the Independent System Operator to perform a review following a major outage that affects at least 10% of customers of the entity providing the local distribution service, as provided.
This bill would require the Independent System Operator, if it finds that the primary cause of the outage was the insufficiency of the available electricity supply, to post the finding and recommendations to prevent future shortfalls on its internet website and share the finding and recommendations with the Public Utilities Commission (PUC), the State Energy Resources Conservation and Development Commission, and the Legislature.
Existing law requires the PUC, in consultation with the Independent System Operator, to establish resource adequacy requirements for all load-serving entities and requires the PUC in establishing those requirements to ensure the reliability of electrical service in California. Existing law requires the PUC to determine and authorize the most efficient and equitable means of achieving certain objectives.
This bill would require that the resource adequacy program consider mitigation measures, if the commission determines they are needed, to reduce costs to ratepayers. The bill would require the PUC to determine and authorize the most efficient and equitable means of ensuring that the resource adequacy program can reasonably maintain a standard measure of reliability and use it for planning purposes.
Existing law requires the PUC to ensure that load-serving entities ensure system and local reliability and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls, as provided.
This bill would require the PUC, as part of the integrated planning process, to assess short-term, midterm, and long-term reliability by conducting specified modeling. The bill would require the PUC to review the results, as specified.
Under the Public Utilities Act, a violation of an order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because a violation of a PUC action implementing certain provisions of this bill would be a crime, the bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law requires the Independent System Operator to ensure the efficient use and reliable operation of the transmission grid, as provided.
This bill would authorize the Independent System Operator to amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission, to be consistent with the efficient use and reliable operation of the transmission grid.
Existing law requires the Independent System Operator to perform a review following a major outage that affects at least 10% of customers of the entity providing the local distribution service, as provided.
This bill would require the Independent System Operator, if it finds that the primary cause of the outage is was the insufficiency of the available electricity supply, to post the finding and recommendations for the procurement of necessary resources to prevent future shortfalls on its internet website and share the finding and recommendations with the Public Utilities Commission (PUC), the State Energy Resources Conservation and Development Commission, and the Legislature.
Existing law requires the PUC, in consultation with the Independent System Operator, to establish resource adequacy requirements for all load-serving entities and requires the PUC in establishing those requirements to ensure the reliability of electrical service in California. Existing law requires the resource adequacy program to facilitate the development of new generating, nongenerating, hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability. Existing law requires the PUC to determine and authorize the most efficient and equitable means of achieving certain objectives.
This bill would require the PUC to ensure the reliability of electrical service in California sufficient to maintain a one-day-in-10-year loss-of-load expectation. The bill would require that the resource adequacy program to consider mitigation measures, if the commission determines they are needed, to reduce costs to ratepayers. The bill would require the PUC to determine and authorize the most efficient and equitable means of ensuring that the resource adequacy program can reasonably maintain a standard measure of reliability and use it for planning purposes.
Existing law requires the PUC to ensure that load-serving entities ensure system and local reliability and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls, as provided.
This bill would require the PUC, on a biennial basis, as part of the integrated planning process, to assess short-term, midterm, and long-term reliability by conducting specified modeling and reviewing the results. modeling. The bill would require the PUC to review the results, as specified.
Under the Public Utilities Act, a violation of order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because a violation of a PUC action implementing certain provisions of the bill would be a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law requires the Independent System Operator to ensure the efficient use and reliable operation of the transmission grid, as provided.
This bill would authorize the Independent System Operator to amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission, to be consistent with the efficient use and reliable operation of the transmission grid.
Existing law requires the Independent System Operator to perform a review following a major outage that affects at least 10% of customers of the entity providing the local distribution service, as provided.
This bill would require the Independent System Operator, if it finds that the primary cause of the outage is the insufficient procurement of generation resources, insufficiency of the available electricity supply, to post the finding and recommendations for the procurement of necessary resources on its internet website and share the finding and recommendations with the Public Utilities Commission (PUC), the State Energy Resources Conservation and Development Commission, and the Legislature.
Existing law requires the PUC, in consultation with the Independent System Operator, to establish resource adequacy requirements for all load-serving entities and requires the PUC in establishing those requirements to ensure the reliability of electrical service in California. Existing law requires the resource adequacy program to facilitate the development of new generating, nongenerating, hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability.
This bill would require the PUC, in coordination, rather than in consultation, with the Independent System Operator, to establish those resource adequacy requirements and would require the PUC to ensure the reliability of electrical service in California sufficient to maintain a one-day-in-10-year loss-of-load expectation. The bill would require the resource adequacy program to facilitate the development of new generating, nongenerating, and hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economical, needed for reliability, and needed to achieve a certain state policy, as specified. consider mitigation measures, if the commission determines they are needed, to reduce costs to ratepayers.
Existing law requires the PUC to ensure that load-serving entities ensure system and local reliability and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls, as provided.
This bill would require the PUC to ensure that all resources contracted in the midterm forward period, defined as a period between 2 and 5 years in the future, are reported to the PUC and the Independent System Operator, as specified. The bill would require the PUC, on a biennial basis, to assess short-term, midterm, and long-term reliability by conducting specified modeling and reviewing the results.
Existing law requires the PUC to establish rules regarding ex parte communications, as provided. Existing law defines ex parte communication to mean any oral or written communication between a decisionmaker and an interested person concerning any matter before the PUC, as provided. Existing law defines interested person.This bill would exclude from the definition of interested person the Independent System Operator when the Independent System Operator consults with the PUC on matters of reliability or when sharing market-sensitive or confidential data, as provided.Under the Public Utilities Act, a violation of order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because a violation of a PUC action implementing certain provisions of the bill would be a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law requires the Independent System Operator to ensure the efficient use and reliable operation of the transmission grid, as provided.
This bill would authorize the Independent System Operator to establish minimum planning reserve requirements for participating load-serving entities amend its tariff, as deemed necessary and approved subject to approval by the Federal Energy Regulatory Commission. Commission, to be consistent with the efficient use and reliable operation of the transmission grid.
Existing law requires the Independent System Operator to perform a review following a major outage that affects at least 10% of customers of the entity providing the local distribution service, as provided.
This bill would require the Independent System Operator, if it finds that the primary cause of the outage is the insufficient procurement of generation resources, to share post the findings finding and recommendations for the procurement of necessary resources on its internet website and share the finding and recommendations with the Public Utilities Commission (PUC), the State Energy Resources Conservation and Development Commission, and the Legislature.
Existing law requires the PUC, in consultation with the Independent System Operator, to establish resource adequacy requirements for all load-serving entities and requires the PUC in establishing those requirements to ensure the reliability of electrical service in California. Existing law requires the resource adequacy program to facilitate the development of new generating, nongenerating, hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability.
This bill would require the PUC, in collaboration instead of consultation coordination, rather than in consultation, with the Independent System Operator, to establish those resource adequacy requirements and would require the PUC to ensure the reliability of electrical service in California sufficient to maintain a one-day-in-10-year loss-of-load expectation. The bill would require the resource adequacy program to facilitate the development of new generating, nongenerating, and hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability in the following 5 years, economical, needed for reliability, and needed to achieve a certain state policy, as specified.
Existing law requires the PUC to ensure that load-serving entities ensure system and local reliability and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls, as provided.
This bill would require the PUC to ensure that all resources contracted in the midterm forward period, defined as a period between 2 and 5 years in the future, are reported to the PUC and the Independent System Operator, as specified. The bill would require the PUC, on a biennial basis, to assess short-term, midterm, and long-term reliability by conducting specified modeling and reviewing the results.
Existing law requires the PUC to establish rules regarding ex parte communication, communications, as provided. Existing law defines ex parte communication to mean any oral or written communication between a decisionmaker and an interested person concerning any matter before the PUC, as provided. Existing law defines interested person.
This bill would exclude from the definition of interested person the Independent System Operator when the Independent System Operator consults with the PUC on matters of reliability, reliability or when sharing market-sensitive or confidential data, as provided.
Under the Public Utilities Act, a violation of order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because a violation of a PUC action implementing certain provisions of the bill would be a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law requires the Independent System Operator to ensure the efficient use and reliable operation of the transmission grid, as provided.
This bill would authorize the Independent System Operator to establish minimum planning reserve requirements for participating load-serving entities as deemed necessary and approved by the Federal Energy Regulatory Commission.
Existing law requires the Independent System Operator to perform a review following a major outage that affects at least 10% of customers of the entity providing the local distribution service, as provided.
This bill would require the Independent System Operator, if it finds that the primary cause of the outage is the insufficient procurement of generation resources, to share the findings and recommendations for the procurement of necessary resources with the Public Utilities Commission, Commission (PUC), the State Energy Resources Conservation and Development Commission, and the Legislature.
Existing law requires the PUC, in consultation with the Independent System Operator, to establish resource adequacy requirements for all load-serving entities and requires the PUC in establishing those requirements to ensure the reliability of electrical service in California. Existing law requires the resource adequacy program to facilitate the development of new generating, nongenerating, hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability.
This bill would require the PUC, in collaboration instead of consultation with the Independent System Operator, to establish those resource adequacy requirements and to ensure the reliability of electrical service in California sufficient to maintain a one-day-in-10-year loss-of-load expectation. The bill would require the resource adequacy program to facilitate the development of new generating, nongenerating, and hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability in the following 5 years, as specified.
Existing law requires the PUC to ensure that load-serving entities ensure system and local reliability and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls, as provided.
This bill would require the PUC to ensure that all resources contracted in the midterm forward period, defined as a period between 2 and 5 years in the future, are reported to the PUC and the Independent System Operator, as specified. The bill would require the PUC, on a biennial basis, to assess short-term, midterm, and long-term reliability by conducting specified modeling and reviewing the results.
Existing law requires the PUC to establish rules regarding ex parte communication, as provided. Existing law defines ex parte communication to mean any oral or written communication between a decisionmaker and an interested person concerning any matter before the PUC, as provided. Existing law defines interested person.
This bill would exclude from the definition of interested person the Independent System Operator when the Independent System Operator consults with the PUC on matters of reliability, as provided.
Under the Public Utilities Act, a violation of order, decision, rule, direction, demand, or requirement of the PUC is a crime.
Because a violation of a PUC action implementing certain provisions of the bill would be a crime, this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.
This bill would provide that no reimbursement is required by this act for a specified reason.
Existing law requires the Independent System Operator to perform a review following a major outage that affects at least 10% of customers of the entity providing the local distribution service, as provided.
This bill would require the Independent System Operator, if it finds that the primary cause of the outage is the insufficient procurement of generation resources, to share the findings and recommendations for the procurement of necessary resources with the Public Utilities Commission, the State Energy Resources Conservation and Development Commission, and the Legislature.
Existing law, enacted as part of the restructuring of the electrical industry, provides for the establishment an Electricity Oversight Board to perform specified functions, including overseeing the Independent System Operator and the Power Exchange and to investigate any matter related to the wholesale market for electricity to ensure that the interests of Californias citizens and consumers are served, protected, and represented in relation to the availability of electric transmission and generation and related costs during periods of peak demand.This bill would make nonsubstantive revisions to certain legislative findings and declarations relative to electrical restructuring.Existing law, enacted as part of the restructuring of the electrical industry, provides for the establishment an Electricity Oversight Board to perform specified functions, including overseeing the Independent System Operator and the Power Exchange and to investigate any matter related to the wholesale market for electricity to ensure that the interests of Californias citizens and consumers are served, protected, and represented in relation to the availability of electric transmission and generation and related costs during periods of peak demand.
This bill would make nonsubstantive revisions to certain legislative findings and declarations relative to electrical restructuring.
(a)The Legislature finds and declares all of the following:
(1)Because Section 454.53 of the Public Utilities Code sets a goal of renewable energy and zero-carbon resources supplying 100 percent of retail sales of electricity to end-use customers by 2045, California is committed to rapidly decarbonizing the grid, promoting the growth of renewable energy resources, optimizing energy efficiency, and expanding the states energy transmission infrastructure to meet its needs.
(2)The foundation of a decarbonized economy rests on a reliable electrical grid.
(3)Realizing this foundation depends on effective and coordinated planning and reliability frameworks that anticipate and address the electricity needs of the state both in the present and in the future.
(4)Climate change is putting increasing pressure on the states electrical grid. It is imperative for state agencies to use the most comprehensive analytical methods to prepare for maintaining the electrical grid during extreme weather events.
(5)The effectiveness of the states resource adequacy and integrated resource planning frameworks is intrinsically linked to the capability of these frameworks to foresee, plan for, and address current and future energy demands.
(6)The absence of review mechanisms for procurement in the midterm or of a formalized reliability standard, such as a 1-in-10 loss of load expectation, may hinder the states path to consistent and cost-effective energy reliability planning.
(7)In the past few years, California has seen multiple capacity shortfalls that have led to several costly events, including the rotating electricity outages of 2020. Consequent emergency procurements, and the extensions to the Diablo Canyon powerplant and three coastal once-through cooling plants have cost taxpayers billions of dollars and underscore the urgent need for a transparent, unified, and forward-thinking planning approach.
(8)Outages and related electrical grid disturbances can affect the health and safety of Californians, especially during extreme heat events, and can be extremely disruptive and costly to our states economy.
(9)The capacity market in California is currently constrained. Capacity prices have skyrocketed in recent years, impacting ratepayers. The Legislature aims to foster more robust reliability planning to avoid these types of market conditions in the future.
(b)It is the intent of the Legislature, in enacting this act, to increase the reliability of Californias electrical grid through all of the following:
(1)Adopting transparent reliability standards to provide consistent information to ensure that planning processes genuinely reflect the electrical grids capacity needs.
(2)Providing consistent information to policymakers and bridging the planning gap between short-term needs and long-term planning, thereby helping to avert the challenges and costs associated with electrical grid emergencies and emergency capacity procurement.
(3)Enhancing the collective efficacy of the resource adequacy and integrated resource planning frameworks in serving Californias energy needs through resource assessment and planning, including through improved collaboration between the Public Utilities Commission, the State Energy Resources Conservation and Development Commission, and the Independent System Operator.
(c)(1)It is not the intent of the Legislature to further penalize load-serving entities through the resource adequacy program due to present capacity market conditions beyond their control.
(2)It is not the intent of the Legislature to prescribe a midterm reliability program design or create an additional procurement mechanism.
(3)It is not the intent of the Legislature to change the authority of the Public Utilities Commission in relation to the Independent System Operator. It is the intent of the Legislature that the primary authority for resource adequacy and procurement planning remains with the Public Utilities Commission and self-governing publicly owned utilities. The Public Utilities Commission and publicly owned utilities are in the best position to balance the objectives of reliability, cost, and environmental goals.
SEC. 2.Section 345 of the Public Utilities Code is amended to read:345.(a)The Independent System Operator shall ensure the efficient use and reliable operation of the transmission grid consistent with the achievement of planning and operating reserve criteria that are no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council.
(b)In furtherance of subdivision (a), the Independent System Operator may amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission through its rulemaking process, to be consistent with subdivision (a).
SEC. 3.Section 349 of the Public Utilities Code is amended to read:349.(a)The Independent System Operator shall perform a review following a major outage that affects at least 10 percent of the customers of the entity providing the local distribution service. The review shall address the cause of the major outage, the response time and effectiveness, and whether the transmission facility owner or operators operation and maintenance practices enhanced or undermined the ability to restore service efficiently and in a timely manner.
(b)(1)If the Independent System Operator finds pursuant to subdivision (a) that the operation and maintenance practices of the transmission facility owner or operator prolonged the response time or was responsible for the outage, the Independent System Operator may order appropriate sanctions, subject to the Federal Energy Regulatory Commission approving that authority.
(2)(A)If the Independent System Operator finds pursuant to subdivision (a) that the primary cause of the outage was the insufficiency of the electricity supply available to serve the electrical load within its balancing area authority, the Independent System Operator shall post on its internet website the finding and recommendations to prevent future shortfalls and share the finding and recommendations with the commission, the Energy Commission, and the Legislature.
(B)Findings and recommendations submitted to the Legislature shall be provided in accordance with Section 9795 of the Government Code.
SEC. 4.Section 380 of the Public Utilities Code is amended to read:380.(a)The commission, in consultation with the Independent System Operator, shall establish resource adequacy requirements for all load-serving entities.
(b)In establishing resource adequacy requirements, the commission shall ensure the reliability of electrical service in California while advancing, to the extent possible, the states goals for clean energy, reducing air pollution, and reducing emissions of greenhouse gases. The resource adequacy program shall achieve all of the following objectives:
(1)Facilitate the development of new generating, nongenerating, and hybrid capacity and the retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability and to achieve the state policy specified in Section 454.53.
(2)Establish new, or maintain existing, demand response products and tariffs that facilitate the economical dispatch and use of demand response that can either meet or reduce an electrical corporations resource adequacy requirements, as determined by the commission.
(3)Equitably allocate the cost of generating capacity and demand response in a manner that prevents the shifting of costs between customer classes.
(4)Minimize enforcement requirements and costs.
(5)Consideration of mitigation measures, if the commission determines they are needed, to reduce costs to ratepayers.
(6)Maximize the ability of community choice aggregators to determine the generation resources used to serve their customers.
(c)Each load-serving entity shall maintain physical generating capacity and electrical demand response adequate to meet its load requirements, including, but not limited to, peak demand and planning and operating reserves. The generating capacity or electrical demand response shall be deliverable to locations and at times as may be necessary to maintain electrical service system reliability, local area reliability, and flexibility.
(d)Each load-serving entity shall, at a minimum, meet the most recent minimum planning reserve and reliability criteria approved by the board of directors of the Western Systems Coordinating Council or the Western Electricity Coordinating Council.
(e)The commission shall implement and enforce the resource adequacy requirements established in accordance with this section in a nondiscriminatory manner. Each load-serving entity shall be subject to the same requirements for resource adequacy, the renewables portfolio standard program, and the integrated resource planning process pursuant to Section 454.52 that apply to electrical corporations pursuant to this section, or are otherwise required by law or by order or decision of the commission. The commission shall exercise its enforcement powers to ensure compliance by all load-serving entities.
(f)(1)The commission shall require sufficient information, including, but not limited to, anticipated load, actual load, and measures undertaken by a load-serving entity to ensure resource adequacy, to be reported to enable the commission to determine compliance with the resource adequacy requirements established by the commission.
(2)The commission shall calculate and publish annually on its internet website, in a new report or as part of another report, the percentage of each load-serving entitys local and system resource adequacy requirements from the previous calendar year that was met with capacity from eligible renewable energy resources pursuant to the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11)), other zero-carbon resources, including large hydroelectric and nuclear resources, or energy storage resources. In determining the percentage of each load-serving entitys resource adequacy requirements, the commission shall include all directly owned or contracted resources and each load-serving entitys allocation of any centrally procured resources or allocation of resources pursuant to any other mechanism that involves an assignment or allocation of resources purchased or owned by a single buyer, and shall exclude any share of a load-serving entitys resources that were allocated to another load-serving entity.
(g)An electrical corporations costs of meeting or reducing resource adequacy requirements, including, but not limited to, the costs associated with system reliability, local area reliability, or flexible resource adequacy, that are determined to be reasonable by the commission, or are otherwise recoverable under a procurement plan approved by the commission pursuant to Section 454.5, shall be fully recoverable from those customers on whose behalf the costs are incurred, as determined by the commission, at the time the commitment to incur the cost is made, on a fully nonbypassable basis, as determined by the commission. The commission shall exclude any amounts authorized to be recovered pursuant to Section 366.2 when authorizing the amount of costs to be recovered from customers of a community choice aggregator or from customers that purchase electricity through a direct transaction pursuant to this subdivision.
(h)The commission shall determine and authorize the most efficient and equitable means for achieving all of the following:
(1)Meeting the objectives of this section.
(2)Ensuring that investment is made in new generating capacity.
(3)Ensuring that existing generating capacity that is economical is retained to ensure reliability.
(4)Ensuring that the resource adequacy program can reasonably maintain a standard measure of reliability, such as a one-day-in-10-year loss-of-load expectation or a similarly robust reliability metric adopted by the commission, and use it for planning purposes.
(5)Ensuring that the cost of generating capacity and demand response is allocated equitably.
(6)Ensuring that community choice aggregators can determine the generation resources used to serve their customers.
(7)Ensuring that investments are made in new and existing demand response resources that are cost effective and help to achieve electrical grid reliability and the states goals for reducing emissions of greenhouse gases.
(8)Minimizing the need for backstop procurement by the Independent System Operator.
(i)In making the determination pursuant to subdivision (h), the commission may consider a centralized resource adequacy mechanism among other options.
(j)The commission shall ensure appropriate valuation of both supply and load modifying demand response resources. The commission, in an existing or new proceeding, shall establish a mechanism to value load modifying demand response resources, including, but not limited to, the ability of demand response resources to help meet distribution needs and transmission system needs and to help reduce a load-serving entitys resource adequacy obligation pursuant to this section. In determining this value, the commission shall consider how these resources further the states electrical grid reliability and the states goals for reducing emissions of greenhouse gases. The commission, Energy Commission, and Independent System Operator shall coordinate to jointly ensure that changes in demand caused by load modifying demand response are expeditiously and comprehensively reflected in the Energy Commissions Integrated Energy Policy Report forecast and in planning proceedings and associated analyses, and shall encourage reflection of these changes in demand in the operation of the grid.
(k)For purposes of this section, load-serving entity means an electrical corporation, electric service provider, or community choice aggregator. Load-serving entity does not include any of the following:
(1)A local publicly owned electric utility.
(2)The State Water Resources Development System commonly known as the State Water Project.
(3)Customer generation located on the customers site or providing electric service through arrangements authorized by Section 218, if the customer generation, or the load it serves, meets one of the following criteria:
(A)It takes standby service from the electrical corporation on a commission-approved rate schedule that provides for adequate backup planning and operating reserves for the standby customer class.
(B)It is not physically interconnected to the electrical transmission or distribution grid, so that, if the customer generation fails, backup electricity is not supplied from the electrical grid.
(C)There is physical assurance that the load served by the customer generation will be curtailed concurrently and commensurately with an outage of the customer generation.
SEC. 5.Section 454.52 of the Public Utilities Code is amended to read:454.52.(a)(1)Beginning in 2017, and to be updated regularly thereafter, the commission shall adopt a process for each load-serving entity to file an integrated resource plan, and a schedule for periodic updates to the plan, and shall ensure that load-serving entities do all of the following:
(A)Meet the greenhouse gas emissions reduction targets established by the State Air Resources Board, in coordination with the commission and the Energy Commission, for the electricity sector and each load-serving entity that reflect the electricity sectors percentage in achieving the economywide greenhouse gas emissions reductions pursuant to Section 38566 of the Health and Safety Code.
(B)Procure at least 60 percent eligible renewable energy resources by December 31, 2030, consistent with the state policy specified in Section 454.53 and Article 16 (commencing with Section 399.11) of Chapter 2.3.
(C)Enable each electrical corporation to fulfill its obligation to serve its customers at just and reasonable rates.
(D)Minimize impacts on ratepayers bills.
(E)(i)Ensure system and local reliability on a short-term, midterm, and long-term basis, including meeting the short-term and forecast long-term resource adequacy requirements of Section 380, and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls by taking into account impacts due to climate change, forecasted levels of building and transportation electrification, and other factors that can result in those shortfalls.
(ii)In furtherance of avoiding unplanned energy supply shortfalls or expensive emergency procurement and ensuring a more accurate understanding of electrical grid operational needs, the commission shall aggregate reported short-term and midterm resource procurement from all load-serving entities conducted under Section 380 or this section and assess midterm resource sufficiency, and annually provide anonymized reports to the Independent System Operator. The commission shall report forward resource procurement using counting conventions that provide the data to the Independent System Operator to be used in its grid planning.
(iii)To accomplish clause (i), the commission shall, as part of the integrated planning process, assess short-term, midterm, and long-term reliability by conducting probabilistic reliability modeling, including if there is sufficient capacity available for procurement in the short term and midterm by all load-serving entities to meet their procurement requirements. The commission shall review the results of that reliability modeling in a public proceeding at the same frequency as the forecast conducted in accordance with this section. When modeling short-term and midterm reliability, the commission shall model all procurement consistent with clause (ii) and may rely upon or incorporate probabilistic reliability modeling conducted by the Energy Commission into the commissions public process. The commission shall also report the modeling results in the joint Reliability Planning Assessments conducted under Section 25233 of the Public Resources Code.
(F)Comply with paragraph (1) of subdivision (b) of Section 399.13.
(G)Strengthen the diversity, sustainability, and resilience of the bulk transmission and distribution systems, and local communities.
(H)Enhance distribution systems and demand-side energy management.
(I)Minimize localized air pollutants and other greenhouse gas emissions, with early priority on disadvantaged communities identified pursuant to Section 39711 of the Health and Safety Code.
(J)Maintain a diverse portfolio of energy resources, which may include eligible energy resources procured by the Department of Water Resources.
(2)(A)The commission may authorize all source procurement for load-serving entities that includes various resource types including demand-side resources, supply-side resources, and resources that may be either demand-side resources or supply-side resources, taking into account the differing load-serving entities geographic service areas, to ensure that each load-serving entity meets the goals set forth in paragraph (1).
(B)The commission may approve procurement of resource types that will reduce the overall emissions of greenhouse gases from the electricity sector and meet the other goals specified in paragraph (1), but due to the nature of the technology or fuel source may not compete favorably in price against other resources over the time period of the integrated resource plan.
(3)In furtherance of the requirements of paragraph (1), the commission shall consider the role of existing renewable generation, grid operational efficiencies, energy storage, and distributed energy resources, including energy efficiency, in helping to ensure each load-serving entity meets energy needs and reliability needs in hours to encompass the hour of peak demand of electricity, excluding demand met by variable renewable generation directly connected to a California balancing authority, as defined in Section 399.12, while reducing the need for new electricity generation resources and new transmission resources in achieving the states energy goals at the least cost to ratepayers.
(4)(A)On or before September 1, 2024, and consistent with the process and schedule adopted pursuant to paragraph (1), the commission, in consultation with the Energy Commission and the Independent System Operator, shall determine if there is a need for the procurement of eligible energy resources based on a review of the integrated resource plans submitted by load-serving entities in compliance with the requirements of this section and Section 454.53 and the progress towards meeting the portfolio of resources identified pursuant to subdivision (a) of Section 454.51.
(B)If the commission determines that there is a need for the procurement of eligible energy resources, the commission shall specify the eligible energy resources that should be procured to meet that need.
(C)Within six months of determining that there is a need for the procurement of eligible energy resources, the commission may request the Department of Water Resources to exercise its central procurement function to procure those eligible energy resources specified pursuant to subparagraph (B) that meet the portfolio of resources identified in subdivision (a) of Section 454.51.
(D)(i)Upon receiving a request pursuant to subparagraph (C), the Department of Water Resources, before January 1, 2035, may exercise its central procurement function to conduct one or more competitive solicitations and enter into contracts to procure eligible energy resources in order to achieve the policy of the state specified in Section 454.53.
(ii)Any contract entered into by the Department of Water Resources pursuant to clause (i) and approved by the commission pursuant to Section 80821 of the Water Code before January 1, 2035, shall remain in force for the duration of the contract.
(E)The Department of Water Resources exercising of its central procurement function to procure eligible energy resources pursuant to this paragraph shall be conducted in accordance with Division 29.5 (commencing with Section 80800) of the Water Code.
(b)(1)Each load-serving entity shall prepare and file an integrated resource plan consistent with paragraph (2) of subdivision (a) on a time schedule directed by the commission and subject to commission review.
(2)Each electrical corporations plan shall follow Section 454.5.
(3)The plan of a community choice aggregator shall be submitted to its governing board for approval and provided to the commission for certification, consistent with paragraph (5) of subdivision (a) of Section 366.2, and shall achieve all of the following:
(A)Economic, reliability, environmental, security, and other benefits and performance characteristics that are consistent with the goals set forth in paragraph (1) of subdivision (a).
(B)A diversified procurement portfolio consisting of short-term, midterm, and long-term electricity, electricity-related, and demand reduction products.
(C)The resource adequacy requirements established pursuant to Section 380.
(4)The plan of an electric service provider shall achieve the goals set forth in paragraph (1) of subdivision (a) through a diversified portfolio consisting of short-term, midterm, and long-term electricity, electricity-related, and demand reduction products.
(c)To the extent that additional procurement is authorized for the electrical corporation in the integrated resource plan or the procurement process authorized pursuant to Section 454.5, the commission shall ensure that the costs are allocated in a fair and equitable manner to all customers consistent with Section 454.51, that there is no cost shifting among customers of load-serving entities, and that community choice aggregators may self-provide renewable integration resources consistent with Section 454.51. The commission may order the procurement of resources with specific attributes by load-serving entities as a result of the integrated resource planning process and shall enforce any resource procurement requirements on a nondiscriminatory basis. Enforcement may include the assessment of penalties for noncompliance.
(d)To eliminate redundancy and increase efficiency, the process adopted pursuant to subdivision (a) shall incorporate, and not duplicate, any other planning processes of the commission.
(e)This section applies to an electrical cooperative, as defined in Section 2776, only if the electrical cooperative has an annual electrical demand exceeding 700 gigawatthours, as determined based on a three-year average commencing with January 1, 2013.
(f)(1)The commission shall not include the energy, capacity, or any attribute from Diablo Canyon Unit 1 beyond November 1, 2024, or Unit 2 beyond August 26, 2025, in the adopted integrated resource plan portfolios, resource stacks, or preferred system plans.
(2)The commission shall disallow a load-serving entity from including in their adopted integrated resource plan any energy, capacity, or any attribute from the Diablo Canyon Unit 1 beyond November 1, 2024, or Unit 2 beyond August 26, 2025.
(g)For a thermal powerplant that uses nuclear fission technology not constructed in the twenty-first century, all resource attributes shall be retired on January 1, 2031, and shall be reported as a separate, line item resource for purposes of complying with Section 398.4.
(h)(1)Only a new energy resource that meets all of the following requirements is eligible to be procured by the Department of Water Resources pursuant to this section:
(A)The resource directly supports attainment of the goals specified in Section 454.53 without increasing the states dependence on any fossil fuel-based resources.
(B)The resource is determined by the commission to not be under contract at sufficient levels as shown in load-serving entities most recent individual integrated resource plans submitted to and reviewed by the commission pursuant to this section to achieve the goals specified in Section 454.53.
(C)The resource has a construction and development lead time of at least five years.
(D)The resource does not generate electricity using fossil fuels or fuels derived from fossil fuels.
(E)The resource does not use combustion to generate electricity, unless that combustion use is ancillary and necessary to facilitate geothermal electricity generation.
(2)Resources from a pump hydroelectric facility may be procured by the Department of Water Resources pursuant to this section if the pump hydroelectric facility does not exceed 500 megawatts and has been directly appropriated funding by the state before January 1, 2023.
(i)For purposes of this section, the following definitions apply:
(1)Load-serving entity has the same meaning as defined in Section 380.
(2)Long term means a time period that includes five or more years in the future.
(3)Midterm means a time period between two and five years in the future.
(4)Short term means a time period between the present and two years in the future.
SEC. 6.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)The Legislature finds and declares all of the following:
(1)Because Section 454.53 of the Public Utilities Code sets a goal of renewable energy and zero-carbon resources supplying 100 percent of retail sales of electricity to end-use customers by 2045, California is committed to rapidly decarbonizing the grid, promoting the growth of renewable energy resources, optimizing energy efficiency, and expanding the states energy transmission infrastructure to meet its needs.
(2)The foundation of a decarbonized economy rests on a reliable electrical grid.
(3)Realizing this foundation depends on effective and coordinated planning and reliability frameworks that anticipate and address the electricity needs of the state both in the present and in the future.
(4)Climate change is putting increasing pressure on the states electrical grid. It is imperative for state agencies to use the most comprehensive analytical methods to prepare for maintaining the electrical grid during extreme weather events.
(5)The effectiveness of the states resource adequacy and integrated resource planning frameworks is intrinsically linked to the capability of these frameworks to foresee, plan for, and address current and future energy demands.
(6)The absence of review mechanisms for procurement in the midterm or of a formalized reliability standard, such as a 1-in-10 loss of load expectation, may hinder the states path to consistent and cost-effective energy reliability planning.
(7)In the past few years, California has seen multiple capacity shortfalls that have led to several costly events, including the rotating electricity outages of 2020. Consequent emergency procurements, and the extensions to the Diablo Canyon powerplant and three coastal once-through cooling plants have cost taxpayers billions of dollars and underscore the urgent need for a transparent, unified, and forward-thinking planning approach.
(8)Outages and related electrical grid disturbances can affect the health and safety of Californians, especially during extreme heat events, and can be extremely disruptive and costly to our states economy.
(9)The capacity market in California is currently constrained. Capacity prices have skyrocketed in recent years, impacting ratepayers. The Legislature aims to foster more robust reliability planning to avoid these types of market conditions in the future.
(b)It is the intent of the Legislature, in enacting this act, to increase the reliability of Californias electrical grid through all of the following:
(1)Adopting transparent reliability standards to provide consistent information to ensure that planning processes genuinely reflect the electrical grids capacity needs.
(2)Providing consistent information to policymakers and bridging the planning gap between short-term needs and long-term planning, thereby helping to avert the challenges and costs associated with electrical grid emergencies and emergency capacity procurement.
(3)Enhancing the collective efficacy of the resource adequacy and integrated resource planning frameworks in serving Californias energy needs through resource assessment and planning, including through improved collaboration between the Public Utilities Commission, the State Energy Resources Conservation and Development Commission, and the Independent System Operator.
(c)(1)It is not the intent of the Legislature to further penalize load-serving entities through the resource adequacy program due to present capacity market conditions beyond their control.
(2)It is not the intent of the Legislature to prescribe a midterm reliability program design or create an additional procurement mechanism.
(3)It is not the intent of the Legislature to change the authority of the Public Utilities Commission in relation to the Independent System Operator. It is the intent of the Legislature that the primary authority for resource adequacy and procurement planning remains with the Public Utilities Commission and self-governing publicly owned utilities. The Public Utilities Commission and publicly owned utilities are in the best position to balance the objectives of reliability, cost, and environmental goals.
SEC. 2.Section 345 of the Public Utilities Code is amended to read:345.(a)The Independent System Operator shall ensure the efficient use and reliable operation of the transmission grid consistent with the achievement of planning and operating reserve criteria that are no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council.
(b)In furtherance of subdivision (a), the Independent System Operator may amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission through its rulemaking process, to be consistent with subdivision (a).
SEC. 3.Section 349 of the Public Utilities Code is amended to read:349.(a)The Independent System Operator shall perform a review following a major outage that affects at least 10 percent of the customers of the entity providing the local distribution service. The review shall address the cause of the major outage, the response time and effectiveness, and whether the transmission facility owner or operators operation and maintenance practices enhanced or undermined the ability to restore service efficiently and in a timely manner.
(b)(1)If the Independent System Operator finds pursuant to subdivision (a) that the operation and maintenance practices of the transmission facility owner or operator prolonged the response time or was responsible for the outage, the Independent System Operator may order appropriate sanctions, subject to the Federal Energy Regulatory Commission approving that authority.
(2)(A)If the Independent System Operator finds pursuant to subdivision (a) that the primary cause of the outage was the insufficiency of the electricity supply available to serve the electrical load within its balancing area authority, the Independent System Operator shall post on its internet website the finding and recommendations to prevent future shortfalls and share the finding and recommendations with the commission, the Energy Commission, and the Legislature.
(B)Findings and recommendations submitted to the Legislature shall be provided in accordance with Section 9795 of the Government Code.
SEC. 4.Section 380 of the Public Utilities Code is amended to read:380.(a)The commission, in consultation with the Independent System Operator, shall establish resource adequacy requirements for all load-serving entities.
(b)In establishing resource adequacy requirements, the commission shall ensure the reliability of electrical service in California while advancing, to the extent possible, the states goals for clean energy, reducing air pollution, and reducing emissions of greenhouse gases. The resource adequacy program shall achieve all of the following objectives:
(1)Facilitate the development of new generating, nongenerating, and hybrid capacity and the retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability and to achieve the state policy specified in Section 454.53.
(2)Establish new, or maintain existing, demand response products and tariffs that facilitate the economical dispatch and use of demand response that can either meet or reduce an electrical corporations resource adequacy requirements, as determined by the commission.
(3)Equitably allocate the cost of generating capacity and demand response in a manner that prevents the shifting of costs between customer classes.
(4)Minimize enforcement requirements and costs.
(5)Consideration of mitigation measures, if the commission determines they are needed, to reduce costs to ratepayers.
(6)Maximize the ability of community choice aggregators to determine the generation resources used to serve their customers.
(c)Each load-serving entity shall maintain physical generating capacity and electrical demand response adequate to meet its load requirements, including, but not limited to, peak demand and planning and operating reserves. The generating capacity or electrical demand response shall be deliverable to locations and at times as may be necessary to maintain electrical service system reliability, local area reliability, and flexibility.
(d)Each load-serving entity shall, at a minimum, meet the most recent minimum planning reserve and reliability criteria approved by the board of directors of the Western Systems Coordinating Council or the Western Electricity Coordinating Council.
(e)The commission shall implement and enforce the resource adequacy requirements established in accordance with this section in a nondiscriminatory manner. Each load-serving entity shall be subject to the same requirements for resource adequacy, the renewables portfolio standard program, and the integrated resource planning process pursuant to Section 454.52 that apply to electrical corporations pursuant to this section, or are otherwise required by law or by order or decision of the commission. The commission shall exercise its enforcement powers to ensure compliance by all load-serving entities.
(f)(1)The commission shall require sufficient information, including, but not limited to, anticipated load, actual load, and measures undertaken by a load-serving entity to ensure resource adequacy, to be reported to enable the commission to determine compliance with the resource adequacy requirements established by the commission.
(2)The commission shall calculate and publish annually on its internet website, in a new report or as part of another report, the percentage of each load-serving entitys local and system resource adequacy requirements from the previous calendar year that was met with capacity from eligible renewable energy resources pursuant to the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11)), other zero-carbon resources, including large hydroelectric and nuclear resources, or energy storage resources. In determining the percentage of each load-serving entitys resource adequacy requirements, the commission shall include all directly owned or contracted resources and each load-serving entitys allocation of any centrally procured resources or allocation of resources pursuant to any other mechanism that involves an assignment or allocation of resources purchased or owned by a single buyer, and shall exclude any share of a load-serving entitys resources that were allocated to another load-serving entity.
(g)An electrical corporations costs of meeting or reducing resource adequacy requirements, including, but not limited to, the costs associated with system reliability, local area reliability, or flexible resource adequacy, that are determined to be reasonable by the commission, or are otherwise recoverable under a procurement plan approved by the commission pursuant to Section 454.5, shall be fully recoverable from those customers on whose behalf the costs are incurred, as determined by the commission, at the time the commitment to incur the cost is made, on a fully nonbypassable basis, as determined by the commission. The commission shall exclude any amounts authorized to be recovered pursuant to Section 366.2 when authorizing the amount of costs to be recovered from customers of a community choice aggregator or from customers that purchase electricity through a direct transaction pursuant to this subdivision.
(h)The commission shall determine and authorize the most efficient and equitable means for achieving all of the following:
(1)Meeting the objectives of this section.
(2)Ensuring that investment is made in new generating capacity.
(3)Ensuring that existing generating capacity that is economical is retained to ensure reliability.
(4)Ensuring that the resource adequacy program can reasonably maintain a standard measure of reliability, such as a one-day-in-10-year loss-of-load expectation or a similarly robust reliability metric adopted by the commission, and use it for planning purposes.
(5)Ensuring that the cost of generating capacity and demand response is allocated equitably.
(6)Ensuring that community choice aggregators can determine the generation resources used to serve their customers.
(7)Ensuring that investments are made in new and existing demand response resources that are cost effective and help to achieve electrical grid reliability and the states goals for reducing emissions of greenhouse gases.
(8)Minimizing the need for backstop procurement by the Independent System Operator.
(i)In making the determination pursuant to subdivision (h), the commission may consider a centralized resource adequacy mechanism among other options.
(j)The commission shall ensure appropriate valuation of both supply and load modifying demand response resources. The commission, in an existing or new proceeding, shall establish a mechanism to value load modifying demand response resources, including, but not limited to, the ability of demand response resources to help meet distribution needs and transmission system needs and to help reduce a load-serving entitys resource adequacy obligation pursuant to this section. In determining this value, the commission shall consider how these resources further the states electrical grid reliability and the states goals for reducing emissions of greenhouse gases. The commission, Energy Commission, and Independent System Operator shall coordinate to jointly ensure that changes in demand caused by load modifying demand response are expeditiously and comprehensively reflected in the Energy Commissions Integrated Energy Policy Report forecast and in planning proceedings and associated analyses, and shall encourage reflection of these changes in demand in the operation of the grid.
(k)For purposes of this section, load-serving entity means an electrical corporation, electric service provider, or community choice aggregator. Load-serving entity does not include any of the following:
(1)A local publicly owned electric utility.
(2)The State Water Resources Development System commonly known as the State Water Project.
(3)Customer generation located on the customers site or providing electric service through arrangements authorized by Section 218, if the customer generation, or the load it serves, meets one of the following criteria:
(A)It takes standby service from the electrical corporation on a commission-approved rate schedule that provides for adequate backup planning and operating reserves for the standby customer class.
(B)It is not physically interconnected to the electrical transmission or distribution grid, so that, if the customer generation fails, backup electricity is not supplied from the electrical grid.
(C)There is physical assurance that the load served by the customer generation will be curtailed concurrently and commensurately with an outage of the customer generation.
SEC. 5.Section 454.52 of the Public Utilities Code is amended to read:454.52.(a)(1)Beginning in 2017, and to be updated regularly thereafter, the commission shall adopt a process for each load-serving entity to file an integrated resource plan, and a schedule for periodic updates to the plan, and shall ensure that load-serving entities do all of the following:
(A)Meet the greenhouse gas emissions reduction targets established by the State Air Resources Board, in coordination with the commission and the Energy Commission, for the electricity sector and each load-serving entity that reflect the electricity sectors percentage in achieving the economywide greenhouse gas emissions reductions pursuant to Section 38566 of the Health and Safety Code.
(B)Procure at least 60 percent eligible renewable energy resources by December 31, 2030, consistent with the state policy specified in Section 454.53 and Article 16 (commencing with Section 399.11) of Chapter 2.3.
(C)Enable each electrical corporation to fulfill its obligation to serve its customers at just and reasonable rates.
(D)Minimize impacts on ratepayers bills.
(E)(i)Ensure system and local reliability on a short-term, midterm, and long-term basis, including meeting the short-term and forecast long-term resource adequacy requirements of Section 380, and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls by taking into account impacts due to climate change, forecasted levels of building and transportation electrification, and other factors that can result in those shortfalls.
(ii)In furtherance of avoiding unplanned energy supply shortfalls or expensive emergency procurement and ensuring a more accurate understanding of electrical grid operational needs, the commission shall aggregate reported short-term and midterm resource procurement from all load-serving entities conducted under Section 380 or this section and assess midterm resource sufficiency, and annually provide anonymized reports to the Independent System Operator. The commission shall report forward resource procurement using counting conventions that provide the data to the Independent System Operator to be used in its grid planning.
(iii)To accomplish clause (i), the commission shall, as part of the integrated planning process, assess short-term, midterm, and long-term reliability by conducting probabilistic reliability modeling, including if there is sufficient capacity available for procurement in the short term and midterm by all load-serving entities to meet their procurement requirements. The commission shall review the results of that reliability modeling in a public proceeding at the same frequency as the forecast conducted in accordance with this section. When modeling short-term and midterm reliability, the commission shall model all procurement consistent with clause (ii) and may rely upon or incorporate probabilistic reliability modeling conducted by the Energy Commission into the commissions public process. The commission shall also report the modeling results in the joint Reliability Planning Assessments conducted under Section 25233 of the Public Resources Code.
(F)Comply with paragraph (1) of subdivision (b) of Section 399.13.
(G)Strengthen the diversity, sustainability, and resilience of the bulk transmission and distribution systems, and local communities.
(H)Enhance distribution systems and demand-side energy management.
(I)Minimize localized air pollutants and other greenhouse gas emissions, with early priority on disadvantaged communities identified pursuant to Section 39711 of the Health and Safety Code.
(J)Maintain a diverse portfolio of energy resources, which may include eligible energy resources procured by the Department of Water Resources.
(2)(A)The commission may authorize all source procurement for load-serving entities that includes various resource types including demand-side resources, supply-side resources, and resources that may be either demand-side resources or supply-side resources, taking into account the differing load-serving entities geographic service areas, to ensure that each load-serving entity meets the goals set forth in paragraph (1).
(B)The commission may approve procurement of resource types that will reduce the overall emissions of greenhouse gases from the electricity sector and meet the other goals specified in paragraph (1), but due to the nature of the technology or fuel source may not compete favorably in price against other resources over the time period of the integrated resource plan.
(3)In furtherance of the requirements of paragraph (1), the commission shall consider the role of existing renewable generation, grid operational efficiencies, energy storage, and distributed energy resources, including energy efficiency, in helping to ensure each load-serving entity meets energy needs and reliability needs in hours to encompass the hour of peak demand of electricity, excluding demand met by variable renewable generation directly connected to a California balancing authority, as defined in Section 399.12, while reducing the need for new electricity generation resources and new transmission resources in achieving the states energy goals at the least cost to ratepayers.
(4)(A)On or before September 1, 2024, and consistent with the process and schedule adopted pursuant to paragraph (1), the commission, in consultation with the Energy Commission and the Independent System Operator, shall determine if there is a need for the procurement of eligible energy resources based on a review of the integrated resource plans submitted by load-serving entities in compliance with the requirements of this section and Section 454.53 and the progress towards meeting the portfolio of resources identified pursuant to subdivision (a) of Section 454.51.
(B)If the commission determines that there is a need for the procurement of eligible energy resources, the commission shall specify the eligible energy resources that should be procured to meet that need.
(C)Within six months of determining that there is a need for the procurement of eligible energy resources, the commission may request the Department of Water Resources to exercise its central procurement function to procure those eligible energy resources specified pursuant to subparagraph (B) that meet the portfolio of resources identified in subdivision (a) of Section 454.51.
(D)(i)Upon receiving a request pursuant to subparagraph (C), the Department of Water Resources, before January 1, 2035, may exercise its central procurement function to conduct one or more competitive solicitations and enter into contracts to procure eligible energy resources in order to achieve the policy of the state specified in Section 454.53.
(ii)Any contract entered into by the Department of Water Resources pursuant to clause (i) and approved by the commission pursuant to Section 80821 of the Water Code before January 1, 2035, shall remain in force for the duration of the contract.
(E)The Department of Water Resources exercising of its central procurement function to procure eligible energy resources pursuant to this paragraph shall be conducted in accordance with Division 29.5 (commencing with Section 80800) of the Water Code.
(b)(1)Each load-serving entity shall prepare and file an integrated resource plan consistent with paragraph (2) of subdivision (a) on a time schedule directed by the commission and subject to commission review.
(2)Each electrical corporations plan shall follow Section 454.5.
(3)The plan of a community choice aggregator shall be submitted to its governing board for approval and provided to the commission for certification, consistent with paragraph (5) of subdivision (a) of Section 366.2, and shall achieve all of the following:
(A)Economic, reliability, environmental, security, and other benefits and performance characteristics that are consistent with the goals set forth in paragraph (1) of subdivision (a).
(B)A diversified procurement portfolio consisting of short-term, midterm, and long-term electricity, electricity-related, and demand reduction products.
(C)The resource adequacy requirements established pursuant to Section 380.
(4)The plan of an electric service provider shall achieve the goals set forth in paragraph (1) of subdivision (a) through a diversified portfolio consisting of short-term, midterm, and long-term electricity, electricity-related, and demand reduction products.
(c)To the extent that additional procurement is authorized for the electrical corporation in the integrated resource plan or the procurement process authorized pursuant to Section 454.5, the commission shall ensure that the costs are allocated in a fair and equitable manner to all customers consistent with Section 454.51, that there is no cost shifting among customers of load-serving entities, and that community choice aggregators may self-provide renewable integration resources consistent with Section 454.51. The commission may order the procurement of resources with specific attributes by load-serving entities as a result of the integrated resource planning process and shall enforce any resource procurement requirements on a nondiscriminatory basis. Enforcement may include the assessment of penalties for noncompliance.
(d)To eliminate redundancy and increase efficiency, the process adopted pursuant to subdivision (a) shall incorporate, and not duplicate, any other planning processes of the commission.
(e)This section applies to an electrical cooperative, as defined in Section 2776, only if the electrical cooperative has an annual electrical demand exceeding 700 gigawatthours, as determined based on a three-year average commencing with January 1, 2013.
(f)(1)The commission shall not include the energy, capacity, or any attribute from Diablo Canyon Unit 1 beyond November 1, 2024, or Unit 2 beyond August 26, 2025, in the adopted integrated resource plan portfolios, resource stacks, or preferred system plans.
(2)The commission shall disallow a load-serving entity from including in their adopted integrated resource plan any energy, capacity, or any attribute from the Diablo Canyon Unit 1 beyond November 1, 2024, or Unit 2 beyond August 26, 2025.
(g)For a thermal powerplant that uses nuclear fission technology not constructed in the twenty-first century, all resource attributes shall be retired on January 1, 2031, and shall be reported as a separate, line item resource for purposes of complying with Section 398.4.
(h)(1)Only a new energy resource that meets all of the following requirements is eligible to be procured by the Department of Water Resources pursuant to this section:
(A)The resource directly supports attainment of the goals specified in Section 454.53 without increasing the states dependence on any fossil fuel-based resources.
(B)The resource is determined by the commission to not be under contract at sufficient levels as shown in load-serving entities most recent individual integrated resource plans submitted to and reviewed by the commission pursuant to this section to achieve the goals specified in Section 454.53.
(C)The resource has a construction and development lead time of at least five years.
(D)The resource does not generate electricity using fossil fuels or fuels derived from fossil fuels.
(E)The resource does not use combustion to generate electricity, unless that combustion use is ancillary and necessary to facilitate geothermal electricity generation.
(2)Resources from a pump hydroelectric facility may be procured by the Department of Water Resources pursuant to this section if the pump hydroelectric facility does not exceed 500 megawatts and has been directly appropriated funding by the state before January 1, 2023.
(i)For purposes of this section, the following definitions apply:
(1)Load-serving entity has the same meaning as defined in Section 380.
(2)Long term means a time period that includes five or more years in the future.
(3)Midterm means a time period between two and five years in the future.
(4)Short term means a time period between the present and two years in the future.
SEC. 6.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)The Legislature finds and declares all of the following:
(1)Because Section 454.53 of the Public Utilities Code sets a goal of renewable energy and zero-carbon resources supplying 100 percent of retail sales of electricity to end-use customers by 2045, California is committed to rapidly decarbonizing the grid, promoting the growth of renewable energy resources, optimizing energy efficiency, and expanding the states energy transmission infrastructure to meet its needs.
(2)The foundation of a decarbonized economy rests on a reliable electrical grid.
(3)Realizing this foundation depends on effective and coordinated planning and reliability frameworks that anticipate and address the electricity needs of the state both in the present and in the future.
(4)Climate change is putting increasing pressure on the states electrical grid. It is imperative for state agencies to use the most comprehensive analytical methods to prepare for maintaining the electrical grid during extreme weather events.
(5)The effectiveness of the states resource adequacy and integrated resource planning frameworks is intrinsically linked to the capability of these frameworks to foresee, plan for, and address current and future energy demands.
(6)The absence of review mechanisms for procurement in the midterm or of a formalized reliability standard, such as a 1-in-10 loss of load expectation, may hinder the states path to consistent and cost-effective energy reliability planning.
(7)In the past few years, California has seen multiple capacity shortfalls that have led to several costly events, including the blackouts rotating electricity outages of 2020. Consequent emergency procurements, and the extensions to the Diablo Canyon powerplant and three coastal once-through cooling plants have cost taxpayers billions of dollars and underscore the urgent need for a transparent, unified, and forward-thinking planning approach.
(8)Blackouts Outages and related electrical grid disturbances can affect the health and safety of Californians, especially during extreme heat events, and can be extremely disruptive and costly to our states economy.
(9)The capacity market in California is currently constrained. Capacity prices have skyrocketed in recent years, impacting ratepayers. The Legislature aims to foster a more robust reliability program planning to avoid these types of market conditions in the future.
(b)It is the intent of the Legislature, in enacting this act, to increase the reliability of Californias electrical grid through all of the following:
(1)Adopting transparent and widely used reliability standards to provide consistent information to ensure that planning processes genuinely reflect the electrical grids capacity needs.
(2)Providing consistent information to policymakers and bridging the planning gap between short-term needs and long-term planning, thereby averting helping to avert the challenges and costs associated with electrical grid emergencies and emergency capacity procurement.
(3)Enhancing the collective efficacy of the resource adequacy and integrated resource planning frameworks in serving Californias energy needs through resource assessment and planning, including through improved collaboration between the Public Utilities Commission, the State Energy Resources Conservation and Development Commission, and the Independent System Operator.
(c)(1)It is not the intent of the Legislature to further penalize load-serving entities through the resource adequacy program due to present capacity market conditions beyond their control.
(2)It is not the intent of the Legislature to prescribe a midterm reliability program design or create an additional procurement mechanism.
(3)It is not the intent of the Legislature to change the authority of the Public Utilities Commission in relation to the Independent System Operator. It is the intent of the Legislature that the primary authority for resource adequacy and procurement planning remains with the Public Utilities Commission and self-governing publicly owned utilities. The Public Utilities Commission and publicly owned utilities are in the best position to balance the objectives of reliability, cost, and environmental goals.
SEC. 2.Section 345 of the Public Utilities Code is amended to read:345.(a)The Independent System Operator shall ensure the efficient use and reliable operation of the transmission grid consistent with the achievement of planning and operating reserve criteria that are no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council.
(b)In furtherance of subdivision (a), the Independent System Operator may amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission through its rulemaking process, to be consistent with subdivision (a).
SEC. 3.Section 349 of the Public Utilities Code is amended to read:349.(a)The Independent System Operator shall perform a review following a major outage that affects at least 10 percent of the customers of the entity providing the local distribution service. The review shall address the cause of the major outage, the response time and effectiveness, and whether the transmission facility owner or operators operation and maintenance practices enhanced or undermined the ability to restore service efficiently and in a timely manner.
(b)(1)If the Independent System Operator finds pursuant to subdivision (a) that the operation and maintenance practices of the transmission facility owner or operator prolonged the response time or was responsible for the outage, the Independent System Operator may order appropriate sanctions, subject to the Federal Energy Regulatory Commission approving that authority.
(2)(A)If the Independent System Operator finds pursuant to subdivision (a) that the primary cause of the outage was the insufficiency of the electricity supply available to serve the electrical load within its balancing area authority, the Independent System Operator shall post on its internet website the finding and recommendations for the procurement of necessary generation resources to prevent future shortfalls and share the finding and recommendations with the commission, the Energy Commission, and the Legislature.
(B)Findings and recommendations submitted to the Legislature shall be provided in accordance with Section 9795 of the Government Code.
SEC. 4.Section 380 of the Public Utilities Code is amended to read:380.(a)The commission, in consultation with the Independent System Operator, shall establish resource adequacy requirements for all load-serving entities.
(b)In establishing resource adequacy requirements, the commission shall ensure the reliability of electrical service in California, in furtherance of Section 345, sufficient to maintain a one-day-in-10-year loss-of-load expectation California while advancing, to the extent possible, the states goals for clean energy, reducing air pollution, and reducing emissions of greenhouse gases. The resource adequacy program shall achieve all of the following objectives:
(1)Facilitate the development of new generating, nongenerating, and hybrid capacity and the retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability and to achieve the state policy specified in Section 454.53.
(2)Establish new, or maintain existing, demand response products and tariffs that facilitate the economical dispatch and use of demand response that can either meet or reduce an electrical corporations resource adequacy requirements, as determined by the commission.
(3)Equitably allocate the cost of generating capacity and demand response in a manner that prevents the shifting of costs between customer classes.
(4)Minimize enforcement requirements and costs.
(5)Consideration of mitigation measures, if the commission determines they are needed, to reduce costs to ratepayers.
(6)Maximize the ability of community choice aggregators to determine the generation resources used to serve their customers.
(c)Each load-serving entity shall maintain physical generating capacity and electrical demand response adequate to meet its load requirements, including, but not limited to, peak demand and planning and operating reserves. The generating capacity or electrical demand response shall be deliverable to locations and at times as may be necessary to maintain electrical service system reliability, local area reliability, and flexibility.
(d)Each load-serving entity shall, at a minimum, meet the most recent minimum planning reserve and reliability criteria approved by the board of directors of the Western Systems Coordinating Council or the Western Electricity Coordinating Council.
(e)The commission shall implement and enforce the resource adequacy requirements established in accordance with this section in a nondiscriminatory manner. Each load-serving entity shall be subject to the same requirements for resource adequacy, the renewables portfolio standard program, and the integrated resource planning process pursuant to Section 454.52 that apply to electrical corporations pursuant to this section, or are otherwise required by law or by order or decision of the commission. The commission shall exercise its enforcement powers to ensure compliance by all load-serving entities.
(f)(1)The commission shall require sufficient information, including, but not limited to, anticipated load, actual load, and measures undertaken by a load-serving entity to ensure resource adequacy, to be reported to enable the commission to determine compliance with the resource adequacy requirements established by the commission.
(2)The commission shall calculate and publish annually on its internet website, in a new report or as part of another report, the percentage of each load-serving entitys local and system resource adequacy requirements from the previous calendar year that was met with capacity from eligible renewable energy resources pursuant to the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11)), other zero-carbon resources, including large hydroelectric and nuclear resources, or energy storage resources. In determining the percentage of each load-serving entitys resource adequacy requirements, the commission shall include all directly owned or contracted resources and each load-serving entitys allocation of any centrally procured resources or allocation of resources pursuant to any other mechanism that involves an assignment or allocation of resources purchased or owned by a single buyer, and shall exclude any share of a load-serving entitys resources that were allocated to another load-serving entity.
(g)An electrical corporations costs of meeting or reducing resource adequacy requirements, including, but not limited to, the costs associated with system reliability, local area reliability, or flexible resource adequacy, that are determined to be reasonable by the commission, or are otherwise recoverable under a procurement plan approved by the commission pursuant to Section 454.5, shall be fully recoverable from those customers on whose behalf the costs are incurred, as determined by the commission, at the time the commitment to incur the cost is made, on a fully nonbypassable basis, as determined by the commission. The commission shall exclude any amounts authorized to be recovered pursuant to Section 366.2 when authorizing the amount of costs to be recovered from customers of a community choice aggregator or from customers that purchase electricity through a direct transaction pursuant to this subdivision.
(h)The commission shall determine and authorize the most efficient and equitable means for achieving all of the following:
(1)Meeting the objectives of this section.
(2)Ensuring that investment is made in new generating capacity.
(3)Ensuring that existing generating capacity that is economical is retained to ensure reliability.
(4)Ensuring that the resource adequacy program can reasonably maintain a standard measure of reliability, such as a one-day-in-10-year loss-of-load expectation or a similarly robust reliability metric adopted by the commission, and use it for planning purposes.
(4)(5)Ensuring that the cost of generating capacity and demand response is allocated equitably.
(5)(6)Ensuring that community choice aggregators can determine the generation resources used to serve their customers.
(6)(7)Ensuring that investments are made in new and existing demand response resources that are cost effective and help to achieve electrical grid reliability and the states goals for reducing emissions of greenhouse gases.
(7)(8)Minimizing the need for backstop procurement by the Independent System Operator.
(i)In making the determination pursuant to subdivision (h), the commission may consider a centralized resource adequacy mechanism among other options.
(j)The commission shall ensure appropriate valuation of both supply and load modifying demand response resources. The commission, in an existing or new proceeding, shall establish a mechanism to value load modifying demand response resources, including, but not limited to, the ability of demand response resources to help meet distribution needs and transmission system needs and to help reduce a load-serving entitys resource adequacy obligation pursuant to this section. In determining this value, the commission shall consider how these resources further the states electrical grid reliability and the states goals for reducing emissions of greenhouse gases. The commission, Energy Commission, and Independent System Operator shall coordinate to jointly ensure that changes in demand caused by load modifying demand response are expeditiously and comprehensively reflected in the Energy Commissions Integrated Energy Policy Report forecast and in planning proceedings and associated analyses, and shall encourage reflection of these changes in demand in the operation of the grid.
(k)For purposes of this section, load-serving entity means an electrical corporation, electric service provider, or community choice aggregator. Load-serving entity does not include any of the following:
(1)A local publicly owned electric utility.
(2)The State Water Resources Development System commonly known as the State Water Project.
(3)Customer generation located on the customers site or providing electric service through arrangements authorized by Section 218, if the customer generation, or the load it serves, meets one of the following criteria:
(A)It takes standby service from the electrical corporation on a commission-approved rate schedule that provides for adequate backup planning and operating reserves for the standby customer class.
(B)It is not physically interconnected to the electrical transmission or distribution grid, so that, if the customer generation fails, backup electricity is not supplied from the electrical grid.
(C)There is physical assurance that the load served by the customer generation will be curtailed concurrently and commensurately with an outage of the customer generation.
SEC. 5.Section 454.52 of the Public Utilities Code is amended to read:454.52.(a)(1)Beginning in 2017, and to be updated regularly thereafter, the commission shall adopt a process for each load-serving entity to file an integrated resource plan, and a schedule for periodic updates to the plan, and shall ensure that load-serving entities do all of the following:
(A)Meet the greenhouse gas emissions reduction targets established by the State Air Resources Board, in coordination with the commission and the Energy Commission, for the electricity sector and each load-serving entity that reflect the electricity sectors percentage in achieving the economywide greenhouse gas emissions reductions pursuant to Section 38566 of the Health and Safety Code.
(B)Procure at least 60 percent eligible renewable energy resources by December 31, 2030, consistent with the state policy specified in Section 454.53 and Article 16 (commencing with Section 399.11) of Chapter 2.3.
(C)Enable each electrical corporation to fulfill its obligation to serve its customers at just and reasonable rates.
(D)Minimize impacts on ratepayers bills.
(E)(i)Ensure system and local reliability on a short-term, midterm, and long-term basis, including meeting the short-term and forecast long-term resource adequacy requirements of Section 380, and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls by taking into account impacts due to climate change, forecasted levels of building and transportation electrification, and other factors that can result in those shortfalls.
(ii)In furtherance of avoiding unplanned energy supply shortfalls or expensive emergency procurement and ensuring a more accurate understanding of electrical grid operational needs, the commission shall aggregate reported short-term and midterm resource procurement from all load-serving entities conducted under Section 380 or this section and assess midterm resource sufficiency, and semiannually annually provide anonymized reports to the Independent System Operator. The commission shall report forward resource procurement using counting conventions that provide the data to the Independent System Operator to be used in its grid planning.
(iii)To accomplish clause (i), the commission shall, every two years, as part of the integrated planning process, assess short-term, midterm, and long-term reliability by conducting probabilistic reliability modeling, including if there is sufficient capacity available for procurement in the short-term short term and midterm by all load-serving entities to meet their procurement requirements, and reviewing requirements. The commission shall review the results of that reliability modeling in a public proceeding. proceeding at the same frequency as the forecast conducted in accordance with this section. When modeling short-term and midterm reliability, the commission shall model all procurement consistent with clause (ii) and may rely upon or incorporate probabilistic reliability modeling conducted by the Energy Commission into the commissions public process. The commission shall also report the modeling results in the joint Reliability Planning Assessments conducted under Section 25233 of the Public Resources Code.
(F)Comply with paragraph (1) of subdivision (b) of Section 399.13.
(G)Strengthen the diversity, sustainability, and resilience of the bulk transmission and distribution systems, and local communities.
(H)Enhance distribution systems and demand-side energy management.
(I)Minimize localized air pollutants and other greenhouse gas emissions, with early priority on disadvantaged communities identified pursuant to Section 39711 of the Health and Safety Code.
(J)Maintain a diverse portfolio of energy resources, which may include eligible energy resources procured by the Department of Water Resources.
(2)(A)The commission may authorize all source procurement for load-serving entities that includes various resource types including demand-side resources, supply-side resources, and resources that may be either demand-side resources or supply-side resources, taking into account the differing load-serving entities geographic service areas, to ensure that each load-serving entity meets the goals set forth in paragraph (1).
(B)The commission may approve procurement of resource types that will reduce the overall emissions of greenhouse gases from the electricity sector and meet the other goals specified in paragraph (1), but due to the nature of the technology or fuel source may not compete favorably in price against other resources over the time period of the integrated resource plan.
(3)In furtherance of the requirements of paragraph (1), the commission shall consider the role of existing renewable generation, grid operational efficiencies, energy storage, and distributed energy resources, including energy efficiency, in helping to ensure each load-serving entity meets energy needs and reliability needs in hours to encompass the hour of peak demand of electricity, excluding demand met by variable renewable generation directly connected to a California balancing authority, as defined in Section 399.12, while reducing the need for new electricity generation resources and new transmission resources in achieving the states energy goals at the least cost to ratepayers.
(4)(A)On or before September 1, 2024, and consistent with the process and schedule adopted pursuant to paragraph (1), the commission, in consultation with the Energy Commission and the Independent System Operator, shall determine if there is a need for the procurement of eligible energy resources based on a review of the integrated resource plans submitted by load-serving entities in compliance with the requirements of this section and Section 454.53 and the progress towards meeting the portfolio of resources identified pursuant to subdivision (a) of Section 454.51.
(B)If the commission determines that there is a need for the procurement of eligible energy resources, the commission shall specify the eligible energy resources that should be procured to meet that need.
(C)Within six months of determining that there is a need for the procurement of eligible energy resources, the commission may request the Department of Water Resources to exercise its central procurement function to procure those eligible energy resources specified pursuant to subparagraph (B) that meet the portfolio of resources identified in subdivision (a) of Section 454.51.
(D)(i)Upon receiving a request pursuant to subparagraph (C), the Department of Water Resources, before January 1, 2035, may exercise its central procurement function to conduct one or more competitive solicitations and enter into contracts to procure eligible energy resources in order to achieve the policy of the state specified in Section 454.53.
(ii)Any contract entered into by the Department of Water Resources pursuant to clause (i) and approved by the commission pursuant to Section 80821 of the Water Code before January 1, 2035, shall remain in force for the duration of the contract.
(E)The Department of Water Resources exercising of its central procurement function to procure eligible energy resources pursuant to this paragraph shall be conducted in accordance with Division 29.5 (commencing with Section 80800) of the Water Code.
(b)(1)Each load-serving entity shall prepare and file an integrated resource plan consistent with paragraph (2) of subdivision (a) on a time schedule directed by the commission and subject to commission review.
(2)Each electrical corporations plan shall follow Section 454.5.
(3)The plan of a community choice aggregator shall be submitted to its governing board for approval and provided to the commission for certification, consistent with paragraph (5) of subdivision (a) of Section 366.2, and shall achieve all of the following:
(A)Economic, reliability, environmental, security, and other benefits and performance characteristics that are consistent with the goals set forth in paragraph (1) of subdivision (a).
(B)A diversified procurement portfolio consisting of short-term, midterm, and long-term electricity, electricity-related, and demand reduction products.
(C)The resource adequacy requirements established pursuant to Section 380.
(4)The plan of an electric service provider shall achieve the goals set forth in paragraph (1) of subdivision (a) through a diversified portfolio consisting of short-term, midterm, and long-term electricity, electricity-related, and demand reduction products.
(c)To the extent that additional procurement is authorized for the electrical corporation in the integrated resource plan or the procurement process authorized pursuant to Section 454.5, the commission shall ensure that the costs are allocated in a fair and equitable manner to all customers consistent with Section 454.51, that there is no cost shifting among customers of load-serving entities, and that community choice aggregators may self-provide renewable integration resources consistent with Section 454.51. The commission may order the procurement of resources with specific attributes by load-serving entities as a result of the integrated resource planning process and shall enforce any resource procurement requirements on a nondiscriminatory basis. Enforcement may include the assessment of penalties for noncompliance.
(d)To eliminate redundancy and increase efficiency, the process adopted pursuant to subdivision (a) shall incorporate, and not duplicate, any other planning processes of the commission.
(e)This section applies to an electrical cooperative, as defined in Section 2776, only if the electrical cooperative has an annual electrical demand exceeding 700 gigawatthours, as determined based on a three-year average commencing with January 1, 2013.
(f)(1)The commission shall not include the energy, capacity, or any attribute from Diablo Canyon Unit 1 beyond November 1, 2024, or Unit 2 beyond August 26, 2025, in the adopted integrated resource plan portfolios, resource stacks, or preferred system plans.
(2)The commission shall disallow a load-serving entity from including in their adopted integrated resource plan any energy, capacity, or any attribute from the Diablo Canyon Unit 1 beyond November 1, 2024, or Unit 2 beyond August 26, 2025.
(g)For a thermal powerplant that uses nuclear fission technology not constructed in the twenty-first century, all resource attributes shall be retired on January 1, 2031, and shall be reported as a separate, line item resource for purposes of complying with Section 398.4.
(h)(1)Only a new energy resource that meets all of the following requirements is eligible to be procured by the Department of Water Resources pursuant to this section:
(A)The resource directly supports attainment of the goals specified in Section 454.53 without increasing the states dependence on any fossil fuel-based resources.
(B)The resource is determined by the commission to not be under contract at sufficient levels as shown in load-serving entities most recent individual integrated resource plans submitted to and reviewed by the commission pursuant to this section to achieve the goals specified in Section 454.53.
(C)The resource has a construction and development lead time of at least five years.
(D)The resource does not generate electricity using fossil fuels or fuels derived from fossil fuels.
(E)The resource does not use combustion to generate electricity, unless that combustion use is ancillary and necessary to facilitate geothermal electricity generation.
(2)Resources from a pump hydroelectric facility may be procured by the Department of Water Resources pursuant to this section if the pump hydroelectric facility does not exceed 500 megawatts and has been directly appropriated funding by the state before January 1, 2023.
(i)For purposes of this section, the following definitions apply:
(1)Load-serving entity has the same meaning as defined in Section 380.
(2)Long term means a time period that includes five or more years in the future.
(3)Midterm means a time period between two and five years in the future.
(4)Short term means a time period between the present and two years in the future.
SEC. 6.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)The Legislature finds and declares all of the following:
(1)Because Section 454.53 of the Public Utilities Code sets a goal of renewable energy and zero-carbon resources supplying 100 percent of retail sales of electricity to end-use customers by 2045, California is committed to rapidly decarbonizing the grid, promoting the growth of renewable energy resources, optimizing energy efficiency, and expanding the states energy transmission infrastructure to meet its needs.
(2)The foundation of a decarbonized economy rests on a reliable electrical grid.
(3)Realizing this foundation depends on effective and coordinated planning and reliability frameworks that anticipate and address the electricity needs of the state both in the present and in the future.
(4)Climate change is putting increasing pressure on the states electrical grid. It is imperative for state agencies to use the most comprehensive analytical methods to prepare for maintaining the electrical grid during extreme weather events.
(5)The effectiveness of the states resource adequacy and integrated resource planning frameworks is intrinsically linked to the capability of these frameworks to foresee, plan for, and address current and future energy demands.
(6)The absence of review mechanisms for procurement in the midterm or of a formalized reliability standard, such as a 1-in-10 loss of load expectation, hinders may hinder the states path to consistent and cost-effective energy reliability planning.
(7)In the past few years, California has seen multiple capacity shortfalls that have led to several costly events, including the blackouts of 2020. Consequent emergency procurements, and the extensions to the Diablo Canyon powerplant and three coastal once-through cooling plants have cost taxpayers billions of dollars and underscore the urgent need for a transparent, unified, and forward-thinking planning approach.
(8)Blackouts and related electrical grid disturbances can affect the health and safety of Californians, especially during extreme heat events, and are can be extremely disruptive and costly to our states economy.
(9)The capacity market in California is currently constrained. Capacity prices have skyrocketed in recent years, impacting ratepayers. The Legislature aims to foster a more robust reliability program to avoid these types of market conditions in the future.
(b)It is the intent of the Legislature, in enacting this act, to increase the reliability of Californias electrical grid through all of the following:
(1)Adopting transparent and widely used reliability standards to provide consistent information to ensure that planning processes genuinely reflect the electrical grids capacity needs.
(2)Providing consistent information to policymakers and bridging the planning gap between short-term needs and long-term planning, thereby averting the challenges and costs associated with electrical grid emergencies and emergency capacity procurement.
(3)Enhancing the collective efficacy of the resource adequacy and integrated resource planning frameworks in serving Californias energy needs through coordinated resource assessment and planning. planning, including through improved collaboration between the Public Utilities Commission, the State Energy Resources Conservation and Development Commission, and the Independent System Operator.
(c)(1)It is not the intent of the Legislature to further penalize load-serving entities through the resource adequacy program due to present capacity market conditions beyond their control or to prescribe a midterm reliability program design or create an additional compliance mechanism. control.
(2)It is not the intent of the Legislature to prescribe a midterm reliability program design or create an additional procurement mechanism.
(3)It is not the intent of the Legislature to change the authority of the Public Utilities Commission in relation to the Independent System Operator. It is the intent of the Legislature that the primary authority for resource adequacy and procurement planning remains with the Public Utilities Commission and self-governing publicly owned utilities. The Public Utilities Commission and publicly owned utilities are in the best position to balance the objectives of reliability, cost, and environmental goals.
SEC. 2.Section 345 of the Public Utilities Code is amended to read:345.(a)The Independent System Operator shall ensure the efficient use and reliable operation of the transmission grid consistent with the achievement of planning and operating reserve criteria that are no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council.
(b)In furtherance of subdivision (a), the Independent System Operator may amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission through its rulemaking process, to be consistent with subdivision (a).
SEC. 3.Section 349 of the Public Utilities Code is amended to read:349.(a)The Independent System Operator shall perform a review following a major outage that affects at least 10 percent of the customers of the entity providing the local distribution service. The review shall address the cause of the major outage, the response time and effectiveness, and whether the transmission facility owner or operators operation and maintenance practices enhanced or undermined the ability to restore service efficiently and in a timely manner.
(b)(1)If the Independent System Operator finds pursuant to subdivision (a) that the operation and maintenance practices of the transmission facility owner or operator prolonged the response time or was responsible for the outage, the Independent System Operator may order appropriate sanctions, subject to the Federal Energy Regulatory Commission approving that authority.
(2)(A)If the Independent System Operator finds pursuant to subdivision (a) that the primary cause of the outage was the insufficiency of the electricity supply available to serve the electrical load within its balancing area authority, the Independent System Operator shall post on its internet website the finding and recommendations for the procurement of necessary generation resources and share the finding and recommendations with the commission, the Energy Commission, and the Legislature.
(B)Findings and recommendations submitted to the Legislature shall be provided in accordance with Section 9795 of the Government Code.
SEC. 4.Section 380 of the Public Utilities Code is amended to read:380.(a)The commission, in coordination consultation with the Independent System Operator, shall establish resource adequacy requirements for all load-serving entities.
(b)In establishing resource adequacy requirements, the commission shall ensure the reliability of electrical service in California, in furtherance of Section 345, sufficient to maintain a one-day-in-10-year loss-of-load expectation while advancing, to the extent possible, the states goals for clean energy, reducing air pollution, and reducing emissions of greenhouse gases. The resource adequacy program shall achieve all of the following objectives:
(1)Facilitate development of new generating, nongenerating, and hybrid capacity that is economical, needed for reliability, and needed to achieve the state policy specified in Section 454.53.(2)(1)Facilitate the development of new generating, nongenerating, and hybrid capacity and the retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability in the short term and midterm and to achieve the state policy specified in Section 454.53.
(3)(2)Establish new, or maintain existing, demand response products and tariffs that facilitate the economical dispatch and use of demand response that can either meet or reduce an electrical corporations resource adequacy requirements, as determined by the commission.
(4)(3)Equitably allocate the cost of generating capacity and demand response in a manner that prevents the shifting of costs between customer classes.
(5)(4)Minimize enforcement requirements and costs by doing both of the following: costs.
(A)Assessing if there is sufficient capacity available for resource adequacy procurement in the short term and midterm by all load-serving entities to meet their requirements and, where supply sufficiency is inadequate to meet the resource adequacy requirements established in this subdivision, providing phase-in periods to align increases in resource adequacy requirements with increases in available supply, prioritizing resource development or retention consistent with paragraphs (1) and (2), and providing other mitigating measures when needed to reduce costs to ratepayers.(B)Avoiding false scarcity in the resource adequacy market by minimizing the incentives, including by avoidance of penalties, for load-serving entities to maintain resource adequacy capacity substantially in excess of those requirements.(5)Consideration of mitigation measures, if the commission determines they are needed, to reduce costs to ratepayers.
(6)Maximize the ability of community choice aggregators to determine the generation resources used to serve their customers.(c)Each load-serving entity shall maintain physical generating capacity and electrical demand response adequate to meet its load requirements, including, but not limited to, peak demand and planning and operating reserves. The generating capacity or electrical demand response shall be deliverable to locations and at times as may be necessary to maintain electrical service system reliability, local area reliability, and flexibility.
(d)Each load-serving entity shall, at a minimum, meet the most recent minimum planning reserve and reliability criteria approved by the board of directors of the Western Systems Coordinating Council or the Western Electricity Coordinating Council.
(e)The commission shall implement and enforce the resource adequacy requirements established in accordance with this section in a nondiscriminatory manner. Each load-serving entity shall be subject to the same requirements for resource adequacy, the renewables portfolio standard program, and the integrated resource planning process pursuant to Section 454.52 that apply to electrical corporations pursuant to this section, or are otherwise required by law or by order or decision of the commission. The commission shall exercise its enforcement powers to ensure compliance by all load-serving entities.
(f)(1)The commission shall require sufficient information, including, but not limited to, anticipated load, actual load, and measures undertaken by a load-serving entity to ensure resource adequacy, to be reported to enable the commission to determine compliance with the resource adequacy requirements established by the commission.
(2)The commission shall calculate and publish annually on its internet website, in a new report or as part of another report, the percentage of each load-serving entitys local and system resource adequacy requirements from the previous calendar year that was met with capacity from eligible renewable energy resources pursuant to the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11)), other zero-carbon resources, including large hydroelectric and nuclear resources, or energy storage resources. In determining the percentage of each load-serving entitys resource adequacy requirements, the commission shall include all directly owned or contracted resources and each load-serving entitys allocation of any centrally procured resources or allocation of resources pursuant to any other mechanism that involves an assignment or allocation of resources purchased or owned by a single buyer, and shall exclude any share of a load-serving entitys resources that were allocated to another load-serving entity.
(g)An electrical corporations costs of meeting or reducing resource adequacy requirements, including, but not limited to, the costs associated with system reliability, local area reliability, or flexible resource adequacy, that are determined to be reasonable by the commission, or are otherwise recoverable under a procurement plan approved by the commission pursuant to Section 454.5, shall be fully recoverable from those customers on whose behalf the costs are incurred, as determined by the commission, at the time the commitment to incur the cost is made, on a fully nonbypassable basis, as determined by the commission. The commission shall exclude any amounts authorized to be recovered pursuant to Section 366.2 when authorizing the amount of costs to be recovered from customers of a community choice aggregator or from customers that purchase electricity through a direct transaction pursuant to this subdivision.
(h)The commission shall determine and authorize the most efficient and equitable means for achieving all of the following:
(1)Meeting the objectives of this section.
(2)Ensuring that investment is made in new generating capacity.
(3)Ensuring that existing generating capacity that is economical is retained to ensure reliability in the short term and midterm. reliability.
(4)Ensuring that the cost of generating capacity and demand response is allocated equitably.
(5)Ensuring that community choice aggregators can determine the generation resources used to serve their customers.
(6)Ensuring that investments are made in new and existing demand response resources that are cost effective and help to achieve electrical grid reliability and the states goals for reducing emissions of greenhouse gases.
(7)Minimizing the need for backstop procurement by the Independent System Operator.
(i)In making the determination pursuant to subdivision (h), the commission may consider a centralized resource adequacy mechanism among other options.
(j)The commission shall ensure appropriate valuation of both supply and load modifying demand response resources. The commission, in an existing or new proceeding, shall establish a mechanism to value load modifying demand response resources, including, but not limited to, the ability of demand response resources to help meet distribution needs and transmission system needs and to help reduce a load-serving entitys resource adequacy obligation pursuant to this section. In determining this value, the commission shall consider how these resources further the states electrical grid reliability and the states goals for reducing emissions of greenhouse gases. The commission, Energy Commission, and Independent System Operator shall coordinate to jointly ensure that changes in demand caused by load modifying demand response are expeditiously and comprehensively reflected in the Energy Commissions Integrated Energy Policy Report forecast and in planning proceedings and associated analyses, and shall encourage reflection of these changes in demand in the operation of the grid.
(k)For purposes of this section, the following definitions apply:
(1)Load-serving section, load-serving entity means an electrical corporation, electric service provider, or community choice aggregator. Load-serving entity does not include any of the following:
(A)(1)A local publicly owned electric utility.
(B)(2)The State Water Resources Development System commonly known as the State Water Project.
(C)(3)Customer generation located on the customers site or providing electric service through arrangements authorized by Section 218, if the customer generation, or the load it serves, meets one of the following criteria:
(i)(A)It takes standby service from the electrical corporation on a commission-approved rate schedule that provides for adequate backup planning and operating reserves for the standby customer class.
(ii)(B)It is not physically interconnected to the electrical transmission or distribution grid, so that, if the customer generation fails, backup electricity is not supplied from the electrical grid.
(iii)(C)There is physical assurance that the load served by the customer generation will be curtailed concurrently and commensurately with an outage of the customer generation.
(2)Midterm means a time period between two and five years in the future.(3)Short term means a time period between the present and two years in the future.SEC. 5.Section 454.52 of the Public Utilities Code is amended to read:454.52.(a)(1)Beginning in 2017, and to be updated regularly thereafter, the commission shall adopt a process for each load-serving entity to file an integrated resource plan, and a schedule for periodic updates to the plan, and shall ensure that load-serving entities do all of the following:
(A)Meet the greenhouse gas emissions reduction targets established by the State Air Resources Board, in coordination with the commission and the Energy Commission, for the electricity sector and each load-serving entity that reflect the electricity sectors percentage in achieving the economywide greenhouse gas emissions reductions pursuant to Section 38566 of the Health and Safety Code.
(B)Procure at least 60 percent eligible renewable energy resources by December 31, 2030, consistent with the state policy specified in Section 454.53 and Article 16 (commencing with Section 399.11) of Chapter 2.3.
(C)Enable each electrical corporation to fulfill its obligation to serve its customers at just and reasonable rates.
(D)Minimize impacts on ratepayers bills.
(E)(i)Ensure system and local reliability on a short-term, midterm, and long-term basis, including meeting the short-term and forecast long-term resource adequacy requirements of Section 380, and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls by taking into account impacts due to climate change, forecasted levels of building and transportation electrification, and other factors that can result in those shortfalls.
(ii)In furtherance of avoiding unplanned energy supply shortfalls or expensive emergency procurement and ensuring a more accurate understanding of electrical grid operational needs, the commission shall aggregate reported short-term and midterm resource procurement from all load-serving entities conducted under Section 380 or 454 this section and assess midterm resource sufficiency, and semiannually provide anonymized reports to the Independent System Operator. The commission shall report forward resource procurement using counting conventions requested by the Independent System Operator. that provide the data to the Independent System Operator to be used in its grid planning.
(iii)To accomplish clause (i), the commission shall, every two years, assess short-term, midterm, and long-term reliability by conducting probabilistic reliability modeling modeling, including if there is sufficient capacity available for procurement in the short-term and midterm by all load-serving entities to meet their procurement requirements, and reviewing the results of that reliability modeling in a public proceeding. When modeling short-term and midterm reliability, the commission shall model all procurement consistent with clause (ii) and may rely upon or incorporate probabilistic reliability modeling conducted by the Energy Commission into the commissions public process. The commission shall also report the modeling results in the joint Reliability Planning Assessments conducted under Section 25233 of the Public Resources Code.
(F)Comply with paragraph (1) of subdivision (b) of Section 399.13.
(G)Strengthen the diversity, sustainability, and resilience of the bulk transmission and distribution systems, and local communities.
(H)Enhance distribution systems and demand-side energy management.
(I)Minimize localized air pollutants and other greenhouse gas emissions, with early priority on disadvantaged communities identified pursuant to Section 39711 of the Health and Safety Code.
(J)Maintain a diverse portfolio of energy resources, which may include eligible energy resources procured by the Department of Water Resources.
(2)(A)The commission may authorize all source procurement for load-serving entities that includes various resource types including demand-side resources, supply-side resources, and resources that may be either demand-side resources or supply-side resources, taking into account the differing load-serving entities geographic service areas, to ensure that each load-serving entity meets the goals set forth in paragraph (1).
(B)The commission may approve procurement of resource types that will reduce the overall emissions of greenhouse gases from the electricity sector and meet the other goals specified in paragraph (1), but due to the nature of the technology or fuel source may not compete favorably in price against other resources over the time period of the integrated resource plan.
(3)In furtherance of the requirements of paragraph (1), the commission shall consider the role of existing renewable generation, grid operational efficiencies, energy storage, and distributed energy resources, including energy efficiency, in helping to ensure each load-serving entity meets energy needs and reliability needs in hours to encompass the hour of peak demand of electricity, excluding demand met by variable renewable generation directly connected to a California balancing authority, as defined in Section 399.12, while reducing the need for new electricity generation resources and new transmission resources in achieving the states energy goals at the least cost to ratepayers.
(4)(A)On or before September 1, 2024, and consistent with the process and schedule adopted pursuant to paragraph (1), the commission, in consultation with the Energy Commission and the Independent System Operator, shall determine if there is a need for the procurement of eligible energy resources based on a review of the integrated resource plans submitted by load-serving entities in compliance with the requirements of this section and Section 454.53 and the progress towards meeting the portfolio of resources identified pursuant to subdivision (a) of Section 454.51.
(B)If the commission determines that there is a need for the procurement of eligible energy resources, the commission shall specify the eligible energy resources that should be procured to meet that need.
(C)Within six months of determining that there is a need for the procurement of eligible energy resources, the commission may request the Department of Water Resources to exercise its central procurement function to procure those eligible energy resources specified pursuant to subparagraph (B) that meet the portfolio of resources identified in subdivision (a) of Section 454.51.
(D)(i)Upon receiving a request pursuant to subparagraph (C), the Department of Water Resources, before January 1, 2035, may exercise its central procurement function to conduct one or more competitive solicitations and enter into contracts to procure eligible energy resources in order to achieve the policy of the state specified in Section 454.53.
(ii)Any contract entered into by the Department of Water Resources pursuant to clause (i) and approved by the commission pursuant to Section 80821 of the Water Code before January 1, 2035, shall remain in force for the duration of the contract.
(E)The Department of Water Resources exercising of its central procurement function to procure eligible energy resources pursuant to this paragraph shall be conducted in accordance with Division 29.5 (commencing with Section 80800) of the Water Code.
(b)(1)Each load-serving entity shall prepare and file an integrated resource plan consistent with paragraph (2) of subdivision (a) on a time schedule directed by the commission and subject to commission review.
(2)Each electrical corporations plan shall follow Section 454.5.
(3)The plan of a community choice aggregator shall be submitted to its governing board for approval and provided to the commission for certification, consistent with paragraph (5) of subdivision (a) of Section 366.2, and shall achieve all of the following:
(A)Economic, reliability, environmental, security, and other benefits and performance characteristics that are consistent with the goals set forth in paragraph (1) of subdivision (a).
(B)A diversified procurement portfolio consisting of short-term, midterm, and long-term electricity, electricity-related, and demand reduction products.
(C)The resource adequacy requirements established pursuant to Section 380.
(4)The plan of an electric service provider shall achieve the goals set forth in paragraph (1) of subdivision (a) through a diversified portfolio consisting of short-term, midterm, and long-term electricity, electricity-related, and demand reduction products.
(c)To the extent that additional procurement is authorized for the electrical corporation in the integrated resource plan or the procurement process authorized pursuant to Section 454.5, the commission shall ensure that the costs are allocated in a fair and equitable manner to all customers consistent with Section 454.51, that there is no cost shifting among customers of load-serving entities, and that community choice aggregators may self-provide renewable integration resources consistent with Section 454.51. The commission may order the procurement of resources with specific attributes by load-serving entities as a result of the integrated resource planning process and shall enforce any resource procurement requirements on a nondiscriminatory basis. Enforcement may include the assessment of penalties for noncompliance.
(d)To eliminate redundancy and increase efficiency, the process adopted pursuant to subdivision (a) shall incorporate, and not duplicate, any other planning processes of the commission.
(e)This section applies to an electrical cooperative, as defined in Section 2776, only if the electrical cooperative has an annual electrical demand exceeding 700 gigawatthours, as determined based on a three-year average commencing with January 1, 2013.
(f)(1)The commission shall not include the energy, capacity, or any attribute from Diablo Canyon Unit 1 beyond November 1, 2024, or Unit 2 beyond August 26, 2025, in the adopted integrated resource plan portfolios, resource stacks, or preferred system plans.
(2)The commission shall disallow a load-serving entity from including in their adopted integrated resource plan any energy, capacity, or any attribute from the Diablo Canyon Unit 1 beyond November 1, 2024, or Unit 2 beyond August 26, 2025.
(g)For a thermal powerplant that uses nuclear fission technology not constructed in the twenty-first century, all resource attributes shall be retired on January 1, 2031, and shall be reported as a separate, line item resource for purposes of complying with Section 398.4.
(h)(1)Only a new energy resource that meets all of the following requirements is eligible to be procured by the Department of Water Resources pursuant to this section:
(A)The resource directly supports attainment of the goals specified in Section 454.53 without increasing the states dependence on any fossil fuel-based resources.
(B)The resource is determined by the commission to not be under contract at sufficient levels as shown in load-serving entities most recent individual integrated resource plans submitted to and reviewed by the commission pursuant to this section to achieve the goals specified in Section 454.53.
(C)The resource has a construction and development lead time of at least five years.
(D)The resource does not generate electricity using fossil fuels or fuels derived from fossil fuels.
(E)The resource does not use combustion to generate electricity, unless that combustion use is ancillary and necessary to facilitate geothermal electricity generation.
(2)Resources from a pump hydroelectric facility may be procured by the Department of Water Resources pursuant to this section if the pump hydroelectric facility does not exceed 500 megawatts and has been directly appropriated funding by the state before January 1, 2023.
(i)For purposes of this section, the following definitions apply:
(1)Load-serving entity has the same meaning as defined in Section 380.
(2)Long term means a time period that includes five or more years in the future.
(3)Midterm means a time period between two and five years in the future.
(4)Short term means a time period between the present and two years in the future.
SEC. 6.Section 1701.1 of the Public Utilities Code is amended to read:1701.1.(a)The commission shall determine whether each proceeding is a quasi-legislative, an adjudication, a ratesetting, or a catastrophic wildfire proceeding. The commissions decision as to the nature of the proceeding shall be subject to a request for rehearing within 10 days of the date of that decision or of any subsequent ruling that expands the scope of the proceeding. Only those parties who have requested a rehearing within that time period shall subsequently have standing for judicial review and that review shall only be available at the conclusion of the proceeding. The commission shall render its decision regarding the rehearing within 30 days. The commission shall establish rules regarding ex parte communication on case categorization issues.(b)(1)The commission, upon initiating an adjudication proceeding or ratesetting proceeding, shall assign one or more commissioners to oversee the case and an administrative law judge when appropriate. The assigned commissioner shall schedule a prehearing conference and shall prepare and issue by order or ruling a scoping memo that describes the issues to be considered and the applicable timetable for resolution and that, consistent with due process, public policy, and statutory requirements, determines whether the proceeding requires a hearing.(2)The administrative law judge shall either preside over and conduct, or assist the assigned commissioner or commissioners in presiding over and conducting, any evidentiary or adjudication hearing that may be required.(c)The commission, upon initiating a quasi-legislative proceeding, shall assign one or more commissioners to oversee the case and an administrative law judge, when appropriate, who may be assisted by a technical advisory staff member in conducting the proceeding. The assigned commissioner shall prepare and issue by order or ruling a scoping memo that describes the issues to be considered and the applicable timetable for resolution and that, consistent with due process, public policy, and statutory requirements, determines whether the proceeding requires a hearing.(d)(1)Quasi-legislative cases, for purposes of this article, are cases that establish policy, including, but not limited to, rulemakings and investigations that may establish rules affecting an entire industry.(2)Adjudication cases, for purposes of this article, are enforcement cases and complaints except those challenging the reasonableness of any rates or charges as specified in Section 1702.(3)Ratesetting cases, for purposes of this article, are cases in which rates are established for a specific company, including, but not limited to, general rate cases, performance-based ratemaking, and other ratesetting mechanisms.(4)Catastrophic wildfire proceedings, for purposes of this article, are proceedings in which an electrical corporation files an application to recover costs and expenses pursuant to Section 451 or 451.1, as applicable, related to a covered wildfire, as defined in Section 1701.8.(e)(1)(A)Ex parte communication, for purposes of this article, means any oral or written communication between a decisionmaker and an interested person concerning any matter before the commission that the commission has not specified in its Rules of Practice and Procedure as being a procedural matter and that does not occur in a public hearing, workshop, or other public proceeding, or on the official record of the proceeding on the matter. The commission shall specify in its Rules of Practice and Procedure, enacted by rulemaking, the types of issues considered procedural matters under this article.(B)(i)For purposes of this article, interested person means any of the following:(I)An applicant, an agent or an employee of the applicant, or a person receiving consideration for representing the applicant, or a participant in the proceeding on any matter before the commission.(II)A person with a financial interest, as described in Article 1 (commencing with Section 87100) of Chapter 7 of Title 9 of the Government Code, in a matter before the commission, an agent or employee of the person with a financial interest, or a person receiving consideration for representing the person with a financial interest. A person involved in issuing credit ratings or advising entities or persons who invest in the shares or operations of any party to a proceeding is a person with a financial interest.(III)A representative acting on behalf of any civic, environmental, neighborhood, business, labor, trade, or similar organization who intends to influence the decision of a commission member on a matter before the commission.(IV)Other categories of individuals deemed by the commission, by rule, to be an interested person.(ii)Interested person does not include the Independent System Operator when the Independent System Operator consults with the commission on matters of reliability for purposes of Section 345 or when sharing market-sensitive or confidential data for purposes of ensuring reliability under Section 380. The Independent System Operator shall participate as a party to proceedings when the primary purpose of that participation is policy development.(2)The commission shall by rule adopt and publish a definition of decisionmakers and interested persons for purposes of this article, along with any requirements for written reporting of ex parte communications and appropriate sanctions for noncompliance with any rule proscribing ex parte communications. The definition of decisionmakers shall include, but is not limited to: each commissioner; the personal staff of a commissioner if the staff is acting in a policy or legal advisory capacity; the chief administrative law judge of the commission; and the administrative law judge assigned to the proceeding. The commission shall, by rule, explicitly ban both of the following:(A)The practice of one-way ex parte communications from a decisionmaker to an interested person.(B)Any communication between an interested person and a decisionmaker regarding which commissioner or administrative law judge may be assigned to a matter before the commission.(3)For adjudication cases, the rules shall provide that ex parte communications shall be prohibited, as required by this article. The rules shall provide that if an ex parte communication occurs that is prohibited by this article, or if an ex parte communication occurs in a ratesetting case or catastrophic wildfire proceeding, whether initiated by a decisionmaker or an interested person, all of the following shall be required:(A)The interested person shall report the communication within three working days of the communication by filing a notice with the commission that includes all the following:(i)The date, time, and location of the communication, whether the communication was oral or written, or a combination of both, and the communication medium used.(ii)The identity of the decisionmaker, the identity of the person initiating the communication, and the identities of any other persons present.(iii)The topic of the communication, including applicable proceeding numbers.(iv)A substantive description of the interested persons communication and its content.(v)A copy of any written material or text used during the communication.(B)Any decisionmaker who participated in the communication shall promptly log the ex parte communication by filing a notice that includes all the following:(i)The date, time, and location of the communication, whether the communication was oral or written, or a combination of both, and the communication medium used.(ii)The identity of the interested person, the identity of the person initiating the communication, and the identities of any other persons present.(iii)The topic of the communication, including any applicable proceeding numbers.(iv)A brief description of the communication.(C)If the interested person who participated in the communication has not timely submitted the notice required by subparagraph (A), the decisionmaker shall refer the matter to the attorney for the commission, and an assigned commissioner, by ruling, shall order the interested person to submit the required notice. The interested person shall be subject to any applicable penalties for the initial violation and, if the interested person does not submit the required notice within the time period specified in the assigned commissioners ruling, the interested person shall be subject to continuing violations pursuant to Section 2108.(4)The requirements of paragraph (3) shall not apply to any oral ex parte communication occurring at a meeting if all parties are invited to participate and given not less than three working days notice.(5)The commission shall not take any vote on a matter in which a notice of a prohibited ex parte communication has been filed pursuant to subparagraph (A) or (B) of paragraph (3) until all parties to the proceeding have been provided a reasonable opportunity to respond to the communication.(6)If an ex parte communication is not disclosed as required by this subdivision until after the commission has issued a decision on the matter to which the communication pertained, a party not participating in the communication may file a petition to rescind or modify the decision. The party may seek a finding that the ex parte communication significantly influenced the decisions process or outcome as part of any petition to rescind or modify the decision. The commission shall process the petition in accordance with the commissions procedures for petitions for modification and shall issue a decision on the petition no later than 180 days after the filing of the petition.(7)(A)Ex parte communications that occur at conferences and that are within the scope of an adjudication, ratesetting, or catastrophic wildfire proceeding shall be subject to the requirements of this article.(B)Ex parte communications that occur at conferences and that are within the scope of a quasi-legislative proceeding shall be governed by the ex parte communication disclosure requirements developed by the commission.(C)For purposes of this section, ex parte communications that occur at conferences includes, but is not limited to, communications in a private setting or during meals, entertainment events, and tours, and informal discussions among conference attendees.(8)The commission shall render its decisions based on the law and on the evidence in the record. Ex parte communications shall not be a part of the evidentiary record of the proceedings.(f)The commission may meet in a closed session to discuss administrative matters so long as no collective consensus is reached or vote taken on any matter requiring a vote of the commissioners. The commission shall, by rule, adopt and publish a definition of administrative matters for purposes of this section.(g)The commission shall permit written comments received from the public to be included in the record of its proceedings, but the comments shall not be treated as evidence. The commission shall provide parties to the proceeding a reasonable opportunity to respond to any public comments included in the record of proceedings.(h)It is the intent of the Legislature that the commission, and any entity or person seeking to influence actions taken by the commission, shall be subject to all applicable ethical standards, including any applicable obligations under the Political Reform Act of 1974 (Title 9 (commencing with Section 81000) of the Government Code), including, but not limited to, any applicable lobbying obligations.SEC. 7.SEC. 6.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)The Legislature finds and declares all of the following:
(1)Because Section 454.53 of the Public Utilities Code sets a goal of renewable energy and zero-carbon resources supplying 100 percent of retail sales of electricity to end-use customers by 2045, California is committed to rapidly decarbonizing the grid, promoting the growth of renewable energy resources, optimizing energy efficiency, and expanding the states energy transmission infrastructure to meet its needs.
(2)The foundation of a decarbonized economy rests on a reliable electrical grid.
(3)Realizing this foundation depends on effective and coordinated planning and reliability frameworks that anticipate and address the electricity needs of the state both in the present and in the future.
(4)Climate change is putting increasing pressure on the states electrical grid. It is imperative for state agencies to use the most comprehensive analytical methods to prepare for maintaining the electrical grid during extreme weather events.
(5)The effectiveness of the states resource adequacy and integrated resource planning frameworks is intrinsically linked to the capability of these frameworks to foresee, plan for, and address current and future energy demands.
(6)The absence of review mechanisms for procurement in the midterm or of a formalized reliability standard, such as a 1-in-10 loss of load expectation, hinders the states path to consistent and cost-effective energy reliability planning.
(7)In the past few years, California has seen multiple capacity shortfalls that have led to several costly events, including the blackouts of 2020. Consequent emergency procurements, and the extensions to the Diablo Canyon powerplant and three coastal once-through cooling plants have cost taxpayers billions of dollars and underscore the urgent need for a transparent, unified, and forward-thinking planning approach.
(8)Blackouts and related electrical grid disturbances affect the health and safety of Californians, especially during extreme heat events, and are extremely disruptive and costly to our states economy.
(9)The capacity market in California is currently constrained. Capacity prices have skyrocketed in recent years, impacting ratepayers. The Legislature aims to foster a more robust reliability program to avoid these types of market conditions in the future.
(b)It is the intent of the Legislature, in enacting this act, to increase the reliability of Californias electrical grid through all of the following:
(1)Adopting transparent and widely used reliability standards to provide consistent information to ensure that planning processes genuinely reflect the electrical grids capacity needs.
(2)Providing consistent information to policymakers and bridging the planning gap between short-term needs and long-term planning, thereby averting the challenges and costs associated with electrical grid emergencies and emergency capacity procurement.
(3)Enhancing the collective efficacy of the resource adequacy and integrated resource planning frameworks in serving Californias energy needs through coordinated resource assessment and planning.
(c)It is not the intent of the Legislature to further penalize load-serving entities through the resource adequacy program due to present capacity market conditions beyond their control or to prescribe a midterm reliability program design or create an additional compliance mechanism.
SECTION 1.SEC. 2.Section 345 of the Public Utilities Code is amended to read:345.(a)The Independent System Operator shall ensure the efficient use and reliable operation of the transmission grid consistent with the achievement of planning and operating reserve criteria that are no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council.
(b)In furtherance of subdivision (a), the Independent System Operator may establish minimum planning reserve requirements for participating load-serving entities amend its tariff, as deemed necessary and approved subject to approval by the Federal Energy Regulatory Commission. Commission through its rulemaking process, to be consistent with subdivision (a).
SEC. 2.SEC. 3.Section 349 of the Public Utilities Code is amended to read:349.(a)The Independent System Operator shall perform a review following a major outage that affects at least 10 percent of the customers of the entity providing the local distribution service. The review shall address the cause of the major outage, the response time and effectiveness, and whether the transmission facility owner or operators operation and maintenance practices enhanced or undermined the ability to restore service efficiently and in a timely manner.
(b)(1)If the Independent System Operator finds pursuant to subdivision (a) that the operation and maintenance practices of the transmission facility owner or operator prolonged the response time or was responsible for the outage, the Independent System Operator may order appropriate sanctions, subject to the Federal Energy Regulatory Commission approving that authority.
(2)(A)If the Independent System Operator finds pursuant to subdivision (a) that the primary cause of the outage was the insufficient procurement of generation resources, insufficiency of the electricity supply available to serve the electrical load within its balancing area authority, the Independent System Operator shall share that post on its internet website the finding and recommendations for the procurement of necessary generation resources and share the finding and recommendations with the commission, the Energy Commission, and the Legislature.
(B)Findings and recommendations submitted to the Legislature shall be provided in accordance with Section 9795 of the Government Code.
SEC. 3.SEC. 4.Section 380 of the Public Utilities Code is amended to read:380.(a)The commission, in coordination with the Independent System Operator, shall establish resource adequacy requirements for all load-serving entities.
(b)In establishing resource adequacy requirements, the commission shall ensure the reliability of electrical service in California, in furtherance of Section 345, sufficient to maintain a one-day-in-10-year loss-of-load expectation while advancing, to the extent possible, the states goals for clean energy, reducing air pollution, and reducing emissions of greenhouse gases. The resource adequacy program shall achieve all of the following objectives:
(1)Facilitate development of new generating, nongenerating, and hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability in the short term and midterm and to achieve the state policy specified in Section 454.53. that is economical, needed for reliability, and needed to achieve the state policy specified in Section 454.53.
(2)Facilitate the retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability in the short term and midterm and to achieve the state policy specified in Section 454.53.
(2)(3)Establish new, or maintain existing, demand response products and tariffs that facilitate the economical dispatch and use of demand response that can either meet or reduce an electrical corporations resource adequacy requirements, as determined by the commission.
(3)(4)Equitably allocate the cost of generating capacity and demand response in a manner that prevents the shifting of costs between customer classes.
(4)(5)Minimize enforcement requirements and costs. costs by doing both of the following:
(A)Assessing if there is sufficient capacity available for resource adequacy procurement in the short term and midterm by all load-serving entities to meet their requirements and, where supply sufficiency is inadequate to meet the resource adequacy requirements established in this subdivision, providing phase-in periods to align increases in resource adequacy requirements with increases in available supply, prioritizing resource development or retention consistent with paragraphs (1) and (2), and providing other mitigating measures when needed to reduce costs to ratepayers.
(B)Avoiding false scarcity in the resource adequacy market by minimizing the incentives, including by avoidance of penalties, for load-serving entities to maintain resource adequacy capacity substantially in excess of those requirements.
(5)(6)Maximize the ability of community choice aggregators to determine the generation resources used to serve their customers.
(c)Each load-serving entity shall maintain physical generating capacity and electrical demand response adequate to meet its load requirements, including, but not limited to, peak demand and planning and operating reserves. The generating capacity or electrical demand response shall be deliverable to locations and at times as may be necessary to maintain electrical service system reliability, local area reliability, and flexibility.
(d)Each load-serving entity shall, at a minimum, meet the most recent minimum planning reserve and reliability criteria approved by the board of directors of the Western Systems Coordinating Council or the Western Electricity Coordinating Council.
(e)The commission shall implement and enforce the resource adequacy requirements established in accordance with this section in a nondiscriminatory manner. Each load-serving entity shall be subject to the same requirements for resource adequacy, the renewables portfolio standard program, and the integrated resource planning process pursuant to Section 454.52 that apply to electrical corporations pursuant to this section, or are otherwise required by law or by order or decision of the commission. The commission shall exercise its enforcement powers to ensure compliance by all load-serving entities.
(f)(1)The commission shall require sufficient information, including, but not limited to, anticipated load, actual load, and measures undertaken by a load-serving entity to ensure resource adequacy, to be reported to enable the commission to determine compliance with the resource adequacy requirements established by the commission.
(2)The commission shall calculate and publish annually on its internet website, in a new report or as part of another report, the percentage of each load-serving entitys local and system resource adequacy requirements from the previous calendar year that was met with capacity from eligible renewable energy resources pursuant to the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11)), other zero-carbon resources, including large hydroelectric and nuclear resources, or energy storage resources. In determining the percentage of each load-serving entitys resource adequacy requirements, the commission shall include all directly owned or contracted resources and each load-serving entitys allocation of any centrally procured resources or allocation of resources pursuant to any other mechanism that involves an assignment or allocation of resources purchased or owned by a single buyer, and shall exclude any share of a load-serving entitys resources that were allocated to another load-serving entity.
(g)An electrical corporations costs of meeting or reducing resource adequacy requirements, including, but not limited to, the costs associated with system reliability, local area reliability, or flexible resource adequacy, that are determined to be reasonable by the commission, or are otherwise recoverable under a procurement plan approved by the commission pursuant to Section 454.5, shall be fully recoverable from those customers on whose behalf the costs are incurred, as determined by the commission, at the time the commitment to incur the cost is made, on a fully nonbypassable basis, as determined by the commission. The commission shall exclude any amounts authorized to be recovered pursuant to Section 366.2 when authorizing the amount of costs to be recovered from customers of a community choice aggregator or from customers that purchase electricity through a direct transaction pursuant to this subdivision.
(h)The commission shall determine and authorize the most efficient and equitable means for achieving all of the following:
(1)Meeting the objectives of this section.
(2)Ensuring that investment is made in new generating capacity.
(3)Ensuring that existing generating capacity that is economical is retained to ensure reliability in the short term and midterm.
(4)Ensuring that the cost of generating capacity and demand response is allocated equitably.
(5)Ensuring that community choice aggregators can determine the generation resources used to serve their customers.
(6)Ensuring that investments are made in new and existing demand response resources that are cost effective and help to achieve electrical grid reliability and the states goals for reducing emissions of greenhouse gases.
(7)Minimizing the need for backstop procurement by the Independent System Operator.
(i)In making the determination pursuant to subdivision (h), the commission may consider a centralized resource adequacy mechanism among other options.
(j)The commission shall ensure appropriate valuation of both supply and load modifying demand response resources. The commission, in an existing or new proceeding, shall establish a mechanism to value load modifying demand response resources, including, but not limited to, the ability of demand response resources to help meet distribution needs and transmission system needs and to help reduce a load-serving entitys resource adequacy obligation pursuant to this section. In determining this value, the commission shall consider how these resources further the states electrical grid reliability and the states goals for reducing emissions of greenhouse gases. The commission, Energy Commission, and Independent System Operator shall coordinate to jointly ensure that changes in demand caused by load modifying demand response are expeditiously and comprehensively reflected in the Energy Commissions Integrated Energy Policy Report forecast and in planning proceedings and associated analyses, and shall encourage reflection of these changes in demand in the operation of the grid.
(k)For purposes of this section, the following definitions apply:
(1)Load-serving entity means an electrical corporation, electric service provider, or community choice aggregator. Load-serving entity does not include any of the following:
(A)A local publicly owned electric utility.
(B)The State Water Resources Development System commonly known as the State Water Project.
(C)Customer generation located on the customers site or providing electric service through arrangements authorized by Section 218, if the customer generation, or the load it serves, meets one of the following criteria:
(i)It takes standby service from the electrical corporation on a commission-approved rate schedule that provides for adequate backup planning and operating reserves for the standby customer class.
(ii)It is not physically interconnected to the electrical transmission or distribution grid, so that, if the customer generation fails, backup electricity is not supplied from the electrical grid.
(iii)There is physical assurance that the load served by the customer generation will be curtailed concurrently and commensurately with an outage of the customer generation.
(2)Midterm means a time period between two and five years in the future.
(3)Short term means a time period between the present and two years in the future.
SEC. 4.SEC. 5.Section 454.52 of the Public Utilities Code is amended to read:454.52.(a)(1)Beginning in 2017, and to be updated regularly thereafter, the commission shall adopt a process for each load-serving entity to file an integrated resource plan, and a schedule for periodic updates to the plan, and shall ensure that load-serving entities do all of the following:
(A)Meet the greenhouse gas emissions reduction targets established by the State Air Resources Board, in coordination with the commission and the Energy Commission, for the electricity sector and each load-serving entity that reflect the electricity sectors percentage in achieving the economywide greenhouse gas emissions reductions pursuant to Section 38566 of the Health and Safety Code.
(B)Procure at least 60 percent eligible renewable energy resources by December 31, 2030, consistent with the state policy specified in Section 454.53 and Article 16 (commencing with Section 399.11) of Chapter 2.3.
(C)Enable each electrical corporation to fulfill its obligation to serve its customers at just and reasonable rates.
(D)Minimize impacts on ratepayers bills.
(E)(i)Ensure system and local reliability on a short-term, midterm, and long-term basis, including meeting the short-term and forecast long-term resource adequacy requirements of Section 380, and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls by taking into account impacts due to climate change, forecasted levels of building and transportation electrification, and other factors that can result in those shortfalls.
(ii)To accomplish clause (i), and in furtherance of avoiding unplanned energy supply shortfalls or expensive emergency procurement, the commission shall ensure that all resources contracted for the midterm forward period are reported to the commission and the Independent System Operator using resource counting rules that are equivalent to those used for resource adequacy pursuant to Section 380.(ii)In furtherance of avoiding unplanned energy supply shortfalls or expensive emergency procurement and ensuring a more accurate understanding of electrical grid operational needs, the commission shall aggregate reported short-term and midterm resource procurement from all load-serving entities conducted under Section 380 or 454 and assess midterm resource sufficiency, and semiannually provide anonymized reports to the Independent System Operator. The commission shall report forward resource procurement using counting conventions requested by the Independent System Operator.
(iii)To accomplish clause (i), the commission shall, every two years, assess short-term, midterm, and long-term reliability by conducting probabilistic reliability modeling and reviewing the results of that reliability modeling in a public proceeding. When modeling short-term and midterm reliability, the commission shall model all procurement provided to the commission pursuant to clause (ii). consistent with clause (ii) and may rely upon or incorporate probabilistic reliability modeling conducted by the Energy Commission into the commissions public process. The commission shall also report the modeling results in the joint Reliability Planning Assessments conducted under Section 25233 of the Public Resources Code.
(F)Comply with paragraph (1) of subdivision (b) of Section 399.13.
(G)Strengthen the diversity, sustainability, and resilience of the bulk transmission and distribution systems, and local communities.
(H)Enhance distribution systems and demand-side energy management.
(I)Minimize localized air pollutants and other greenhouse gas emissions, with early priority on disadvantaged communities identified pursuant to Section 39711 of the Health and Safety Code.
(J)Maintain a diverse portfolio of energy resources, which may include eligible energy resources procured by the Department of Water Resources.
(2)(A)The commission may authorize all source procurement for load-serving entities that includes various resource types including demand-side resources, supply-side resources, and resources that may be either demand-side resources or supply-side resources, taking into account the differing load-serving entities geographic service areas, to ensure that each load-serving entity meets the goals set forth in paragraph (1).
(B)The commission may approve procurement of resource types that will reduce the overall emissions of greenhouse gases from the electricity sector and meet the other goals specified in paragraph (1), but due to the nature of the technology or fuel source may not compete favorably in price against other resources over the time period of the integrated resource plan.
(3)In furtherance of the requirements of paragraph (1), the commission shall consider the role of existing renewable generation, grid operational efficiencies, energy storage, and distributed energy resources, including energy efficiency, in helping to ensure each load-serving entity meets energy needs and reliability needs in hours to encompass the hour of peak demand of electricity, excluding demand met by variable renewable generation directly connected to a California balancing authority, as defined in Section 399.12, while reducing the need for new electricity generation resources and new transmission resources in achieving the states energy goals at the least cost to ratepayers.
(4)(A)On or before September 1, 2024, and consistent with the process and schedule adopted pursuant to paragraph (1), the commission, in consultation with the Energy Commission and the Independent System Operator, shall determine if there is a need for the procurement of eligible energy resources based on a review of the integrated resource plans submitted by load-serving entities in compliance with the requirements of this section and Section 454.53 and the progress towards meeting the portfolio of resources identified pursuant to subdivision (a) of Section 454.51.
(B)If the commission determines that there is a need for the procurement of eligible energy resources, the commission shall specify the eligible energy resources that should be procured to meet that need.
(C)Within six months of determining that there is a need for the procurement of eligible energy resources, the commission may request the Department of Water Resources to exercise its central procurement function to procure those eligible energy resources specified pursuant to subparagraph (B) that meet the portfolio of resources identified in subdivision (a) of Section 454.51.
(D)(i)Upon receiving a request pursuant to subparagraph (C), the Department of Water Resources, before January 1, 2035, may exercise its central procurement function to conduct one or more competitive solicitations and enter into contracts to procure eligible energy resources in order to achieve the policy of the state specified in Section 454.53.
(ii)Any contract entered into by the Department of Water Resources pursuant to clause (i) and approved by the commission pursuant to Section 80821 of the Water Code before January 1, 2035, shall remain in force for the duration of the contract.
(E)The Department of Water Resources exercising of its central procurement function to procure eligible energy resources pursuant to this paragraph shall be conducted in accordance with Division 29.5 (commencing with Section 80800) of the Water Code.
(b)(1)Each load-serving entity shall prepare and file an integrated resource plan consistent with paragraph (2) of subdivision (a) on a time schedule directed by the commission and subject to commission review.
(2)Each electrical corporations plan shall follow Section 454.5.
(3)The plan of a community choice aggregator shall be submitted to its governing board for approval and provided to the commission for certification, consistent with paragraph (5) of subdivision (a) of Section 366.2, and shall achieve all of the following:
(A)Economic, reliability, environmental, security, and other benefits and performance characteristics that are consistent with the goals set forth in paragraph (1) of subdivision (a).
(B)A diversified procurement portfolio consisting of short-term, midterm, and long-term electricity, electricity-related, and demand reduction products.
(C)The resource adequacy requirements established pursuant to Section 380.
(4)The plan of an electric service provider shall achieve the goals set forth in paragraph (1) of subdivision (a) through a diversified portfolio consisting of short-term, midterm, and long-term electricity, electricity-related, and demand reduction products.
(c)To the extent that additional procurement is authorized for the electrical corporation in the integrated resource plan or the procurement process authorized pursuant to Section 454.5, the commission shall ensure that the costs are allocated in a fair and equitable manner to all customers consistent with Section 454.51, that there is no cost shifting among customers of load-serving entities, and that community choice aggregators may self-provide renewable integration resources consistent with Section 454.51. The commission may order the procurement of resources with specific attributes by load-serving entities as a result of the integrated resource planning process and shall enforce any resource procurement requirements on a nondiscriminatory basis. Enforcement may include the assessment of penalties for noncompliance.
(d)To eliminate redundancy and increase efficiency, the process adopted pursuant to subdivision (a) shall incorporate, and not duplicate, any other planning processes of the commission.
(e)This section applies to an electrical cooperative, as defined in Section 2776, only if the electrical cooperative has an annual electrical demand exceeding 700 gigawatthours, as determined based on a three-year average commencing with January 1, 2013.
(f)(1)The commission shall not include the energy, capacity, or any attribute from Diablo Canyon Unit 1 beyond November 1, 2024, or Unit 2 beyond August 26, 2025, in the adopted integrated resource plan portfolios, resource stacks, or preferred system plans.
(2)The commission shall disallow a load-serving entity from including in their adopted integrated resource plan any energy, capacity, or any attribute from the Diablo Canyon Unit 1 beyond November 1, 2024, or Unit 2 beyond August 26, 2025.
(g)For a thermal powerplant that uses nuclear fission technology not constructed in the twenty-first century, all resource attributes shall be retired on January 1, 2031, and shall be reported as a separate, line item resource for purposes of complying with Section 398.4.
(h)(1)Only a new energy resource that meets all of the following requirements is eligible to be procured by the Department of Water Resources pursuant to this section:
(A)The resource directly supports attainment of the goals specified in Section 454.53 without increasing the states dependence on any fossil fuel-based resources.
(B)The resource is determined by the commission to not be under contract at sufficient levels as shown in load-serving entities most recent individual integrated resource plans submitted to and reviewed by the commission pursuant to this section to achieve the goals specified in Section 454.53.
(C)The resource has a construction and development lead time of at least five years.
(D)The resource does not generate electricity using fossil fuels or fuels derived from fossil fuels.
(E)The resource does not use combustion to generate electricity, unless that combustion use is ancillary and necessary to facilitate geothermal electricity generation.
(2)Resources from a pump hydroelectric facility may be procured by the Department of Water Resources pursuant to this section if the pump hydroelectric facility does not exceed 500 megawatts and has been directly appropriated funding by the state before January 1, 2023.
(i)For purposes of this section, the following definitions apply:
(1)Load-serving entity has the same meaning as defined in Section 380.
(2)Long term means a time period that includes time five or more years in the future.
(3)Midterm means a time period between two and five years in the future.
(4)Short term means a time period between the present and two years in the future.
SEC. 5.SEC. 6.Section 1701.1 of the Public Utilities Code is amended to read:1701.1.(a)The commission shall determine whether each proceeding is a quasi-legislative, an adjudication, a ratesetting, or a catastrophic wildfire proceeding. The commissions decision as to the nature of the proceeding shall be subject to a request for rehearing within 10 days of the date of that decision or of any subsequent ruling that expands the scope of the proceeding. Only those parties who have requested a rehearing within that time period shall subsequently have standing for judicial review and that review shall only be available at the conclusion of the proceeding. The commission shall render its decision regarding the rehearing within 30 days. The commission shall establish rules regarding ex parte communication on case categorization issues.
(b)(1)The commission, upon initiating an adjudication proceeding or ratesetting proceeding, shall assign one or more commissioners to oversee the case and an administrative law judge when appropriate. The assigned commissioner shall schedule a prehearing conference and shall prepare and issue by order or ruling a scoping memo that describes the issues to be considered and the applicable timetable for resolution and that, consistent with due process, public policy, and statutory requirements, determines whether the proceeding requires a hearing.
(2)The administrative law judge shall either preside over and conduct, or assist the assigned commissioner or commissioners in presiding over and conducting, any evidentiary or adjudication hearing that may be required.
(c)The commission, upon initiating a quasi-legislative proceeding, shall assign one or more commissioners to oversee the case and an administrative law judge, when appropriate, who may be assisted by a technical advisory staff member in conducting the proceeding. The assigned commissioner shall prepare and issue by order or ruling a scoping memo that describes the issues to be considered and the applicable timetable for resolution and that, consistent with due process, public policy, and statutory requirements, determines whether the proceeding requires a hearing.
(d)(1)Quasi-legislative cases, for purposes of this article, are cases that establish policy, including, but not limited to, rulemakings and investigations that may establish rules affecting an entire industry.
(2)Adjudication cases, for purposes of this article, are enforcement cases and complaints except those challenging the reasonableness of any rates or charges as specified in Section 1702.
(3)Ratesetting cases, for purposes of this article, are cases in which rates are established for a specific company, including, but not limited to, general rate cases, performance-based ratemaking, and other ratesetting mechanisms.
(4)Catastrophic wildfire proceedings, for purposes of this article, are proceedings in which an electrical corporation files an application to recover costs and expenses pursuant to Section 451 or 451.1, as applicable, related to a covered wildfire, as defined in Section 1701.8.
(e)(1)(A)Ex parte communication, for purposes of this article, means any oral or written communication between a decisionmaker and an interested person concerning any matter before the commission that the commission has not specified in its Rules of Practice and Procedure as being a procedural matter and that does not occur in a public hearing, workshop, or other public proceeding, or on the official record of the proceeding on the matter. The commission shall specify in its Rules of Practice and Procedure, enacted by rulemaking, the types of issues considered procedural matters under this article.
(B)(i)For purposes of this article, interested person means any of the following:
(I)An applicant, an agent or an employee of the applicant, or a person receiving consideration for representing the applicant, or a participant in the proceeding on any matter before the commission.
(II)A person with a financial interest, as described in Article 1 (commencing with Section 87100) of Chapter 7 of Title 9 of the Government Code, in a matter before the commission, an agent or employee of the person with a financial interest, or a person receiving consideration for representing the person with a financial interest. A person involved in issuing credit ratings or advising entities or persons who invest in the shares or operations of any party to a proceeding is a person with a financial interest.
(III)A representative acting on behalf of any civic, environmental, neighborhood, business, labor, trade, or similar organization who intends to influence the decision of a commission member on a matter before the commission.
(IV)Other categories of individuals deemed by the commission, by rule, to be an interested person.
(ii)Interest Interested person does not include the Independent System Operator when the Independent System Operator consults with the commission on matters of reliability for purposes of Section 345 or 380. when sharing market-sensitive or confidential data for purposes of ensuring reliability under Section 380. The Independent System Operator shall participate as a party to proceedings when the primary purpose of that participation is policy development.
(2)The commission shall by rule adopt and publish a definition of decisionmakers and interested persons for purposes of this article, along with any requirements for written reporting of ex parte communications and appropriate sanctions for noncompliance with any rule proscribing ex parte communications. The definition of decisionmakers shall include, but is not limited to: each commissioner; the personal staff of a commissioner if the staff is acting in a policy or legal advisory capacity; the chief administrative law judge of the commission; and the administrative law judge assigned to the proceeding. The commission shall, by rule, explicitly ban both of the following:
(A)The practice of one-way ex parte communications from a decisionmaker to an interested person.
(B)Any communication between an interested person and a decisionmaker regarding which commissioner or administrative law judge may be assigned to a matter before the commission.
(3)For adjudication cases, the rules shall provide that ex parte communications shall be prohibited, as required by this article. The rules shall provide that if an ex parte communication occurs that is prohibited by this article, or if an ex parte communication occurs in a ratesetting case or catastrophic wildfire proceeding, whether initiated by a decisionmaker or an interested person, all of the following shall be required:
(A)The interested person shall report the communication within three working days of the communication by filing a notice with the commission that includes all the following:
(i)The date, time, and location of the communication, whether the communication was oral or written, or a combination of both, and the communication medium used.
(ii)The identity of the decisionmaker, the identity of the person initiating the communication, and the identities of any other persons present.
(iii)The topic of the communication, including applicable proceeding numbers.
(iv)A substantive description of the interested persons communication and its content.
(v)A copy of any written material or text used during the communication.
(B)Any decisionmaker who participated in the communication shall promptly log the ex parte communication by filing a notice that includes all the following:
(i)The date, time, and location of the communication, whether the communication was oral or written, or a combination of both, and the communication medium used.
(ii)The identity of the interested person, the identity of the person initiating the communication, and the identities of any other persons present.
(iii)The topic of the communication, including any applicable proceeding numbers.
(iv)A brief description of the communication.
(C)If the interested person who participated in the communication has not timely submitted the notice required by subparagraph (A), the decisionmaker shall refer the matter to the attorney for the commission, and an assigned commissioner, by ruling, shall order the interested person to submit the required notice. The interested person shall be subject to any applicable penalties for the initial violation and, if the interested person does not submit the required notice within the time period specified in the assigned commissioners ruling, the interested person shall be subject to continuing violations pursuant to Section 2108.
(4)The requirements of paragraph (3) shall not apply to any oral ex parte communication occurring at a meeting if all parties are invited to participate and given not less than three working days notice.
(5)The commission shall not take any vote on a matter in which a notice of a prohibited ex parte communication has been filed pursuant to subparagraph (A) or (B) of paragraph (3) until all parties to the proceeding have been provided a reasonable opportunity to respond to the communication.
(6)If an ex parte communication is not disclosed as required by this subdivision until after the commission has issued a decision on the matter to which the communication pertained, a party not participating in the communication may file a petition to rescind or modify the decision. The party may seek a finding that the ex parte communication significantly influenced the decisions process or outcome as part of any petition to rescind or modify the decision. The commission shall process the petition in accordance with the commissions procedures for petitions for modification and shall issue a decision on the petition no later than 180 days after the filing of the petition.
(7)(A)Ex parte communications that occur at conferences and that are within the scope of an adjudication, ratesetting, or catastrophic wildfire proceeding shall be subject to the requirements of this article.
(B)Ex parte communications that occur at conferences and that are within the scope of a quasi-legislative proceeding shall be governed by the ex parte communication disclosure requirements developed by the commission.
(C)For purposes of this section, ex parte communications that occur at conferences includes, but is not limited to, communications in a private setting or during meals, entertainment events, and tours, and informal discussions among conference attendees.
(8)The commission shall render its decisions based on the law and on the evidence in the record. Ex parte communications shall not be a part of the evidentiary record of the proceedings.
(f)The commission may meet in a closed session to discuss administrative matters so long as no collective consensus is reached or vote taken on any matter requiring a vote of the commissioners. The commission shall, by rule, adopt and publish a definition of administrative matters for purposes of this section.
(g)The commission shall permit written comments received from the public to be included in the record of its proceedings, but the comments shall not be treated as evidence. The commission shall provide parties to the proceeding a reasonable opportunity to respond to any public comments included in the record of proceedings.
(h)It is the intent of the Legislature that the commission, and any entity or person seeking to influence actions taken by the commission, shall be subject to all applicable ethical standards, including any applicable obligations under the Political Reform Act of 1974 (Title 9 (commencing with Section 81000) of the Government Code), including, but not limited to, any applicable lobbying obligations.
SEC. 6.SEC. 7.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)The Independent System Operator shall ensure the efficient use and reliable operation of the transmission grid consistent with the achievement of planning and operating reserve criteria that are no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council.
(b)In furtherance of subdivision (a), the Independent System Operator may establish minimum planning reserve requirements for participating load-serving entities as deemed necessary and approved by the Federal Energy Regulatory Commission.
SECTION 1.SEC. 2.Section 349 of the Public Utilities Code is amended to read:349.(a)The Independent System Operator shall perform a review following a major outage that affects at least 10 percent of the customers of the entity providing the local distribution service. The review shall address the cause of the major outage, the response time and effectiveness, and whether the transmission facility owner or operators operation and maintenance practices enhanced or undermined the ability to restore service efficiently and in a timely manner.
(b)(1)If the Independent System Operator finds pursuant to subdivision (a) that the operation and maintenance practices of the transmission facility owner or operator prolonged the response time or was responsible for the outage, the Independent System Operator may order appropriate sanctions, subject to the Federal Energy Regulatory Commission approving that authority.
(2)(A)If the Independent System Operator finds pursuant to subdivision (a) that the primary cause of the outage was the insufficient procurement of generation resources, the Independent System Operator shall share that finding and recommendations for the procurement of necessary generation resources with the commission, the Energy Commission, and the Legislature.
(B)Findings and recommendations submitted to the Legislature shall be provided in accordance with Section 9795 of the Government Code.
SEC. 3.Section 380 of the Public Utilities Code is amended to read:380.(a)The commission, in consultation coordination with the Independent System Operator, shall establish resource adequacy requirements for all load-serving entities.
(b)In establishing resource adequacy requirements, the commission shall ensure the reliability of electrical service in California California, in furtherance of Section 345, sufficient to maintain a one-day-in-10-year loss-of-load expectation while advancing, to the extent possible, the states goals for clean energy, reducing air pollution, and reducing emissions of greenhouse gases. The resource adequacy program shall achieve all of the following objectives:
(1)Facilitate development of new generating, nongenerating, and hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability in the short term and midterm and to achieve the state policy specified in Section 454.53.
(2)Establish new, or maintain existing, demand response products and tariffs that facilitate the economical dispatch and use of demand response that can either meet or reduce an electrical corporations resource adequacy requirements, as determined by the commission.
(3)Equitably allocate the cost of generating capacity and demand response in a manner that prevents the shifting of costs between customer classes.
(4)Minimize enforcement requirements and costs.
(5)Maximize the ability of community choice aggregators to determine the generation resources used to serve their customers.
(c)Each load-serving entity shall maintain physical generating capacity and electrical demand response adequate to meet its load requirements, including, but not limited to, peak demand and planning and operating reserves. The generating capacity or electrical demand response shall be deliverable to locations and at times as may be necessary to maintain electrical service system reliability, local area reliability, and flexibility.
(d)Each load-serving entity shall, at a minimum, meet the most recent minimum planning reserve and reliability criteria approved by the board of directors of the Western Systems Coordinating Council or the Western Electricity Coordinating Council.
(e)The commission shall implement and enforce the resource adequacy requirements established in accordance with this section in a nondiscriminatory manner. Each load-serving entity shall be subject to the same requirements for resource adequacy, the renewables portfolio standard program, and the integrated resource planning process pursuant to Section 454.52 that apply to electrical corporations pursuant to this section, or are otherwise required by law or by order or decision of the commission. The commission shall exercise its enforcement powers to ensure compliance by all load-serving entities.
(f)(1)The commission shall require sufficient information, including, but not limited to, anticipated load, actual load, and measures undertaken by a load-serving entity to ensure resource adequacy, to be reported to enable the commission to determine compliance with the resource adequacy requirements established by the commission.
(2)The commission shall calculate and publish annually on its internet website, in a new report or as part of another report, the percentage of each load-serving entitys local and system resource adequacy requirements from the previous calendar year that was met with capacity from eligible renewable energy resources pursuant to the California Renewables Portfolio Standard Program (Article 16 (commencing with Section 399.11)), other zero-carbon resources, including large hydroelectric and nuclear resources, or energy storage resources. In determining the percentage of each load-serving entitys resource adequacy requirements, the commission shall include all directly owned or contracted resources and each load-serving entitys allocation of any centrally procured resources or allocation of resources pursuant to any other mechanism that involves an assignment or allocation of resources purchased or owned by a single buyer, and shall exclude any share of a load-serving entitys resources that were allocated to another load-serving entity.
(g)An electrical corporations costs of meeting or reducing resource adequacy requirements, including, but not limited to, the costs associated with system reliability, local area reliability, or flexible resource adequacy, that are determined to be reasonable by the commission, or are otherwise recoverable under a procurement plan approved by the commission pursuant to Section 454.5, shall be fully recoverable from those customers on whose behalf the costs are incurred, as determined by the commission, at the time the commitment to incur the cost is made, on a fully nonbypassable basis, as determined by the commission. The commission shall exclude any amounts authorized to be recovered pursuant to Section 366.2 when authorizing the amount of costs to be recovered from customers of a community choice aggregator or from customers that purchase electricity through a direct transaction pursuant to this subdivision.
(h)The commission shall determine and authorize the most efficient and equitable means for achieving all of the following:
(1)Meeting the objectives of this section.
(2)Ensuring that investment is made in new generating capacity.
(3)Ensuring that existing generating capacity that is economical is retained. retained to ensure reliability in the short term and midterm.
(4)Ensuring that the cost of generating capacity and demand response is allocated equitably.
(5)Ensuring that community choice aggregators can determine the generation resources used to serve their customers.
(6)Ensuring that investments are made in new and existing demand response resources that are cost effective and help to achieve electrical grid reliability and the states goals for reducing emissions of greenhouse gases.
(7)Minimizing the need for backstop procurement by the Independent System Operator.
(i)In making the determination pursuant to subdivision (h), the commission may consider a centralized resource adequacy mechanism among other options.
(j)The commission shall ensure appropriate valuation of both supply and load modifying demand response resources. The commission, in an existing or new proceeding, shall establish a mechanism to value load modifying demand response resources, including, but not limited to, the ability of demand response resources to help meet distribution needs and transmission system needs and to help reduce a load-serving entitys resource adequacy obligation pursuant to this section. In determining this value, the commission shall consider how these resources further the states electrical grid reliability and the states goals for reducing emissions of greenhouse gases. The commission, Energy Commission, and Independent System Operator shall jointly ensure that changes in demand caused by load modifying demand response are expeditiously and comprehensively reflected in the Energy Commissions Integrated Energy Policy Report forecast and in planning proceedings and associated analyses, and shall encourage reflection of these changes in demand in the operation of the grid.
(k)For purposes of this section, load-serving the following definitions apply:
(1)Load-serving entity means an electrical corporation, electric service provider, or community choice aggregator. Load-serving entity does not include any of the following:
(1)(A)A local publicly owned electric utility.
(2)(B)The State Water Resources Development System commonly known as the State Water Project.
(3)(C)Customer generation located on the customers site or providing electric service through arrangements authorized by Section 218, if the customer generation, or the load it serves, meets one of the following criteria:
(A)(i)It takes standby service from the electrical corporation on a commission-approved rate schedule that provides for adequate backup planning and operating reserves for the standby customer class.
(B)(ii)It is not physically interconnected to the electrical transmission or distribution grid, so that, if the customer generation fails, backup electricity is not supplied from the electrical grid.
(C)(iii)There is physical assurance that the load served by the customer generation will be curtailed concurrently and commensurately with an outage of the customer generation.
(2)Midterm means a time period between two and five years in the future.
(3)Short term means a time period between the present and two years in the future.
SEC. 4.Section 454.52 of the Public Utilities Code is amended to read:454.52.(a)(1)Beginning in 2017, and to be updated regularly thereafter, the commission shall adopt a process for each load-serving entity to file an integrated resource plan, and a schedule for periodic updates to the plan, and shall ensure that load-serving entities do all of the following:
(A)Meet the greenhouse gas emissions reduction targets established by the State Air Resources Board, in coordination with the commission and the Energy Commission, for the electricity sector and each load-serving entity that reflect the electricity sectors percentage in achieving the economywide greenhouse gas emissions reductions pursuant to Section 38566 of the Health and Safety Code.
(B)Procure at least 60 percent eligible renewable energy resources by December 31, 2030, consistent with the state policy specified in Section 454.53 and Article 16 (commencing with Section 399.11) of Chapter 2.3.
(C)Enable each electrical corporation to fulfill its obligation to serve its customers at just and reasonable rates.
(D)Minimize impacts on ratepayers bills.
(E)(i)Ensure system and local reliability on a near-term, mid-term, short-term, midterm, and long-term basis, including meeting the near-term short-term and forecast long-term resource adequacy requirements of Section 380, and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls by taking into account impacts due to climate change, forecasted levels of building and transportation electrification, and other factors that can result in those shortfalls.
(ii)To accomplish clause (i), and in furtherance of avoiding unplanned energy supply shortfalls or expensive emergency procurement, the commission shall ensure that all resources contracted for the midterm forward period are reported to the commission and the Independent System Operator using resource counting rules that are equivalent to those used for resource adequacy pursuant to Section 380.
(iii)To accomplish clause (i), the commission shall, every two years, assess short-term, midterm, and long-term reliability by conducting probabilistic reliability modeling and reviewing the results of that reliability modeling in a public proceeding. When modeling short-term and midterm reliability, the commission shall model all procurement provided to the commission pursuant to clause (ii).
(F)Comply with paragraph (1) of subdivision (b) of Section 399.13.
(G)Strengthen the diversity, sustainability, and resilience of the bulk transmission and distribution systems, and local communities.
(H)Enhance distribution systems and demand-side energy management.
(I)Minimize localized air pollutants and other greenhouse gas emissions, with early priority on disadvantaged communities identified pursuant to Section 39711 of the Health and Safety Code.
(J)Maintain a diverse portfolio of energy resources, which may include eligible energy resources procured by the Department of Water Resources.
(2)(A)The commission may authorize all source procurement for load-serving entities that includes various resource types including demand-side resources, supply-side resources, and resources that may be either demand-side resources or supply-side resources, taking into account the differing load-serving entities geographic service areas, to ensure that each load-serving entity meets the goals set forth in paragraph (1).
(B)The commission may approve procurement of resource types that will reduce the overall emissions of greenhouse gases from the electricity sector and meet the other goals specified in paragraph (1), but due to the nature of the technology or fuel source may not compete favorably in price against other resources over the time period of the integrated resource plan.
(3)In furtherance of the requirements of paragraph (1), the commission shall consider the role of existing renewable generation, grid operational efficiencies, energy storage, and distributed energy resources, including energy efficiency, in helping to ensure each load-serving entity meets energy needs and reliability needs in hours to encompass the hour of peak demand of electricity, excluding demand met by variable renewable generation directly connected to a California balancing authority, as defined in Section 399.12, while reducing the need for new electricity generation resources and new transmission resources in achieving the states energy goals at the least cost to ratepayers.
(4)(A)On or before September 1, 2024, and consistent with the process and schedule adopted pursuant to paragraph (1), the commission, in consultation with the Energy Commission and the Independent System Operator, shall determine if there is a need for the procurement of eligible energy resources based on a review of the integrated resource plans submitted by load-serving entities in compliance with the requirements of this section and Section 454.53 and the progress towards meeting the portfolio of resources identified pursuant to subdivision (a) of Section 454.51.
(B)If the commission determines that there is a need for the procurement of eligible energy resources, the commission shall specify the eligible energy resources that should be procured to meet that need.
(C)Within six months of determining that there is a need for the procurement of eligible energy resources, the commission may request the Department of Water Resources to exercise its central procurement function to procure those eligible energy resources specified pursuant to subparagraph (B) that meet the portfolio of resources identified in subdivision (a) of Section 454.51.
(D)(i)Upon receiving a request pursuant to subparagraph (C), the Department of Water Resources, before January 1, 2035, may exercise its central procurement function to conduct one or more competitive solicitations and enter into contracts to procure eligible energy resources in order to achieve the policy of the state specified in Section 454.53.
(ii)Any contract entered into by the Department of Water Resources pursuant to clause (i) and approved by the commission pursuant to Section 80821 of the Water Code before January 1, 2035, shall remain in force for the duration of the contract.
(E)The Department of Water Resources exercising of its central procurement function to procure eligible energy resources pursuant to this paragraph shall be conducted in accordance with Division 29.5 (commencing with Section 80800) of the Water Code.
(b)(1)Each load-serving entity shall prepare and file an integrated resource plan consistent with paragraph (2) of subdivision (a) on a time schedule directed by the commission and subject to commission review.
(2)Each electrical corporations plan shall follow Section 454.5.
(3)The plan of a community choice aggregator shall be submitted to its governing board for approval and provided to the commission for certification, consistent with paragraph (5) of subdivision (a) of Section 366.2, and shall achieve all of the following:
(A)Economic, reliability, environmental, security, and other benefits and performance characteristics that are consistent with the goals set forth in paragraph (1) of subdivision (a).
(B)A diversified procurement portfolio consisting of short-term short-term, midterm, and long-term electricity, electricity-related, and demand reduction products.
(C)The resource adequacy requirements established pursuant to Section 380.
(4)The plan of an electric service provider shall achieve the goals set forth in paragraph (1) of subdivision (a) through a diversified portfolio consisting of short-term short-term, midterm, and long-term electricity, electricity-related, and demand reduction products.
(c)To the extent that additional procurement is authorized for the electrical corporation in the integrated resource plan or the procurement process authorized pursuant to Section 454.5, the commission shall ensure that the costs are allocated in a fair and equitable manner to all customers consistent with Section 454.51, that there is no cost shifting among customers of load-serving entities, and that community choice aggregators may self-provide renewable integration resources consistent with Section 454.51. The commission may order the procurement of resources with specific attributes by load-serving entities as a result of the integrated resource planning process and shall enforce any resource procurement requirements on a nondiscriminatory basis. Enforcement may include the assessment of penalties for noncompliance.
(d)To eliminate redundancy and increase efficiency, the process adopted pursuant to subdivision (a) shall incorporate, and not duplicate, any other planning processes of the commission.
(e)This section applies to an electrical cooperative, as defined in Section 2776, only if the electrical cooperative has an annual electrical demand exceeding 700 gigawatthours, as determined based on a three-year average commencing with January 1, 2013.
(f)(1)The commission shall not include the energy, capacity, or any attribute from Diablo Canyon Unit 1 beyond November 1, 2024, or Unit 2 beyond August 26, 2025, in the adopted integrated resource plan portfolios, resource stacks, or preferred system plans.
(2)The commission shall disallow a load-serving entity from including in their adopted integrated resource plan any energy, capacity, or any attribute from the Diablo Canyon Unit 1 beyond November 1, 2024, or Unit 2 beyond August 26, 2025.
(g)For a thermal powerplant that uses nuclear fission technology not constructed in the twenty-first century, all resource attributes shall be retired on January 1, 2031, and shall be reported as a separate, line item resource for purposes of complying with Section 398.4.
(h)(1)Only a new energy resource that meets all of the following requirements is eligible to be procured by the Department of Water Resources pursuant to this section:
(A)The resource directly supports attainment of the goals specified in Section 454.53 without increasing the states dependence on any fossil fuel-based resources.
(B)The resource is determined by the commission to not be under contract at sufficient levels as shown in load-serving entities most recent individual integrated resource plans submitted to and reviewed by the commission pursuant to this section to achieve the goals specified in Section 454.53.
(C)The resource has a construction and development lead time of at least five years.
(D)The resource does not generate electricity using fossil fuels or fuels derived from fossil fuels.
(E)The resource does not use combustion to generate electricity, unless that combustion use is ancillary and necessary to facilitate geothermal electricity generation.
(2)Resources from a pump hydroelectric facility may be procured by the Department of Water Resources pursuant to this section if the pump hydroelectric facility does not exceed 500 megawatts and has been directly appropriated funding by the state before January 1, 2023.
(i)For purposes of this section, load-serving the following definitions apply:
(1)Load-serving entity has the same meaning as defined in Section 380.
(2)Long term means a time period that includes time five or more years in the future.
(3)Midterm means a time period between two and five years in the future.
(4)Short term means a time period between the present and two years in the future.
SEC. 5.Section 1701.1 of the Public Utilities Code is amended to read:1701.1.(a)The commission shall determine whether each proceeding is a quasi-legislative, an adjudication, a ratesetting, or a catastrophic wildfire proceeding. The commissions decision as to the nature of the proceeding shall be subject to a request for rehearing within 10 days of the date of that decision or of any subsequent ruling that expands the scope of the proceeding. Only those parties who have requested a rehearing within that time period shall subsequently have standing for judicial review and that review shall only be available at the conclusion of the proceeding. The commission shall render its decision regarding the rehearing within 30 days. The commission shall establish rules regarding ex parte communication on case categorization issues.
(b)(1)The commission, upon initiating an adjudication proceeding or ratesetting proceeding, shall assign one or more commissioners to oversee the case and an administrative law judge when appropriate. The assigned commissioner shall schedule a prehearing conference and shall prepare and issue by order or ruling a scoping memo that describes the issues to be considered and the applicable timetable for resolution and that, consistent with due process, public policy, and statutory requirements, determines whether the proceeding requires a hearing.
(2)The administrative law judge shall either preside over and conduct, or assist the assigned commissioner or commissioners in presiding over and conducting, any evidentiary or adjudication hearing that may be required.
(c)The commission, upon initiating a quasi-legislative proceeding, shall assign one or more commissioners to oversee the case and an administrative law judge, when appropriate, who may be assisted by a technical advisory staff member in conducting the proceeding. The assigned commissioner shall prepare and issue by order or ruling a scoping memo that describes the issues to be considered and the applicable timetable for resolution and that, consistent with due process, public policy, and statutory requirements, determines whether the proceeding requires a hearing.
(d)(1)Quasi-legislative cases, for purposes of this article, are cases that establish policy, including, but not limited to, rulemakings and investigations that may establish rules affecting an entire industry.
(2)Adjudication cases, for purposes of this article, are enforcement cases and complaints except those challenging the reasonableness of any rates or charges as specified in Section 1702.
(3)Ratesetting cases, for purposes of this article, are cases in which rates are established for a specific company, including, but not limited to, general rate cases, performance-based ratemaking, and other ratesetting mechanisms.
(4)Catastrophic wildfire proceedings, for purposes of this article, are proceedings in which an electrical corporation files an application to recover costs and expenses pursuant to Section 451 or 451.1, as applicable, related to a covered wildfire, as defined in Section 1701.8.
(e)(1)(A)Ex parte communication, for purposes of this article, means any oral or written communication between a decisionmaker and an interested person concerning any matter before the commission that the commission has not specified in its Rules of Practice and Procedure as being a procedural matter and that does not occur in a public hearing, workshop, or other public proceeding, or on the official record of the proceeding on the matter. The commission shall specify in its Rules of Practice and Procedure, enacted by rulemaking, the types of issues considered procedural matters under this article.
(B)Interested person, for (i)For purposes of this article, interested person means any of the following:
(i)Any(I)An applicant, an agent or an employee of the applicant, or a person receiving consideration for representing the applicant, or a participant in the proceeding on any matter before the commission.
(ii)Any(II)A person with a financial interest, as described in Article 1 (commencing with Section 87100) of Chapter 7 of Title 9 of the Government Code, in a matter before the commission, an agent or employee of the person with a financial interest, or a person receiving consideration for representing the person with a financial interest. A person involved in issuing credit ratings or advising entities or persons who invest in the shares or operations of any party to a proceeding is a person with a financial interest.
(iii)(III)A representative acting on behalf of any civic, environmental, neighborhood, business, labor, trade, or similar organization who intends to influence the decision of a commission member on a matter before the commission.
(iv)(IV)Other categories of individuals deemed by the commission, by rule, to be an interested person.
(ii)Interest person does not include the Independent System Operator when the Independent System Operator consults with the commission on matters of reliability for purposes of Section 345 or 380.
(2)The commission shall by rule adopt and publish a definition of decisionmakers and interested persons for purposes of this article, along with any requirements for written reporting of ex parte communications and appropriate sanctions for noncompliance with any rule proscribing ex parte communications. The definition of decisionmakers shall include, but is not limited to: each commissioner; the personal staff of a commissioner if the staff is acting in a policy or legal advisory capacity; the chief administrative law judge of the commission; and the administrative law judge assigned to the proceeding. The commission shall, by rule, explicitly ban both of the following:
(A)The practice of one-way ex parte communications from a decisionmaker to an interested person.
(B)Any communication between an interested person and a decisionmaker regarding which commissioner or administrative law judge may be assigned to a matter before the commission.
(3)For adjudication cases, the rules shall provide that ex parte communications shall be prohibited, as required by this article. The rules shall provide that if an ex parte communication occurs that is prohibited by this article, or if an ex parte communication occurs in a ratesetting case or catastrophic wildfire proceeding, whether initiated by a decisionmaker or an interested person, all of the following shall be required:
(A)The interested person shall report the communication within three working days of the communication by filing a notice with the commission that includes all the following:
(i)The date, time, and location of the communication, whether the communication was oral or written, or a combination of both, and the communication medium used.
(ii)The identity of the decisionmaker, the identity of the person initiating the communication, and the identities of any other persons present.
(iii)The topic of the communication, including applicable proceeding numbers.
(iv)A substantive description of the interested persons communication and its content.
(v)A copy of any written material or text used during the communication.
(B)Any decisionmaker who participated in the communication shall promptly log the ex parte communication by filing a notice that includes all the following:
(i)The date, time, and location of the communication, whether the communication was oral or written, or a combination of both, and the communication medium used.
(ii)The identity of the interested person, the identity of the person initiating the communication, and the identities of any other persons present.
(iii)The topic of the communication, including any applicable proceeding numbers.
(iv)A brief description of the communication.
(C)If the interested person who participated in the communication has not timely submitted the notice required by subparagraph (A), the decisionmaker shall refer the matter to the attorney for the commission, and an assigned commissioner, by ruling, shall order the interested person to submit the required notice. The interested person shall be subject to any applicable penalties for the initial violation and, if the interested person does not submit the required notice within the time period specified in the assigned commissioners ruling, the interested person shall be subject to continuing violations pursuant to Section 2108.
(4)The requirements of paragraph (3) shall not apply to any oral ex parte communication occurring at a meeting if all parties are invited to participate and given not less than three working days notice.
(5)The commission shall not take any vote on a matter in which a notice of a prohibited ex parte communication has been filed pursuant to subparagraph (A) or (B) of paragraph (3) until all parties to the proceeding have been provided a reasonable opportunity to respond to the communication.
(6)If an ex parte communication is not disclosed as required by this subdivision until after the commission has issued a decision on the matter to which the communication pertained, a party not participating in the communication may file a petition to rescind or modify the decision. The party may seek a finding that the ex parte communication significantly influenced the decisions process or outcome as part of any petition to rescind or modify the decision. The commission shall process the petition in accordance with the commissions procedures for petitions for modification and shall issue a decision on the petition no later than 180 days after the filing of the petition.
(7)(A)Ex parte communications that occur at conferences and that are within the scope of an adjudication, ratesetting, or catastrophic wildfire proceeding shall be subject to the requirements of this article.
(B)Ex parte communications that occur at conferences and that are within the scope of a quasi-legislative proceeding shall be governed by the ex parte communication disclosure requirements developed by the commission.
(C)For purposes of this section, ex parte communications that occur at conferences includes, but is not limited to, communications in a private setting or during meals, entertainment events, and tours, and informal discussions among conference attendees.
(8)The commission shall render its decisions based on the law and on the evidence in the record. Ex parte communications shall not be a part of the evidentiary record of the proceedings.
(f)The commission may meet in a closed session to discuss administrative matters so long as no collective consensus is reached or vote taken on any matter requiring a vote of the commissioners. The commission shall, by rule, adopt and publish a definition of administrative matters for purposes of this section.
(g)The commission shall permit written comments received from the public to be included in the record of its proceedings, but the comments shall not be treated as evidence. The commission shall provide parties to the proceeding a reasonable opportunity to respond to any public comments included in the record of proceedings.
(h)It is the intent of the Legislature that the commission, and any entity or person seeking to influence actions taken by the commission, shall be subject to all applicable ethical standards, including any applicable obligations under the Political Reform Act of 1974 (Title 9 (commencing with Section 81000) of the Government Code), including, but not limited to, any applicable lobbying obligations.
SEC. 6.No reimbursement is required by this act pursuant to Section 6 of Article XIIIB of the California Constitution because the only costs that may be incurred by a local agency or school district will be incurred because this act creates a new crime or infraction, eliminates a crime or infraction, or changes the penalty for a crime or infraction, within the meaning of Section 17556 of the Government Code, or changes the definition of a crime within the meaning of Section 6 of Article XIIIB of the California Constitution.
(a)The Independent System Operator shall perform a review following a major outage that affects at least 10 percent of the customers of the entity providing the local distribution service. The review shall address the cause of the major outage, the response time and effectiveness, and whether the transmission facility owner or operators operation and maintenance practices enhanced or undermined the ability to restore service efficiently and in a timely manner. If
(b)(1)If the Independent System Operator finds pursuant to subdivision (a) that the operation and maintenance practices of the transmission facility owner or operator prolonged the response time or was responsible for the outage, the Independent System Operator may order appropriate sanctions, subject to the Federal Energy Regulatory Commission approving that authority.
(2)(A)If the Independent System Operator finds pursuant to subdivision (a) that the primary cause of the outage was the insufficient procurement of generation resources, the Independent System Operator shall share that finding and recommendations for the procurement of necessary generation resources with the commission, the Energy Commission, and the Legislature.
(B)Findings and recommendations submitted to the Legislature shall be provided in accordance with Section 9795 of the Government Code.
SECTION 1.Section 334 of the Public Utilities Code is amended to read:334.The Legislature finds and declares that in order to ensure the success of electrical restructuring, in the transition to a new market structure it is important to ensure a reliable supply of electricity. Reliable electrical service is of paramount importance to the safety, health, and comfort of the people of California. Transmission connections between electrical utilities allow them to share generation resources and reduce the number of powerplants necessary to maintain a reliable system. The connections between utilities also create exposure to events that can cause widespread and extended transmission and service outages that reach far beyond the originating utility service area. California utilities and those in the western United States voluntarily adhere to reliability standards developed by the Western Electricity Coordinating Council. The economic cost of extended electricity outages, such as those that occurred in California and throughout the Western Electricity Coordinating Council on July 2, 1996, and August 10, 1996, to Californias residential, commercial, agricultural, and industrial customers is significant. The proposed restructuring of the electrical industry would transfer responsibility for ensuring short- and long-term reliability away from electrical utilities and regulatory bodies to the Independent System Operator and various market-based mechanisms. The Legislature has an interest in ensuring that the change in the locus of responsibility for reliability does not expose California citizens to undue economic risk in connection with system reliability.The Legislature finds and declares that in order to ensure the success of electric industry electrical restructuring, in the transition to a new market structure it is important to ensure a reliable supply of electricity. Reliable electric electrical service is of paramount importance to the safety, health, and comfort of the people of California. Transmission connections between electric electrical utilities allow them to share generation resources and reduce the number of powerplants necessary to maintain a reliable system. The connections between utilities also create exposure to events that can cause widespread and extended transmission and service outages that reach far beyond the originating utility service area. California utilities and those in the western United States voluntarily adhere to reliability standards developed by the Western Electricity Coordinating Council. The economic cost of extended electricity outages, such as those that occurred in California and throughout the Western Electricity Coordinating Council on July 2, 1996, and August 10, 1996, to Californias residential, commercial, agricultural, and industrial customers is significant. The proposed restructuring of the electricity electrical industry would transfer responsibility for ensuring short- and long-term reliability away from electric electrical utilities and regulatory bodies to the Independent System Operator and various market-based mechanisms. The Legislature has an interest in ensuring that the change in the locus of responsibility for reliability does not expose California citizens to undue economic risk in connection with system reliability.
|
Date
|
Status
|
|---|---|
| Sep 27, 2024 | Chaptered by Secretary of State - Chapter 713, Statutes of 2024. |
| Sep 27, 2024 | Approved by the Governor. |
| Sep 11, 2024 | Enrolled and presented to the Governor at 4 p.m. |
| Aug 29, 2024 | Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 76. Noes 0.). |
| Aug 28, 2024 | In Assembly. Concurrence in Senate amendments pending. May be considered on or after August 30 pursuant to Assembly Rule 77. |
| Aug 28, 2024 | Assembly Rule 77 suspended. |
| Aug 27, 2024 | Read third time. Passed. Ordered to the Assembly. (Ayes 39. Noes 0.). |
| Aug 22, 2024 | Read second time. Ordered to third reading. |
| Aug 21, 2024 | Read third time and amended. Ordered to second reading. |
| Aug 19, 2024 | Read second time. Ordered to third reading. |
| Aug 15, 2024 | From committee: Do pass. (Ayes 7. Noes 0.) (August 15). |
| Aug 5, 2024 | In committee: Referred to APPR suspense file. |
| Jul 3, 2024 | Read second time and amended. Re-referred to Com. on APPR. |
| Jul 3, 2024 | From committee: Amend, and do pass as amended and re-refer to Com. on APPR. (Ayes 18. Noes 0.) (July 2). |
| Jun 10, 2024 | From committee chair, with author's amendments: Amend, and re-refer to committee. Read second time, amended, and re-referred to Com. on E., U. & C. |
| Jun 5, 2024 | Referred to Com. on E., U. & C. |
| May 23, 2024 | In Senate. Read first time. To Com. on RLS. for assignment. |
| May 22, 2024 | Read third time. Passed. Ordered to the Senate. (Ayes 72. Noes 0. Page 5472.) |
| May 20, 2024 | Read second time. Ordered to third reading. |
| May 16, 2024 | Joint Rule 62(a), file notice suspended. (Page 5215.) |
| May 16, 2024 | From committee: Do pass. (Ayes 15. Noes 0.) (May 16). |
| May 15, 2024 | In committee: Set, first hearing. Referred to APPR. suspense file. |
| Apr 25, 2024 | From committee: Do pass and re-refer to Com. on APPR. with recommendation: To Consent Calendar. (Ayes 16. Noes 0.) (April 24). Re-referred to Com. on APPR. |
| Apr 17, 2024 | Re-referred to Com. on U. & E. |
| Apr 16, 2024 | From committee chair, with author's amendments: Amend, and re-refer to Com. on U. & E. Read second time and amended. |
| Apr 1, 2024 | Re-referred to Com. on U. & E. |
| Mar 21, 2024 | Referred to Com. on U. & E. |
| Mar 21, 2024 | From committee chair, with author's amendments: Amend, and re-refer to Com. on U. & E. Read second time and amended. |
| Feb 13, 2024 | From printer. May be heard in committee March 14. |
| Feb 12, 2024 | Read first time. To print. |
|
Date
|
Description
|
Location
|
Votes
|
|
|---|---|---|---|---|
| Aug 29, 2024 | AB 2368 Petrie-Norris Concurrence in Senate Amendments | Assembly Floor |
Passed |
|
| Aug 27, 2024 | Assembly 3rd Reading AB2368 Petrie-Norris et al. By Becker | Senate Floor |
Passed |
|
| Aug 15, 2024 | Do pass | Senate Standing Committee on Appropriations |
Passed |
|
| Aug 5, 2024 | Placed on suspense file | Senate Standing Committee on Appropriations |
Passed |
|
| Jul 2, 2024 | Do pass as amended, but first amend, and re-refer to the Committee on [Appropriations] | Senate Standing Committee on Energy, Utilities and Communications |
Passed |
|
| May 22, 2024 | AB 2368 Petrie-Norris Assembly Third Reading | Assembly Floor |
Passed |
|
| May 16, 2024 | Do pass. | Assembly Standing Committee on Appropriations |
Passed |
|
| Apr 24, 2024 | Do pass and be re-referred to the Committee on [Appropriations] with recommendation: To Consent Calendar | Assembly Standing Committee on Utilities and Energy |
Passed |
This list shows positions taken on this bill by organizations on the date displayed, which is linked to the original source.
Positions by individuals are not included.
|
Organization
|
Position
|
Date
|
|---|---|---|
| Alliance For Retail Energy Markets | * Neutral | Jul 2, 2024 |
| California State Association Of Electrical Workers | * Support | Jul 2, 2024 |
| Clean Energy Buyers Association | * Support | Jul 2, 2024 |
| Clean Energy Buyers Association | ** Support | |
| Clean Power Campaign | * Support | Jul 2, 2024 |
| Coalition of California Utility Employees | * Support | Jul 2, 2024 |
| Eco Equity | ** Support | |
| Environmental Defense Fund | ** Support | |
| Equinix, INC. | ** Support | |
| General Motors LLC | ** Support | |
| GM Equinox | * Support | Jul 2, 2024 |
| Independent Energy Producers Association | ** Support | |
| Microsoft Corporation | ** Support | |
| Nrg Energy Inc | * Against | Jul 2, 2024 |
| Pacific Gas And Electric Company | ** Support | |
| Prime Data Centers | ** Support | |
| Salesforce | ** Support | |
| San Diego Community Power | * Support | Jul 2, 2024 |
| Silicon Valley Clean Energy | ** Support | |
| Silicon Valley Leadership Group | ** Support | |
| Southern California Public Power Authority | * Neutral | Jul 2, 2024 |
CONCURRENCE IN SENATE AMENDMENTS
CSA1 Bill Id:AB 2368
Author:(Petrie-Norris)
As Amended Ver:August 21, 2024
Majority vote
SUMMARY
Modifies several aspects of the resource adequacy (RA) program and integrated resources planning (IRP) process at the California Public Utilities Commission (CPUC) in order to address challenges with electricity supply reliability.
Senate Amendments
- Moves the assessment of midterm reliability from the RA program to the biennial IRP process. Requires the CPUC to review the results of the IRP's reliability modeling in a public proceeding at the same frequency as the forecast conducted, and report the modeling results in the joint Reliability Planning Assessments.
- Moves the California Independent System Operator (CAISO) to a consulting role, rather than a coordinating role, for establishing RA requirements for all load-serving entities (LSEs).
- Removes prescriptive actions for minimizing enforcement requirements and costs.
- Removes the one day-in-10 year loss-of-load expectation (1-in-10 LOLE) as the minimum measure of reliability for system-wide RA, and instead requires the CPUC to ensure that RA can reasonably maintain a standard measure of reliability, such as 1-in-10 LOLE or a similarly robust reliability metric adopted by the commission, and use it for planning purposes.
- Clarifies that the CPUC shall report forward resource procurement using counting conventions that provide the data to CAISO, rather than are requested by CAISO, to be used in its grid planning.
- Makes clarifying amendments to the findings and declarations.
- Removes the exemption of CAISO from the CPUC's ex parte communication rules within the bill.
COMMENTS
The RA process, overseen by the CPUC and CAISO, is designed to identify resources needed to ensure reliability. Through this process, the CPUC requires LSEs – a catchall term to describe the entities, other than municipal utilities, that, in the context of this bill, procure electricity on behalf of end-use customers – have energy resources sufficient to meet anticipated customer demand. The current RA program consists of system, local, and flexible requirements for each month of a compliance year. System requirements are determined for each LSE based on the CEC's integrated energy policy report electricity forecast plus a planning reserve margin (PRM). Local requirements are determined based on an annual CAISO study using a 1-in-10 LOLE and an N-1-1 contingency.
The RA market has experienced significant constraint recently, largely driven by resource retirements across the western U.S. and the growing frequency of extreme weather events. For example, a heatwave in 2020 resulted in two days of rotating outages in the CAISO territory. This event led to extensive effort and collaboration amongst California's energy agencies to understand the root cause of the event and to develop strategies to ensure such events do not recur. Some of those strategies included increasing the PRM to 17% for 2024-25, and 20-22.5% for the three large investor-owned utilities (IOUs) in the summers of 2022-2025; several emergency mid-term procurement orders in the CPUC's IRP proceedings; further analyses and modelling by the CEC using the 1-in-10 LOLE standard to provide situational awareness to and affirm the CPUC's mid-term decisions; and the adoption of the 1-in-10 LOLE standard for the IRP.
Emergency contracting, by nature, is more expensive since time-strapped utilities cannot wait for lower bidders when energy is urgently needed. The latest increases in the effective PRM for LSEs have led to a market rush, practically at any cost, to buy resources needed to meet RA and emergency procurement obligations. Energy sellers have seemingly taken note. While nowhere near the same extent as squeezes during extreme weather events, both system and local RA prices have increased significantly over the last few years, and are projected to be even higher for the coming summers.
More granular resource planning and development in short-term and mid-term time frames will be crucial to ensuring reliability and cost-effectiveness of California's electric grid as climate change continues to exacerbate the frequency and magnitude of extreme weather events. Towards this goal, this bill would codify a practice of ensuring system and local reliability on a short-term and mid-term basis into the IRP. This bill also seeks to make RA more robust by requiring the CPUC to maintain a standard measure of reliability for the program and to consider mitigation measures for reducing costs to ratepayers.
According to the Author
"Our planning has not evolved to meet our rapidly changing climate and its impact on electric load, and the grid is not keeping pace with the rapid adoption of electric vehicles, heat pumps, and other electrification initiatives. …A reliable grid is essential for meeting the state's ambitious decarbonization goals and for supporting the growing electrification of transportation and buildings. … AB 2368 addresses the fundamental issue of California's energy grid struggling to meet peak demand reliably, exacerbated by aging infrastructure and increased strain from climate-induced extreme weather events. The transition to 100% clean energy required by SB 100 has the potential to create reliability challenges unless it is managed methodically. The RA framework and the IRP process operate on different timelines using different planning standards and metrics, leading to a huge gap in assessing reliability. This disconnect hampers the California Independent System Operator's (CAISO) ability to ensure grid reliability, contributing to the state's vulnerability to power outages during critical times."
Arguments in Support
The Environmental Defense Fund writes, "The bill's proposed modifications to the Resource Adequacy program are an important step for enhancing California's grid reliability…California is an outlier amongst modern electric grids in that we do not use a transparent planning standard…This bill's adoption of such a standard would be a major step for California. California's grid is predicted to have critical capacity shortfalls for the next 3-5 years, yet the state does not have a formalized planning process to evaluate reliability within this time frame… this bill is aimed at this gap, which under the status quo could lead to grid emergencies and even blackouts."
Arguments in Opposition
None on file.
FISCAL COMMENTS
According to the Senate Committee on Appropriations, this bill would incur ongoing costs at the CPUC of about $2.1 million annually as well as one-time costs of $250,000 (ratepayer funds).
VOTES:
ASM UTILITIES AND ENERGY: 16-0-0
YES: Petrie-Norris, Jim Patterson, Bauer-Kahan, Calderon, Chen, Connolly, Friedman, Holden, Joe Patterson, Reyes, Santiago, Schiavo, Ting, Wallis, Wood, Zbur
ASM APPROPRIATIONS: 15-0-0
YES: Wicks, Sanchez, Arambula, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Grayson, Haney, Hart, Jim Patterson, Pellerin, Ta, Villapudua
ASSEMBLY FLOOR: 72-0-8
YES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Flora, Mike Fong, Vince Fong, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
ABS, ABST OR NV: Calderon, Cervantes, Megan Dahle, Essayli, Friedman, Holden, Mathis, Luz Rivas
SENATE FLOOR: 40-0-0
YES: Allen, Alvarado-Gil, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk
UPDATED
VERSION: August 21, 2024
CONSULTANT: Kathleen Chen / U. & E. / (916) 319-2083 FN: 0004813
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 2368 |
THIRD READING
Bill No: AB 2368
Author: Petrie-Norris (D), et al.
Amended: 8/21/24 in Senate
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 18-0, 7/2/24
AYES: Bradford, Dahle, Ashby, Becker, Caballero, Dodd, Durazo, Eggman, Gonzalez, Grove, Limón, Min, Newman, Rubio, Seyarto, Skinner, Stern, Wilk
SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/15/24
AYES: Caballero, Jones, Ashby, Becker, Bradford, Seyarto, Wahab
ASSEMBLY FLOOR: 72-0, 5/22/24 - See last page for vote
SUBJECT: System reliability and outages
SOURCE: Clean Energy Buyers Association
DIGEST:
This bill makes changes to the resource adequacy (RA) program and integrated resources planning (IRP) process at the California Public Utilities Commission (CPUC) in order to address challenges with electricity supply reliability.
Senate Floor Amendments of 8/21/24 provide the CPUC with additional discretion and make changes to some of the bill’s requirements, including: (1) CPUC discretion regarding which planning standard metric to adopt; (2) the timing of reporting of specified electricity supply to the to the California Independent System Operator (CAISO) from semiannually to annually; (3) the timing of the assessment of reliability modeling to be within existing IRP process, instead of prescribed every two years; and (4) additional technical and clarifying amendments.
ANALYSIS:
Existing law:
- Requires the CAISO to ensure the efficient use and reliable operation of the transmission grid, as provided. (Public Utilities Code §345)
- Requires the CAISO to perform a review following a major outage that affects at least 10 percent of customers of the entity providing the local distribution service, as provided. (Public Utilities Code §349)
- Requires the CPUC, in consultation with the CAISO, to establish RA requirements for all load-serving entities (LSEs) and requires the CPUC in establishing those requirements to ensure the reliability of electrical service in California. Requires the CPUC to determine and authorize the most efficient and equitable means of achieving certain objectives, including: resource adequacy, investment in new generating capacity, ensuring existing generating capacity that is economical is retained, and others. (Public Utilities Code §380)
- Requires the CPUC to adopt a process for each LSE to file an IRP and schedule periodic update to the plan and require that LSEs ensure system and local reliability and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls, as provided. (Public Utilities Code §454.52)
This bill:
- Makes several findings and declarations regarding the need to ensure energy reliability as the state transitions to 100 percent zero carbon energy resources and renewable energy by 2045, including the challenges of climate change, the constrained market for energy resources, the need for improved reliability standards, and need for coordinated assessment and planning.
- Authorizes the CAISO to amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission (FERC), to be consistent with the efficient use and reliable operation of the transmission grid.
- Requires the CAISO, if it finds that the primary cause of a major outage that affects at least 10 percent of customers of the local distribution service was the insufficiency of the available electricity supply, to post the finding and recommendations to prevent future shortfalls on its internet website and share the finding and recommendations with the CPUC, the State Energy Resources Conservation and Development Commission (California Energy Commission (CEC)), and the Legislature.
- Requires the RA program to consider mitigation measures, if the CPUC determines they are needed, to reduce costs to ratepayers.
- Requires the CPUC to determine and authorize the most efficient and equitable means of ensuring that resource adequacy program can reasonably maintain a standard measure of reliability, such as a one-day-in-10-year loss-of-load expectation (LOLE) and use it for planning purposes.
- Requires the CPUC, as part of the IRP process, to assess short-term, midterm, and long-term reliability by conducting specified modeling. Requires the CPUC to review the results in a public proceeding at the same frequency as the IRP process forecast.
Background
- Resource adequacy (RA). Following the California energy crisis of 2000-01, the California Legislature enacted legislation to prevent future incidents of widespread blackouts and rolling brownouts due to lack of electric generating capacity. Among the reforms adopted in response to the crisis was the adoption of a RA program in an effort to better ensure reliability of electricity supply. The statute directs the CPUC, in consultation with the CAISO, to establish RA requirements for all LSEs, including electric investor-owned utilities (IOUs), electric service providers (ESPs), and community choice aggregators (CCAs). The current RA program consists of system, local, and flexible requirements for each month of a compliance year. In October of each year, LSEs must demonstrate that they have procured 90 percent of their system RA obligations for the five summer months (May-September) of the following year, as well as 100 percent of their local requirements, and 90 percent of their flexible requirements for each month of the coming compliance year.
- Adjustments to RA program. In recent years, the CPUC has adopted changes to RA program, including increasing the planning reserve margin from 15 percent to 17 percent by 2024 for all LSEs and in the case of electric IOUs upwards of 20-22 percent effective planning reserve margin. The CPUC has required a multi-year local capacity RA requirement and more recently adopted local capacity requirements for the upcoming three years. The CPUC also assesses penalties on the LSEs who fail to satisfy their RA obligations, including limiting the expansion of CCAs if they are deficient in their RA requirements. Additionally, the CPUC is in the midst of a significant change to the RA program by implementing a slice-of-day framework that assesses the hourly use of resources. The CPUC has been developing the slice-of-day structure for a few years and is now on the cusp of rolling out the new framework for 2025’s RA program. Lastly, the CPUC recently adopted a 17 percent planning reserve margin for the slice-of-day framework, consistent with previous planning reserve margins.
- SB 100 (De León, Chapter 312, Statutes of 2018). SB 100 established the state’s target to meet 100 percent of the state’s electricity retail load with renewable and zero-carbon resources by 2045. SB 1020 (Laird, Chapter 361, Statutes of 2022) established interim goals to meeting the SB 100 target, specifically requiring 90 percent of retail sales by 2035, 95 percent by 2040 to be met with renewable and zero-carbon energy resources. SB 100 Joint Agency Report evaluates the challenges and opportunities in implementing SB 100. It includes an initial assessment of the additional energy resources and the resource building rates needed to achieve 100 percent clean electricity, along with the associated costs. The first report issued on March 2021 identified preliminarily that on average the state may need six gigawatts of new renewable and energy storage annually to meet the SB 100 goals. Subsequent reports will be issued every four years.
- IRP process. SB 350 (De León, Chapter 547, Statutes of 2015) required each LSE to file a biennial IRP for approval or certification by the CPUC. The CPUC combines all LSEs’ IRPs to ensure the state is on the path to meet its clean energy procurement goals. Publicly owned utilities (POUs) are required to file their own IRPs with the CEC. The goal of the IRP is a two-year planning process to ensure that LSEs are meeting targets that allow the electricity sector to contribute to California’s economy-wide greenhouse gas (GHG) emissions reductions goals and that helps to reduce overall costs. In the most recent IRP decision, the CPUC adopted a 2023 portfolio that reduces 25 million metric ton (MMT) of GHG emissions by 2035, as compared to the previously adopted 38 MMT by 2030 planning target. The IRP is intended to forecast needs on a 10-year horizon. In this regard, the IRP is a forward-looking activity. As part of the IRP process, the CPUC has issued several procurement orders on LSEs (summarized in the table below) to address near-term and mid-term procurement needs. Within the procurement orders, the CPUC has directed central procurement for local RA and mid-term reliability by electric IOUs for customers, including those of other LSEs.
CPUC IRP Procurement Order | Total MW | Time Horizon (Calendar Years) |
D. 19-11-016 | 3,300 MW | 2021-2023 |
D. 21-06-035 Mid-Term Reliability (MTR) | 11,500 MW | 2023-2028 |
D. 23-02-040 Supplemental | 4,000 MW | 2026-2027 |
Cumulative Procurement | 18,800 MW | 2021-2028 |
- Recent budget and other energy “insurance” actions. In response to energy supply challenges during extreme heat events, including the rotating outages in August 2020, the Legislature and Governor adopted several measures to help shore-up California’s electricity supply against the impacts from extreme events. These measures include authorizing the extension of the operations of the Diablo Canyon Nuclear Power Plant, establishment of an Electricity Supply Strategic Reliability Reserve Program administered by the Department of Water Resources (DWR) with a $2.4 billion budget to procure capacity for extreme emergency events, additional reliability Demand Side Grid Support and Distributed Electric Backup Assets programs at the CEC, and development, and partial appropriation, for a $1 billion Clean Energy Reliability Investment Plan. Additionally, just last year, the Legislature and Governor authorized DWR to serve as a central procurement entity if requested by the CPUC for specified long-lead time resources.
Comments
- Need for this bill. According to the author, “Our planning has not evolved to meet our rapidly changing climate and its impact on electric load, and the grid is not keeping pace with the rapid adoption of electric vehicles, heat pumps, and other electrification initiatives. …A reliable grid is essential for meeting the state’s ambitious decarbonization goals and for supporting the growing electrification of transportation and buildings. … AB 2368 addresses the fundamental issue of California's energy grid struggling to meet peak demand reliably, exacerbated by aging infrastructure and increased strain from climate-induced extreme weather events. The transition to 100% clean energy required by SB 100 has the potential to create reliability challenges unless it is managed methodically. The RA framework and the IRP process operate on different timelines using different planning standards and metrics, leading to a huge gap in assessing reliability. This disconnect hampers the California Independent System Operator's (CAISO) ability to ensure grid reliability, contributing to the state’s vulnerability to power outages during critical times.”
- Planning standard. This bill would provide the CPUC with discretion to select a planning standard metric, which can include a one-day-in-10-year LOLE planning standard, within the RA program. The author and proponents of this bill express frustrations with the CPUC not affirming a particular standard for the RA program, and instead relying on a planning reserve margin approach that varies and where the underpinnings are unclear to stakeholders. They contend that the one-day-in-10-year LOLE is a common standard adopted across many other jurisdictions and also used within the CPUC’s IRP process, and should therefore be used within the RA program. While this bill does not require the use of the one-day-in-10-year LOLE, it does give strong indication towards its consideration. Currently, the CPUC is undergoing the previously mentioned changes to RA program with slice-of-day framework, stating they intend to use a 17 percent planning reserve margin. To the extent a one-day-in-10-year LOLE may not complement those efforts or might further constrain the RA market, including driving up prices for all LSEs, this bill affords the CPUC the discretion to determine what planning standard metric to use. Importantly, this bill requires the CPUC select a planning standard metric.
- Medium-term supply assessment within IRP program. As currently drafted this bill would require an assessment of supply sufficiency for midterm (two-five years out) within the IRP program. The CPUC has the authority to direct midterm procurement (and has within the IRP). Requiring this assessment is consistent with the CPUC’s approach to better plan for resources within the IRP process.
Related/Prior Legislation
AB 1373 (E. Garcia, Chapter 367, Statutes of 2023) made numerous changes to electricity policy, most notably, authorized the DWR to serve as a central procurement entity to procure energy resources in order to help the state meet its renewable and zero-carbon energy resources and reliability goals. The bill also includes numerous related and additional provisions.
AB 205 (Committee on Budget, Chapter 61, Statutes of 2022) authorized, among other things, the DWR to contract for, purchase, finance or otherwise secure electrical generation to create additional capacity during extreme energy grid events, and established the Strategic Reliability Reserve to fund these actions.
SB 1158 (Becker, Chapter 367, Statutes of 2022) required, among its provisions, the CPUC as part of the RA program to require every LSEs to annually report information regarding the sources of electricity and the emissions of GHG associated with those sources of electricity for RA requirements.
SB 1136 (Hertzberg, Chapter 851, Statutes of 2018) revised existing statute that required the CPUC, in consultation with the CAISO, to establish RA requirements for the state’s electric “LSEs”.
SB 618 (Bradford, Chapter 431, Statutes of 2017) required, explicitly, the IRPs of all LSEs to contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply, meet certain environmental goals, and prevent cost shifting among LSEs.
SB 350 (De León, Chapter 737, Statutes of 2015) increased, among other things, the Renewable Portfolio Standards and directed the CPUC to develop a process by which LSEs submit IRPs to the CPUC for review or for certification.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
According to the Senate Committee on Appropriations, the CPUC estimates ongoing costs of about $2.1 million annually as well as one-time costs of $250,000 (ratepayer funds) to ensure the reliability of electrical service in California sufficient to maintain a one-day-in-ten-year loss-of-load expectation, among other things.
SUPPORT: (Verified 8/15/24)
Clean Energy Buyers Association (source)
Eco Equity
Environmental Defense Fund
Equinix, INC.
General Motors LLC
Independent Energy Producers Association
Microsoft Corporation
Pacific Gas and Electric Company
Prime Data Centers
Salesforce
Silicon Valley Clean Energy
Silicon Valley Leadership Group
OPPOSITION: (Verified 8/15/24)
None received
ARGUMENTS IN SUPPORT: Microsoft Corporation states:
We are pleased to see AB 2368 introduced to address how best to modernize the Resource Adequacy program at the Public Utilities Commission (CPUC) to meet the needs of our evolving grid. We support AB 2368 because our Resource Adequacy programs should provide certainty to the grid operator so that it can maintain reliability under all but the most extreme conditions. California is an outlier amongst modern electric grids in that we do not use a transparent planning standard, such as the widely adopted “one-in-ten loss-of-load expectation.” This bill’s adoption of such a standard would be a major step for California.
ASSEMBLY FLOOR: 72-0, 5/22/24
AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Flora, Mike Fong, Vince Fong, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NO VOTE RECORDED: Calderon, Cervantes, Megan Dahle, Essayli, Friedman, Holden, Mathis, Luz Rivas
Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107
8/22/24 16:10:31
**** END ****
SENATE RULES COMMITTEE Office of Senate Floor Analyses (916) 651-1520 Fax: (916) 327-4478 | AB 2368 |
THIRD READING
Bill No: AB 2368
Author: Petrie-Norris (D), et al.
Amended: 7/3/24 in Senate
Vote: 21
SENATE ENERGY, U. & C. COMMITTEE: 18-0, 7/2/24
AYES: Bradford, Dahle, Ashby, Becker, Caballero, Dodd, Durazo, Eggman, Gonzalez, Grove, Limón, Min, Newman, Rubio, Seyarto, Skinner, Stern, Wilk
SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/15/24
AYES: Caballero, Jones, Ashby, Becker, Bradford, Seyarto, Wahab
ASSEMBLY FLOOR: 72-0, 5/22/24 - See last page for vote
SUBJECT: System reliability and outages
SOURCE: Clean Energy Buyers Association
DIGEST:
This bill makes changes to the resource adequacy (RA) program and integrated resources planning (IRP) process at the California Public Utilities Commission (CPUC) in order to address challenges with electricity supply reliability.
ANALYSIS:
Existing law:
- Requires the California Independent System Operator (CAISO) to ensure the efficient use and reliable operation of the transmission grid, as provided. (Public Utilities Code §345)
- Requires the CAISO to perform a review following a major outage that affects at least 10 percent of customers of the entity providing the local distribution service, as provided. (Public Utilities Code §349)
- Requires the CPUC, in consultation with the CAISO, to establish RA requirements for all load-serving entities (LSEs) and requires the CPUC in establishing those requirements to ensure the reliability of electrical service in California. Requires the RA program to facilitate the development of new generating, non-generating, hybrid capacity and retention of existing generating, non-generating, and hybrid capacity that is economical and needed for reliability. (Public Utilities Code §380)
- Requires the CPUC to adopt a process for each LSE to file an IRP and schedule periodic update to the plan and require that LSEs ensure system and local reliability and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls, as provided. (Public Utilities Code §454.52)
This bill:
- Makes several findings and declarations regarding the need to ensure energy reliability as the state transitions to 100 percent zero carbon energy resources and renewable energy by 2045, including the challenges of climate change, the constrained market for energy resources, the need for improved reliability standards, and need for coordinated assessment and planning.
- Authorizes the CAISO to amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission (FERC), to be consistent with the efficient use and reliable operation of the transmission grid.
- Requires the CAISO, if it finds that the primary cause of a major outage that affects at least 10 percent of customers of the local distribution service is the insufficiency of the available electricity supply, to post the finding and recommendations for the procurement of necessary resources on its internet website and share the finding and recommendations with the CPUC, the State Energy Resources Conservation and Development Commission (California Energy Commission (CEC)), and the Legislature.
- Requires the CPUC, in consultation, with the CAISO, to establish RA requirements for LSEs and requires the CPUC in establishing those requirements to ensure the reliability of electrical service in California sufficient to maintain a one-day-in-10-year loss-of-load expectation (LOLE).
- Requires the RA program to consider mitigation measures, if the CPUC determines they are needed, to reduce costs to ratepayers.
- Requires the CPUC, on a biennial basis, to assess short-term, midterm, and long-term reliability by conducting specified modeling and reviewing the results of the reliability modeling in a public proceeding as part of the IRP process.
Background
- Resource adequacy (RA). Following the California energy crisis of 2000-01, the California Legislature enacted legislation to prevent future incidents of widespread blackouts and rolling brownouts due to lack of electric generating capacity. Among the reforms adopted in response to the crisis was the adoption of Public Utilities Code §380 as an effort to better ensure reliability of electric supply. The statute directs the CPUC, in consultation with the CAISO, to establish RA requirements for all LSEs, including electric IOUs, electric service providers (ESPs), and now includes community choice aggregators (CCAs), which did not exist at the time of the crisis. The current RA program consists of system, local, and flexible requirements for each month of a compliance year. In October of each year, LSEs must demonstrate that they have procured 90 percent of their system RA obligations for the five summer months (May-September) of the following year, as well as 100 percent of their local requirements, and 90 percent of their flexible requirements for each month of the coming compliance year.
- Adjustments to RA program. The CPUC has adopted changes to RA program in recent years, including increasing the planning reserve margin from 15 percent to 17 percent by 2024 for all LSEs and in the case of electric IOUs upwards of 20-22 percent effective planning reserve margin. The CPUC has required a multi-year local capacity RA requirement and recently adopted local capacity requirements for the upcoming three years. The CAISO conducts a Local Capacity Technical Analysis to identify the minimum local resource capacity required in each local area to meet energy needs used a 1-in-10 weather year and N-1-1(emergency) contingency. The CPUC also assesses penalties on the LSEs who fail to satisfy their RA obligations, including limiting the expansion of CCAs if they are deficient in their RA requirements. The CPUC is also in the midst of a significant change to the RA program by implementing a slice-of-day framework that assesses the hourly use of resources. The CPUC has been developing the slice-of-day structure for a few years and is now on the cusp of rolling out the new framework for 2025’s RA program. Just this month, the CPUC adopted a 17 percent planning reserve margin for the slice-of-day framework, consistent with previous planning reserve margins.
- SB 100 (De León, Chapter 312, Statutes of 2018). SB 100 established the state’s target to meet 100 percent of the state’s electricity retail load with renewable and zero-carbon resources by 2045. SB 1020 (Laird, Chapter 361, Statutes of 2022) established interim goals to meeting the SB 100 target, specifically requiring 90 percent of retail sales by 2035, 95 percent by 2040 to be met with renewable and zero-carbon energy resources. SB 100 Joint Agency Report evaluates the challenges and opportunities in implementing SB 100. It includes an initial assessment of the additional energy resources and the resource building rates needed to achieve 100 percent clean electricity, along with the associated costs. It uses a computer model to analyze these factors under various conditions and technologies. The report is scheduled to be updated every four years. The first report issued on March 2021 identified preliminarily that on average the state may need six gigawatts of new renewable and energy storage annually to meet the SB 100 goals.
- IRP process. SB 350 (De León, Chapter 547, Statutes of 2015) required each LSE to file a biennial IRP for approval or certification by the CPUC. The CPUC combines all LSEs’ IRPs to ensure the state is on its path to meet its clean energy procurement goals. Public owned utilities (POUs) are required to file their own IRPs with the CEC. The goal of the IRP is a two-year planning process to ensure that LSEs are meeting targets that allow the electricity sector to contribute to California’s economy-wide greenhouse gas (GHG) emissions reductions goals and that helps to reduce overall costs. In most recent IRP decision, the CPUC adopted a 2023 portfolio that reduces 25 million metric ton (MMT) of GHG emissions by 2035, as compared to the previously adopted 38 MMT by 2030 planning target. The IRP is intended to forecast needs on a 10-year horizon. In this regard, the IRP is a forward-looking activity. As part of the IRP process, the CPUC has issued several procurement orders on LSEs (summarized in the table below) to address near-term and mid-term procurement needs. Within the procurement orders, the CPUC has directed central procurement for local RA and mid-term reliability by electric IOUs for customers, including those of other LSEs.
CPUC IRP Procurement Order | Total MW | Time Horizon (Calendar Years) |
D. 19-11-016 | 3,300 MW | 2021-2023 |
D. 21-06-035 Mid-Term Reliability (MTR) | 11,500 MW | 2023-2028 |
D. 23-02-040 Supplemental | 4,000 MW | 2026-2027 |
Cumulative Procurement | 18,800 MW | 2021-2028 |
- Recent budget and other energy “insurance” actions. In response to energy supply challenges during extreme heat events, including the rotating outages in August 2020, the Legislature and Governor adopted several measures to help shore-up California’s electricity supply against the impacts from extreme events. These measures include authorizing the extension of the Diablo Canyon Nuclear Power Plant, establishment of an Electricity Supply Strategic Reliability Reserve Program administered by the Department of Water Resources (DWR) with a $2.4 billion budget to procure capacity for extreme emergency events, additional reliability Demand Side Grid Support and Distributed Electric Backup Assets programs at the CEC, and development, and partial appropriation, for a $1 billion Clean Energy Reliability Investment Plan. Additionally, just last year, the Legislature and Governor authorized DWR to serve as a central procurement entity if requested by the CPUC for specified long-lead time resources.
Comments
- Need for this bill. According to the author, “Our planning has not evolved to meet our rapidly changing climate and its impact on electric load, and the grid is not keeping pace with the rapid adoption of electric vehicles, heat pumps, and other electrification initiatives. …A reliable grid is essential for meeting the state’s ambitious decarbonization goals and for supporting the growing electrification of transportation and buildings. … AB 2368 addresses the fundamental issue of California's energy grid struggling to meet peak demand reliably, exacerbated by aging infrastructure and increased strain from climate-induced extreme weather events. The transition to 100% clean energy required by SB 100 has the potential to create reliability challenges unless it is managed methodically. The RA framework and the IRP process operate on different timelines using different planning standards and metrics, leading to a huge gap in assessing reliability. This disconnect hampers the California Independent System Operator's (CAISO) ability to ensure grid reliability, contributing to the state’s vulnerability to power outages during critical times.”
- Planning standard. This bill indicates a need to establish a one-day-in-10-year loss of load expectation (LOLE) planning standard within the RA program. The author and proponents contend that this is a common standard adopted across many other jurisdictions and also adopted within the IRP process. They note challenges of the CPUC affirming a particular standard for the RA program, relying more on a planning reserve margin that varies and where proponents struggle that the underpinnings are unclear. While this bill does not require the use of the one-in-10 LOLE, it does give strong indication towards its use. Although none of the comments have raised concerns with this particular standard, the Legislature may need to ensure that as this bill moves forward a clearer understanding of its application may be provided by the CPUC. Currently, the CPUC is undergoing the previously mentioned changes to RA with slice-of-day framework, stating they intend to use a 17 percent planning reserve margin. To the extent a one-in-10 LOLE might further constrain the RA market, including driving up prices, the author and Senate Energy, Utilities and Communications Committee may wish to revisit this standard.
- Medium-term supply assessment within IRP program. As currently drafted this bill would require an assessment of supply sufficiency for midterm (two-five years out) within the IRP program. The CPUC has the authority to direct midterm procurement (and has within the IRP). Requiring this assessment is consistent with the CPUC’s approach to better plan for resources within the IRP process.
Related/Prior Legislation
AB 1373 (E. Garcia, Chapter 367, Statutes of 2023) made numerous changes to electricity policy, most notably, authorized the DWR to serve as a central procurement entity to procure energy resources in order to help the state meet its renewable and zero-carbon energy resources and reliability goals. The bill also includes numerous related and additional provisions.
AB 205 (Committee on Budget, Chapter 61, Statutes of 2022), among other things, authorized the DWR to contract for, purchase, finance or otherwise secure electrical generation to create additional capacity during extreme energy grid events, and established the Strategic Reliability Reserve to fund these actions.
SB 1158 (Becker, Chapter 367, Statutes of 2022) among its provisions, required the CPUC as part of the RA program to require every LSEs to annually report information regarding the sources of electricity and the emissions of GHG associated with those sources of electricity for RA requirements.
SB 1136 (Hertzberg, Chapter 851, Statutes of 2018) revised existing statute that required the CPUC, in consultation with the CAISO, to establish RA requirements for the state’s electric “LSEs”.
SB 618 (Bradford, Chapter 431, Statutes of 2017) required, explicitly, the IRPs of all LSEs to contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply, meet certain environmental goals, and prevent cost shifting among LSEs.
SB 350 (De León, Chapter 737, Statutes of 2015), among other things, increased the Renewable Portfolio Standards and directed the CPUC to develop a process by which LSEs submit IRPs to the CPUC for review or for certification.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
According to the Senate Committee on Appropriations, the CPUC estimates ongoing costs of about $2.1 million annually as well as one-time costs of $250,000 (ratepayer funds) to ensure the reliability of electrical service in California sufficient to maintain a one-day-in-ten-year loss-of-load expectation, among other things.
SUPPORT: (Verified 8/15/24)
Clean Energy Buyers Association (source)
Eco Equity
Environmental Defense Fund
Equinix, INC.
General Motors LLC
Independent Energy Producers Association
Microsoft Corporation
Pacific Gas and Electric Company
Prime Data Centers
Salesforce
Silicon Valley Leadership Group
OPPOSITION: (Verified 8/15/24)
None received
ARGUMENTS IN SUPPORT: Microsoft Corporation states:
We are pleased to see AB 2368 introduced to address how best to modernize the Resource Adequacy program at the Public Utilities Commission (CPUC) to meet the needs of our evolving grid. We support AB 2368 because our Resource Adequacy programs should provide certainty to the grid operator so that it can maintain reliability under all but the most extreme conditions. California is an outlier amongst modern electric grids in that we do not use a transparent planning standard, such as the widely adopted “one-in-ten loss-of-load expectation.” This bill’s adoption of such a standard would be a major step for California.
ASSEMBLY FLOOR: 72-0, 5/22/24
AYES: Addis, Aguiar-Curry, Alanis, Alvarez, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Flora, Mike Fong, Vince Fong, Gabriel, Gallagher, Garcia, Gipson, Grayson, Haney, Hart, Hoover, Irwin, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas
NO VOTE RECORDED: Calderon, Cervantes, Megan Dahle, Essayli, Friedman, Holden, Mathis, Luz Rivas
Prepared by: Nidia Bautista / E., U. & C. / (916) 651-4107
8/18/24 9:07:38
**** END ****
SENATE COMMITTEE ON
Senator Anna Caballero, Chair
2023 - 2024 Regular Session
AB 2368 (Petrie-Norris) - System reliability and outages
Version: | Policy Vote: |
Urgency: | Mandate: |
Hearing Date: | Consultant: |
Bill Summary:
This bill would make various changes to the resource adequacy (RA) program and integrated resources plan (IRP) at the California Public Utilities Commission (CPUC) in order to address challenges with electricity supply reliability.
Fiscal Impact:
- The CPUC estimates ongoing costs of about $2.1 million annually as well as one-time costs of $250,000 (ratepayer funds) to ensure the reliability of electrical service in California sufficient to maintain a one-day-in-ten-year loss-of-load expectation, among other things.
Background:
Resource Adequacy (RA). Following the California energy crisis of 2000-01, the California Legislature enacted legislation to prevent future incidents of widespread blackouts and rolling brownouts due to lack of electric generating capacity. Among the reforms adopted in response to the crisis was the adoption of Public Utilities Code §380 as an effort to better ensure reliability of electric supply. The statute directs the CPUC, in consultation with the CAISO, to establish RA requirements for all LSEs, including electric IOUs, electric service providers (ESPs), and now includes community choice aggregators (CCAs), which did not exist at the time of the crisis. The current RA program consists of system, local, and flexible requirements for each month of a compliance year. In October of each year, LSEs must demonstrate that they have procured 90 percent of their system RA obligations for the five summer months (May-September) of the following year, as well as 100 percent of their local requirements, and 90 percent of their flexible requirements for each month of the coming compliance year.
The CAISO conducts a Local Capacity Technical Analysis to identify the minimum local resource capacity required in each local area to meet energy needs used a 1-in-10 weather year and N-1-1(emergency) contingency. The CPUC also assesses penalties on the LSEs who fail to satisfy their RA obligations, including limiting the expansion of CCAs if they are deficient in their RA requirements. The CPUC is also in the midst of a significant change to the RA program by implementing a slice-of-day framework that assesses the hourly use of resources.
IRP process. SB 350 (De León, Chapter 547, Statutes of 2015) established the state’s target to meet 100 percent of the state’s electricity retail load with renewable and zero-carbon resources by 2045 and required each LSE to file a biennial IRP for approval or certification by the CPUC. The CPUC combines all LSEs’ IRPs to ensure the state is on its path to meet its clean energy procurement goals. Public owned utilities (POUs) are required to file their own IRPs with the CEC. The goal of the IRP is a two-year planning process to ensure that LSEs are meeting targets that allow the electricity sector to contribute to California’s economy-wide greenhouse gas (GHG) emissions reductions goals and that helps to reduce overall costs. In most recent IRP decision, the CPUC adopted a 2023 portfolio that reduces 25 million metric ton (MMT) of GHG emissions by 2035, as compared to the previously adopted 38 MMT by 2030 planning target. The IRP is intended to forecast needs on a 10-year horizon. In this regard, the IRP is a forward-looking activity. As part of the IRP process, the CPUC has issued several procurement orders on LSEs to address near-term and mid-term procurement needs. Within the procurement orders, the CPUC has directed central procurement for local RA and mid-term reliability by electric IOUs for customers, including those of other LSEs.
Recent budget and other energy “insurance” actions. In response to energy capacity challenges during extreme heat events, including the rotating outages in August 2020, the Legislature, in collaboration with the Newsom Administration, adopted several measures throughout 2022, in addition to previously adopted measures, to continue to help shore-up California’s electricity supply against the impacts from extreme events. These measures include authorizing the extension of the Diablo Canyon Nuclear Power Plant, establishment of an Electricity Supply Strategic Reliability Reserve Program administered by the Department of Water Resources with nearly $2.4 billion budget to procure capacity for extreme emergency events, additional reliability Demand Side Grid Support and Distributed Electric Backup Assets programs at the CEC, and development, if not appropriation, for a $1 billion Clean Energy Reliability Investment Plan. Additionally, just last year, the Legislature and Governor authorized Department of Water Resources (DWR) to serve as central procurement entity if requested by the CPUC for specified long-lead time resources.
Proposed Law:
This bill would make various changes to the RA and IRP programs at the CPUC in order to address challenges with electricity supply reliability. Specifically, it would:
- Authorize the CAISO to amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission (FERC), to be consistent with the efficient use and reliable operation of the transmission grid.
- Require the CAISO, if it finds that the primary cause of a major outage that affects at least 10 percent of customers of the local distribution service is insufficiency of the available electricity supply, to post the finding and recommendations for the procurement of necessary resources on its internet website and share the finding and recommendations with the CPUC, California Energy Commission, and the Legislature.
- Require the CPUC to ensure the reliability of electrical service in California sufficient to maintain a one-day-in-10-year loss-of-load expectation.
- Require the RA program to consider mitigation measures, if the CPUC determines they are needed, to reduce costs to ratepayers.
- Require the CPUC, on a biennial basis, to assess short-term, midterm, and long-term reliability by conducting specified modeling and reviewing the results of the reliability modeling in a public proceeding.
Related Legislation:
AB 1373 (E. Garcia, Chapter Statutes of 2023) made numerous changes to electricity policy, most notably, authorized the DWR to serve as a central procurement entity to procure energy resources in order to help the state meet its renewable and zero-carbon energy resources and reliability goals. The bill also includes numerous related and additional provisions.
AB 205 (Committee on Budget, Chapter 61, Statutes of 2022), among other things, authorized the DWR to contract for, purchase, finance or otherwise secure electrical generation to create additional capacity during extreme energy grid events, and established the Strategic Reliability Reserve to fund these actions.
SB 1158 (Becker, Chapter 367, Statutes of 2022) among its provisions, required the CPUC as part of the RA program to require every LSEs to annually report information regarding the sources of electricity and the emissions of greenhouse gases associated with those sources of electricity for RA requirements.
SB 1136 (Hertzberg, Chapter 851, Statutes of 2018) revised existing statute that required the CPUC, in consultation with the CAISO, to establish RA requirements for the state’s electric “LSEs”.
SB 618 (Bradford, Chapter 431, Statutes of 2017) required, explicitly, the IRPs of all LSEs to contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply, meet certain environmental goals, and prevent cost shifting among LSEs.
SB 350 (De León, Chapter 737, Statutes of 2015), among other things, increased the RPS and directed the CPUC to develop a process by which LSEs submit IRPs to the CPUC for review or for certification.
Staff Comments:
This bill would create additional workload at the CPUC due to conducting reliability modeling and reviewing the results on a biennial basis, increased reporting and coordination with the ISO for midterm contracted resources, additional legal support for CAISO stakeholder initiatives relating to the planning reserve margin and RA, and staff participation on issues related to tariffs concerning the planning reserve margin and RA at FERC.
-- END --
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Steven Bradford, Chair
2023 - 2024 Regular
Bill No: AB 2368 Hearing Date: 7/2/2024
Author: | Petrie-Norris | ||
Version: | 6/10/2024 Amended | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Nidia Bautista | ||
SUBJECT: System reliability and outages
DIGEST: This bill makes various changes to the resource adequacy (RA) program and integrated resources plan (IRP) at the California Public Utilities Commission (CPUC) in order to address challenges with electricity supply reliability.
ANALYSIS:
Existing law:
- Establishes and vests the CPUC with regulatory authority over public utilities, including electrical corporations. (Article XII of the California Constitution)
- Requires the California Independent System Operator (CAISO), as a nonprofit, public benefit corporation, to conduct its operations consistent with applicable state and federal laws and consistent with the interests of the people of the state. (Public Utilities Code §345.5)
- Requires the CAISO to ensure the efficient use and reliable operation of the transmission grid, as provided. (Public Utilities Code §345)
- Requires the CAISO to perform a review following a major outage that affects at least 10 percent of customers of the entity providing the local distribution service, as provided. (Public Utilities Code §349)
- Requires the CPUC, in consultation with the CAISO, to establish RA requirements for all load-serving entities (LSEs) and requires the CPUC in establishing those requirements to ensure the reliability of electrical service in California. Requires the RA program to facilitate the development of new generating, nongenerating, hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability. (Public Utilities Code §380)
- Requires the CPUC to adopt a process for each LSE to file an IRP and schedule periodic update to the plan and require that LSEs ensure system and local reliability and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls, as provided. (Public Utilities Code §454.52)
- Defines “ex parte communication” to mean any oral or written communication between a decisionmaker and an interested person concerning any matter before the CPUC, as provided. Defines “interested person.” (Public Utilities Code §1701.1)
This bill:
- Makes several findings and declarations regarding the need to ensure energy reliability as the state transitions to 100 percent zero carbon energy resources and renewable energy by 2045, including the challenges of climate change, the constrained market for energy resources, the need for improved reliability standards, and need for coordinated assessment and planning.
- Authorizes the CAISO to amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission (FERC), to be consistent with the efficient use and reliable operation of the transmission grid.
- Requires the CAISO, if it finds that the primary cause of a major outage that affects at least 10 percent of customers of the local distribution service is the insufficient procurement of generation resources, to post the finding and recommendations for the procurement of necessary resources on its internet website and share the finding and recommendations with the CPUC, the State Energy Resources Conservation and Development Commission (California Energy Commission (CEC)), and the Legislature.
- Requires the CPUC, in coordination, rather than in consultation, with the CAISO, to establish RA requirements for LSEs and would require the CPUC to ensure the reliability of electrical service in California sufficient to maintain a one-day-in-10-year loss-of-load expectation.
- Requires the RA program to facilitate the development of new generating, nongenerating, and hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economical, needed for reliability, and needed to achieve the state state’s policy of achieving 100 percent renewable energy and zero-carbon resources by 2045.
- Requires the CPUC in establishing RA requirements to assess if there is sufficient capacity available for procurement in the short-term and mid-term, defined as the period between two and five years in the future, by all LSEs to meet their requirements. Requires where supply sufficiency is inadequate to meet the RA requirements providing phase-in periods to align increases in RA requirements with increases in available supply, prioritizing resource development or retention consistent with facilitating development and retention of generating and non-generating resources needed for reliability.
- Requires the CPUC, on a biennial basis, to assess short-term, midterm, and long-term reliability by conducting specified modeling and reviewing the results of the reliability modeling in a public proceeding.
- Excludes from the definition of “interested person,” within a CPUC proceeding, the CAISO, when the CAISO consults with the CPUC on matters of reliability or when sharing market-sensitive or confidential data.
Background
Resource adequacy (RA). Following the California energy crisis of 2000-01, the California Legislature enacted legislation to prevent future incidents of widespread blackouts and rolling brownouts due to lack of electric generating capacity. Among the reforms adopted in response to the crisis was the adoption of Public Utilities Code §380 as an effort to better ensure reliability of electric supply. The statute directs the CPUC, in consultation with the CAISO, to establish RA requirements for all LSEs, including electric IOUs, electric service providers (ESPs), and now includes community choice aggregators (CCAs), which did not exist at the time of the crisis. The current RA program consists of system, local, and flexible requirements for each month of a compliance year. In October of each year, LSEs must demonstrate that they have procured 90 percent of their system RA obligations for the five summer months (May-September) of the following year, as well as 100 percent of their local requirements, and 90 percent of their flexible requirements for each month of the coming compliance year. The CPUC has adopted changes to RA program in recent years, including increasing the planning reserve margin from 15 percent to 17 percent by 2024 for all LSEs and in the case of electric IOUs upwards of 20-22 percent effective planning reserve margin. The CPUC has required a multi-year local capacity RA requirement and recently adopted local capacity requirements for the upcoming three years. The CAISO conducts a Local Capacity Technical Analysis to identify the minimum local resource capacity required in each local area to meet energy needs used a 1-in-10 weather year and N-1-1(emergency) contingency. The CPUC also assesses penalties on the LSEs who fail to satisfy their RA obligations, including limiting the expansion of CCAs if they are deficient in their RA requirements. The CPUC is also in the midst of a significant change to the RA program by implementing a slice-of-day framework that assesses the hourly use of resources. The CPUC has been developing the slice-of-day structure for a few years and is now on the cusp of rolling out the new framework for 2025’s RA program. Just this month, the CPUC adopted a 17 percent planning reserve margin for the slice-of-day framework, consistent with previous planning reserve margins.
SB 100 (De León, 2018). SB 100 established the state’s target to meet 100 percent of the state’s electricity retail load with renewable and zero-carbon resources by 2045. SB 1020 (Laird, Chapter 361, Statutes of 2022) established interim goals to meeting the SB 100 target, specifically requiring 90 percent of retail sales by 2035, 95 percent by 2040 to be met with renewable and zero-carbon energy resources. SB 100 Joint Agency Report evaluates the challenges and opportunities in implementing SB 100. It includes an initial assessment of the additional energy resources and the resource building rates needed to achieve 100 percent clean electricity, along with the associated costs. It uses a computer model to analyze these factors under various conditions and technologies. The report is scheduled to be updated every four years. The first report issued on March 2021 identified preliminarily that on average the state may need six gigawatts of new renewable and energy storage annually to meet the SB 100 goals.
IRP process. SB 350 (De León, Chapter 547, Statutes of 2015) required each LSE to file a biennial IRP for approval or certification by the CPUC. The CPUC combines all LSEs’ IRPs to ensure the state is on its path to meet its clean energy procurement goals. Public owned utilities (POUs) are required to file their own IRPs with the CEC. The goal of the IRP is a two-year planning process to ensure that LSEs are meeting targets that allow the electricity sector to contribute to California’s economy-wide greenhouse gas (GHG) emissions reductions goals and that helps to reduce overall costs. In most recent IRP decision, the CPUC adopted a 2023 portfolio that reduces 25 million metric ton (MMT) of GHG emissions by 2035, as compared to the previously adopted 38 MMT by 2030 planning target. The IRP is intended to forecast needs on a 10-year horizon. In this regard, the IRP is a forward-looking activity. As part of the IRP process, the CPUC has issued several procurement orders on LSEs (summarized in the table below) to address near-term and mid-term procurement needs. Within the procurement orders, the CPUC has directed central procurement for local RA and mid-term reliability by electric IOUs for customers, including those of other LSEs.
CPUC IRP Procurement Order | Total MW | Time Horizon (Calendar Years) |
D. 19-11-016 | 3,300 MW | 2021-2023 |
D. 21-06-035 Mid-Term Reliability (MTR) | 11,500 MW | 2023-2028 |
D. 23-02-040 Supplemental | 4,000 MW | 2026-2027 |
Cumulative Procurement | 18,800 MW | 2021-2028 |
Recent budget and other energy “insurance” actions. In response to energy capacity challenges during extreme heat events, including the rotating outages in August 2020, the Legislature, in collaboration with the Newsom Administration, adopted several measures throughout 2022, in addition to previously adopted measures, to continue to help shore-up California’s electricity supply against the impacts from extreme events. These measures include authorizing the extension of the Diablo Canyon Nuclear Power Plant, establishment of an Electricity Supply Strategic Reliability Reserve Program administered by the Department of Water Resources with nearly $2.4 billion budget to procure capacity for extreme emergency events, additional reliability Demand Side Grid Support and Distributed Electric Backup Assets programs at the CEC, and development, if not appropriation, for a $1 billion Clean Energy Reliability Investment Plan. Additionally, just last year, the Legislature and Governor authorized Department of Water Resources (DWR) to serve as central procurement entity if requested by the CPUC for specified long-lead time resources.
Comments
Need for this bill. According to the author: Our planning has not evolved to meet our rapidly changing climate and its impact on electric load, and the grid is not keeping pace with the rapid adoption of electric vehicles, heat pumps, and other electrification initiatives. …A reliable grid is essential for meeting the state’s ambitious decarbonization goals and for supporting the growing electrification of transportation and buildings. … AB 2368 addresses the fundamental issue of California's energy grid struggling to meet peak demand reliably, exacerbated by aging infrastructure and increased strain from climate-induced extreme weather events. The transition to 100% clean energy required by SB 100 has the potential to create reliability challenges unless it is managed methodically. The RA framework and the IRP process operate on different timelines using different planning standards and metrics, leading to a huge gap in assessing reliability. This disconnect hampers the California Independent System Operator's (CAISO) ability to ensure grid reliability, contributing to the state’s vulnerability to power outages during critical times.
Planning standard. This bill would indicate a need to establish a one-in-ten-year loss of load expectation (LOLE) planning standard within the RA program. The author and proponents contend that this is a common standard adopted across many other jurisdictions and also adopted within the IRP process. They note challenges of the CPUC affirming a particular standard for the RA program, relying more on a planning reserve margin that varies and where proponents struggle that the underpinnings are unclear. While this bill does not require the use of the one-in-ten LOLE, it does not require the 1-in-10 LOLE, it does give strong indication towards its use. While none of the comments have raised concerns with this particular standard, the Legislature may need to continue to monitor to ensure as the bill moves forward a clearer understanding of its application may be provided by the CPUC. Currently, the CPUC is undergoing the previously mentioned changes to RA with slice-of-day framework, stating they intend to use a 17 percent planning reserve margin. To the extent a 1-in-10 LOLE might further constrain the RA market, including driving up prices, the author and committee may wish to revisit this standard.
Medium-term supply assessment within RA program. As currently drafted this bill would require an assessment of supply sufficiency for midterm (two-five years out) within the RA program. Many stakeholders have raised concerns that such an assessment and related provisions signal mid-term procurement requirements. The author and proponents of the bill suggest they are not requiring procurement and have added intent language to this bill to clarify. However, the intent language does not seem to satisfy the concerns. Currently the CPUC has the authority to direct midterm procurement (and has within the IRP). Adding this assessment and related provisions in the RA program has raised many concerns which may be resolved by housing this assessment within the IRP. Therefore, the author and committee may wish to amend this bill to move this assessment within the IRP and delete the related provisions.
CAISO vs. CPUC role. Though not explicit, this bill attempts to tip the planning for RA towards a stronger role for the CAISO. The author and proponents are valid concerns to address supply reliability, including those actions identified after the 2020 rotating outages. However, caution is warranted to ensure the state retains the role to drive policy and reliability, including RA by having the CPUC maintain clear jurisdiction of this role. Unlike the CAISO, the CPUC is a state agency and one where costs to ratepayers are a prime consideration of policies, including RA. Additional, provisions that give the CAISO exemption from ex parte rules at the CPUC do not seem necessary, as SB 1020 (Laird, Chapter 361, Statutes of 2022) already authorizes the CPUC and CAISO to share confidential information. As such, the author and committee wish to delete provisions of the bill that unnecessarily shift some of the responsibility to the CAISO, including affording the CAISO exemption from ex parte rules within CPUC proceedings. The author and committee may adopt additional clarifying amendments to further clarify the findings and declarations.
Prior/Related Legislation
AB 1373 (E. Garcia, Chapter Statutes of 2023) made numerous changes to electricity policy, most notably, authorized the DWR to serve as a central procurement entity to procure energy resources in order to help the state meet its renewable and zero-carbon energy resources and reliability goals. The bill also includes numerous related and additional provisions.
AB 205 (Committee on Budget, Chapter 61, Statutes of 2022), among other things, authorized the DWR to contract for, purchase, finance or otherwise secure electrical generation to create additional capacity during extreme energy grid events, and established the Strategic Reliability Reserve to fund these actions.
SB 1158 (Becker, Chapter 367, Statutes of 2022) among its provisions, required the CPUC as part of the RA program to require every LSEs to annually report information regarding the sources of electricity and the emissions of greenhouse gases associated with those sources of electricity for RA requirements.
SB 1136 (Hertzberg, Chapter 851, Statutes of 2018) revised existing statute that required the CPUC, in consultation with the CAISO, to establish RA requirements for the state’s electric “LSEs”.
SB 618 (Bradford, Chapter 431, Statutes of 2017) required, explicitly, the IRPs of all LSEs to contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply, meet certain environmental goals, and prevent cost shifting among LSEs.
SB 350 (De León, Chapter 737, Statutes of 2015), among other things, increased the RPS and directed the CPUC to develop a process by which LSEs submit IRPs to the CPUC for review or for certification.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT:
Clean Energy Buyers Association, Sponsor
Eco Equity
Environmental Defense Fund
Equinix, INC.
General Motors LLC
Independent Energy Producers Association, if amended
Microsoft Corporation
Prime Data Centers
Salesforce
Silicon Valley Leadership Group
OPPOSITION:
Alliance for Retail Energy Markets
NRG Energy
ARGUMENTS IN SUPPORT: Microsoft Corporation states:
California’s electric grid has had multiple close calls over the past four years. We observe that California’s ability to provide a reliable power source is at risk due to climate change and load growth, therefore creating a need to reform the framework that governs the planning and procurement of electric generation in California. We are pleased to see AB 2368 introduced to address how best to modernize the Resource Adequacy program at the Public Utilities Commission (CPUC) to meet the needs of our evolving grid. We support AB 2368 because our Resource Adequacy programs should provide certainty to the grid operator so that it can maintain reliability under all but the most extreme conditions. California is an outlier amongst modern electric grids in that we do not use a transparent planning standard, such as the widely adopted “one-in-ten loss-of-load expectation.” This bill’s adoption of such a standard would be a major step for California. California’s grid is predicted to have critical capacity shortfalls for the next 3-5 years, yet the state does not have a formalized planning process to evaluate reliability within this time frame. We appreciate that this bill is aimed at this gap, which under the status quo could lead to grid emergencies and even blackouts. AB 2368 represents a vital step forward in ensuring grid reliability.
ARGUMENTS IN OPPOSITION: The Alliance for Retail Energy Markets states opposes the bill, stating:
AB 2368, however, risks unintended consequences of exacerbating coordination challenges by expanding the scope of the RA program under Pub. Util. Sec. 380 to include a new midterm assessment. A midterm reliability assessment within the RA program would duplicate midterm needs assessments and associated requirements under the IRP process thereby exacerbating process overlaps and inter-proceeding conflicts. To address this concern, we propose the following amendment as a new subdivision under Pub. Util. Sec. 380: "Nothing in this section requires the commission to establish midterm resource adequacy requirements.”
-- END --
SENATE COMMITTEE ON ENERGY, UTILITIES AND COMMUNICATIONS
Senator Steven Bradford, Chair
2023 - 2024 Regular
Bill No: AB 2368 Hearing Date: 7/2/2024
Author: | Petrie-Norris | ||
Version: | 6/10/2024 Amended | ||
Urgency: | No | Fiscal: | Yes |
Consultant: | Nidia Bautista | ||
SUBJECT: System reliability and outages
DIGEST: This bill makes various changes to the resource adequacy (RA) program and integrated resources plan (IRP) at the California Public Utilities Commission (CPUC) in order to address challenges with electricity supply reliability.
ANALYSIS:
Existing law:
- Establishes and vests the CPUC with regulatory authority over public utilities, including electrical corporations. (Article XII of the California Constitution)
- Requires the California Independent System Operator (CAISO), as a nonprofit, public benefit corporation, to conduct its operations consistent with applicable state and federal laws and consistent with the interests of the people of the state. (Public Utilities Code §345.5)
- Requires the CAISO to ensure the efficient use and reliable operation of the transmission grid, as provided. (Public Utilities Code §345)
- Requires the CAISO to perform a review following a major outage that affects at least 10 percent of customers of the entity providing the local distribution service, as provided. (Public Utilities Code §349)
- Requires the CPUC, in consultation with the CAISO, to establish RA requirements for all load-serving entities (LSEs) and requires the CPUC in establishing those requirements to ensure the reliability of electrical service in California. Requires the RA program to facilitate the development of new generating, nongenerating, hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economical and needed for reliability. (Public Utilities Code §380)
- Requires the CPUC to adopt a process for each LSE to file an IRP and schedule periodic update to the plan and require that LSEs ensure system and local reliability and require sufficient, predictable resource procurement and development to avoid unplanned energy supply shortfalls, as provided. (Public Utilities Code §454.52)
- Defines “ex parte communication” to mean any oral or written communication between a decisionmaker and an interested person concerning any matter before the CPUC, as provided. Defines “interested person.” (Public Utilities Code §1701.1)
This bill:
- Makes several findings and declarations regarding the need to ensure energy reliability as the state transitions to 100 percent zero carbon energy resources and renewable energy by 2045, including the challenges of climate change, the constrained market for energy resources, the need for improved reliability standards, and need for coordinated assessment and planning.
- Authorizes the CAISO to amend its tariff, as deemed necessary and subject to approval by the Federal Energy Regulatory Commission (FERC), to be consistent with the efficient use and reliable operation of the transmission grid.
- Requires the CAISO, if it finds that the primary cause of a major outage that affects at least 10 percent of customers of the local distribution service is the insufficient procurement of generation resources, to post the finding and recommendations for the procurement of necessary resources on its internet website and share the finding and recommendations with the CPUC, the State Energy Resources Conservation and Development Commission (California Energy Commission (CEC)), and the Legislature.
- Requires the CPUC, in coordination, rather than in consultation, with the CAISO, to establish RA requirements for LSEs and would require the CPUC to ensure the reliability of electrical service in California sufficient to maintain a one-day-in-10-year loss-of-load expectation.
- Requires the RA program to facilitate the development of new generating, nongenerating, and hybrid capacity and retention of existing generating, nongenerating, and hybrid capacity that is economical, needed for reliability, and needed to achieve the state state’s policy of achieving 100 percent renewable energy and zero-carbon resources by 2045.
- Requires the CPUC in establishing RA requirements to assess if there is sufficient capacity available for procurement in the short-term and mid-term, defined as the period between two and five years in the future, by all LSEs to meet their requirements. Requires where supply sufficiency is inadequate to meet the RA requirements providing phase-in periods to align increases in RA requirements with increases in available supply, prioritizing resource development or retention consistent with facilitating development and retention of generating and non-generating resources needed for reliability.
- Requires the CPUC, on a biennial basis, to assess short-term, midterm, and long-term reliability by conducting specified modeling and reviewing the results of the reliability modeling in a public proceeding.
- Excludes from the definition of “interested person,” within a CPUC proceeding, the CAISO, when the CAISO consults with the CPUC on matters of reliability or when sharing market-sensitive or confidential data.
Background
Resource adequacy (RA). Following the California energy crisis of 2000-01, the California Legislature enacted legislation to prevent future incidents of widespread blackouts and rolling brownouts due to lack of electric generating capacity. Among the reforms adopted in response to the crisis was the adoption of Public Utilities Code §380 as an effort to better ensure reliability of electric supply. The statute directs the CPUC, in consultation with the CAISO, to establish RA requirements for all LSEs, including electric IOUs, electric service providers (ESPs), and now includes community choice aggregators (CCAs), which did not exist at the time of the crisis. The current RA program consists of system, local, and flexible requirements for each month of a compliance year. In October of each year, LSEs must demonstrate that they have procured 90 percent of their system RA obligations for the five summer months (May-September) of the following year, as well as 100 percent of their local requirements, and 90 percent of their flexible requirements for each month of the coming compliance year. The CPUC has adopted changes to RA program in recent years, including increasing the planning reserve margin from 15 percent to 17 percent by 2024 for all LSEs and in the case of electric IOUs upwards of 20-22 percent effective planning reserve margin. The CPUC has required a multi-year local capacity RA requirement and recently adopted local capacity requirements for the upcoming three years. The CAISO conducts a Local Capacity Technical Analysis to identify the minimum local resource capacity required in each local area to meet energy needs used a 1-in-10 weather year and N-1-1(emergency) contingency. The CPUC also assesses penalties on the LSEs who fail to satisfy their RA obligations, including limiting the expansion of CCAs if they are deficient in their RA requirements. The CPUC is also in the midst of a significant change to the RA program by implementing a slice-of-day framework that assesses the hourly use of resources. The CPUC has been developing the slice-of-day structure for a few years and is now on the cusp of rolling out the new framework for 2025’s RA program. Just this month, the CPUC adopted a 17 percent planning reserve margin for the slice-of-day framework, consistent with previous planning reserve margins.
SB 100 (De León, 2018). SB 100 established the state’s target to meet 100 percent of the state’s electricity retail load with renewable and zero-carbon resources by 2045. SB 1020 (Laird, Chapter 361, Statutes of 2022) established interim goals to meeting the SB 100 target, specifically requiring 90 percent of retail sales by 2035, 95 percent by 2040 to be met with renewable and zero-carbon energy resources. SB 100 Joint Agency Report evaluates the challenges and opportunities in implementing SB 100. It includes an initial assessment of the additional energy resources and the resource building rates needed to achieve 100 percent clean electricity, along with the associated costs. It uses a computer model to analyze these factors under various conditions and technologies. The report is scheduled to be updated every four years. The first report issued on March 2021 identified preliminarily that on average the state may need six gigawatts of new renewable and energy storage annually to meet the SB 100 goals.
IRP process. SB 350 (De León, Chapter 547, Statutes of 2015) required each LSE to file a biennial IRP for approval or certification by the CPUC. The CPUC combines all LSEs’ IRPs to ensure the state is on its path to meet its clean energy procurement goals. Public owned utilities (POUs) are required to file their own IRPs with the CEC. The goal of the IRP is a two-year planning process to ensure that LSEs are meeting targets that allow the electricity sector to contribute to California’s economy-wide greenhouse gas (GHG) emissions reductions goals and that helps to reduce overall costs. In most recent IRP decision, the CPUC adopted a 2023 portfolio that reduces 25 million metric ton (MMT) of GHG emissions by 2035, as compared to the previously adopted 38 MMT by 2030 planning target. The IRP is intended to forecast needs on a 10-year horizon. In this regard, the IRP is a forward-looking activity. As part of the IRP process, the CPUC has issued several procurement orders on LSEs (summarized in the table below) to address near-term and mid-term procurement needs. Within the procurement orders, the CPUC has directed central procurement for local RA and mid-term reliability by electric IOUs for customers, including those of other LSEs.
CPUC IRP Procurement Order | Total MW | Time Horizon (Calendar Years) |
D. 19-11-016 | 3,300 MW | 2021-2023 |
D. 21-06-035 Mid-Term Reliability (MTR) | 11,500 MW | 2023-2028 |
D. 23-02-040 Supplemental | 4,000 MW | 2026-2027 |
Cumulative Procurement | 18,800 MW | 2021-2028 |
Recent budget and other energy “insurance” actions. In response to energy capacity challenges during extreme heat events, including the rotating outages in August 2020, the Legislature, in collaboration with the Newsom Administration, adopted several measures throughout 2022, in addition to previously adopted measures, to continue to help shore-up California’s electricity supply against the impacts from extreme events. These measures include authorizing the extension of the Diablo Canyon Nuclear Power Plant, establishment of an Electricity Supply Strategic Reliability Reserve Program administered by the Department of Water Resources with nearly $2.4 billion budget to procure capacity for extreme emergency events, additional reliability Demand Side Grid Support and Distributed Electric Backup Assets programs at the CEC, and development, if not appropriation, for a $1 billion Clean Energy Reliability Investment Plan. Additionally, just last year, the Legislature and Governor authorized Department of Water Resources (DWR) to serve as central procurement entity if requested by the CPUC for specified long-lead time resources.
Comments
Need for this bill. According to the author: Our planning has not evolved to meet our rapidly changing climate and its impact on electric load, and the grid is not keeping pace with the rapid adoption of electric vehicles, heat pumps, and other electrification initiatives. …A reliable grid is essential for meeting the state’s ambitious decarbonization goals and for supporting the growing electrification of transportation and buildings. … AB 2368 addresses the fundamental issue of California's energy grid struggling to meet peak demand reliably, exacerbated by aging infrastructure and increased strain from climate-induced extreme weather events. The transition to 100% clean energy required by SB 100 has the potential to create reliability challenges unless it is managed methodically. The RA framework and the IRP process operate on different timelines using different planning standards and metrics, leading to a huge gap in assessing reliability. This disconnect hampers the California Independent System Operator's (CAISO) ability to ensure grid reliability, contributing to the state’s vulnerability to power outages during critical times.
Planning standard. This bill would indicate a need to establish a one-in-ten-year loss of load expectation (LOLE) planning standard within the RA program. The author and proponents contend that this is a common standard adopted across many other jurisdictions and also adopted within the IRP process. They note challenges of the CPUC affirming a particular standard for the RA program, relying more on a planning reserve margin that varies and where proponents struggle that the underpinnings are unclear. While this bill does not require the use of the one-in-ten LOLE, it does not require the 1-in-10 LOLE, it does give strong indication towards its use. While none of the comments have raised concerns with this particular standard, the Legislature may need to continue to monitor to ensure as the bill moves forward a clearer understanding of its application may be provided by the CPUC. Currently, the CPUC is undergoing the previously mentioned changes to RA with slice-of-day framework, stating they intend to use a 17 percent planning reserve margin. To the extent a 1-in-10 LOLE might further constrain the RA market, including driving up prices, the author and committee may wish to revisit this standard.
Medium-term supply assessment within RA program. As currently drafted this bill would require an assessment of supply sufficiency for midterm (two-five years out) within the RA program. Many stakeholders have raised concerns that such an assessment and related provisions signal mid-term procurement requirements. The author and proponents of the bill suggest they are not requiring procurement and have added intent language to this bill to clarify. However, the intent language does not seem to satisfy the concerns. Currently the CPUC has the authority to direct midterm procurement (and has within the IRP). Adding this assessment and related provisions in the RA program has raised many concerns which may be resolved by housing this assessment within the IRP. Therefore, the author and committee may wish to amend this bill to move this assessment within the IRP and delete the related provisions.
CAISO vs. CPUC role. Though not explicit, this bill attempts to tip the planning for RA towards a stronger role for the CAISO. The author and proponents are valid concerns to address supply reliability, including those actions identified after the 2020 rotating outages. However, caution is warranted to ensure the state retains the role to drive policy and reliability, including RA by having the CPUC maintain clear jurisdiction of this role. Unlike the CAISO, the CPUC is a state agency and one where costs to ratepayers are a prime consideration of policies, including RA. Additional, provisions that give the CAISO exemption from ex parte rules at the CPUC do not seem necessary, as SB 1020 (Laird, Chapter 361, Statutes of 2022) already authorizes the CPUC and CAISO to share confidential information. As such, the author and committee wish to delete provisions of the bill that unnecessarily shift some of the responsibility to the CAISO, including affording the CAISO exemption from ex parte rules within CPUC proceedings. The author and committee may adopt additional clarifying amendments to further clarify the findings and declarations.
Prior/Related Legislation
AB 1373 (E. Garcia, Chapter Statutes of 2023) made numerous changes to electricity policy, most notably, authorized the DWR to serve as a central procurement entity to procure energy resources in order to help the state meet its renewable and zero-carbon energy resources and reliability goals. The bill also includes numerous related and additional provisions.
AB 205 (Committee on Budget, Chapter 61, Statutes of 2022), among other things, authorized the DWR to contract for, purchase, finance or otherwise secure electrical generation to create additional capacity during extreme energy grid events, and established the Strategic Reliability Reserve to fund these actions.
SB 1158 (Becker, Chapter 367, Statutes of 2022) among its provisions, required the CPUC as part of the RA program to require every LSEs to annually report information regarding the sources of electricity and the emissions of greenhouse gases associated with those sources of electricity for RA requirements.
SB 1136 (Hertzberg, Chapter 851, Statutes of 2018) revised existing statute that required the CPUC, in consultation with the CAISO, to establish RA requirements for the state’s electric “LSEs”.
SB 618 (Bradford, Chapter 431, Statutes of 2017) required, explicitly, the IRPs of all LSEs to contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply, meet certain environmental goals, and prevent cost shifting among LSEs.
SB 350 (De León, Chapter 737, Statutes of 2015), among other things, increased the RPS and directed the CPUC to develop a process by which LSEs submit IRPs to the CPUC for review or for certification.
FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes
SUPPORT:
Clean Energy Buyers Association, Sponsor
Eco Equity
Environmental Defense Fund
Equinix, INC.
General Motors LLC
Independent Energy Producers Association, if amended
Microsoft Corporation
Prime Data Centers
Salesforce
Silicon Valley Leadership Group
OPPOSITION:
Alliance for Retail Energy Markets
NRG Energy
ARGUMENTS IN SUPPORT: Microsoft Corporation states:
California’s electric grid has had multiple close calls over the past four years. We observe that California’s ability to provide a reliable power source is at risk due to climate change and load growth, therefore creating a need to reform the framework that governs the planning and procurement of electric generation in California. We are pleased to see AB 2368 introduced to address how best to modernize the Resource Adequacy program at the Public Utilities Commission (CPUC) to meet the needs of our evolving grid. We support AB 2368 because our Resource Adequacy programs should provide certainty to the grid operator so that it can maintain reliability under all but the most extreme conditions. California is an outlier amongst modern electric grids in that we do not use a transparent planning standard, such as the widely adopted “one-in-ten loss-of-load expectation.” This bill’s adoption of such a standard would be a major step for California. California’s grid is predicted to have critical capacity shortfalls for the next 3-5 years, yet the state does not have a formalized planning process to evaluate reliability within this time frame. We appreciate that this bill is aimed at this gap, which under the status quo could lead to grid emergencies and even blackouts. AB 2368 represents a vital step forward in ensuring grid reliability.
ARGUMENTS IN OPPOSITION: The Alliance for Retail Energy Markets states opposes the bill, stating:
AB 2368, however, risks unintended consequences of exacerbating coordination challenges by expanding the scope of the RA program under Pub. Util. Sec. 380 to include a new midterm assessment. A midterm reliability assessment within the RA program would duplicate midterm needs assessments and associated requirements under the IRP process thereby exacerbating process overlaps and inter-proceeding conflicts. To address this concern, we propose the following amendment as a new subdivision under Pub. Util. Sec. 380: "Nothing in this section requires the commission to establish midterm resource adequacy requirements.”
-- END --
ASSEMBLY THIRD READING
ATR Bill Id:AB 2368
Author:(Petrie-Norris)
As Amended Ver:April 16, 2024
Majority vote
SUMMARY
Modifies several aspects of the resource adequacy (RA) program to ensure reliable electric service, including permitting the California Independent System Operator (CAISO) to establish a minimum planning reserve margin; requiring the California Public Utilities Commission (CPUC) adopt the 1 day-in-10 year (1-in-10) loss-of-load expectation (LOLE) as the minimum standard for the RA program; and directing the CPUC to regularly conduct a mid-term (2-5 year) assessment of reliability.
Major Provisions
- Authorizes the CAISO to establish minimum planning reserve requirements for participating load-serving entities (LSEs) as deemed necessary and approved by the Federal Energy Regulatory Commission (FERC).
- Defines "short term" and "midterm" to mean a time period between the present to two years in the future and a time period between two to five years in the future, respectively.
- Requires the CPUC, in coordination with the CAISO, to establish RA requirements sufficient to maintain a 1-in-10 LOLE while advancing the state's goals for carbon reduction and clean energy, for all LSEs.
- Requires LSEs to file an integrated resource plan (IRP) to the CPUC that, in addition to existing provisions, ensures system and local reliability on a short-term, midterm, and long-term basis. To accomplish this, the CPUC shall:
- Ensure that all resources contracted for the midterm forward period by LSEs are reported to the CPUC and the CAISO using resource counting rules that are equivalent to those used for RA; and
- Biennially assess short-term, midterm, and long-term reliability by conducting probabilistic reliability modeling and reviewing the results of that reliability modeling in a public proceeding.
- Exempts the CAISO from the CPUC's ex parte communication rules when it consults with the CPUC on matters of reliability, as provided.
COMMENTS
The RA process, overseen by the CPUC and CAISO, is designed to identify resources needed to ensure reliability. Through this process, the CPUC requires LSEs – a catchall term to describe the entities, other than municipal utilities, that, in the context of this bill, procure electricity on behalf of end-use customers – have energy resources sufficient to meet anticipated customer demand. The current RA program consists of system, local, and flexible requirements for each month of a compliance year. System requirements are determined for each LSE based on the CEC's integrated energy policy report electricity forecast plus a planning reserve margin (PRM). Local requirements are determined based on an annual CAISO study using a 1-in-10 LOLE and an N-1-1 contingency.
The RA market has experienced significant constraint recently, largely driven by resource retirements across the western U.S. and the growing frequency of extreme weather events. For example, a heatwave in 2020 resulted in two days of rotating outages in the CAISO territory. This event led to extensive effort and collaboration amongst California's energy agencies to understand the root cause of the event and to develop strategies to ensure such events do not recur. Some of those strategies included increasing the PRM to 17% for 2024-25, and 20-22.5% for the three large investor-owned utilities (IOUs) in the summers of 2022-2025; several emergency mid-term procurement orders in the CPUC's IRP proceedings; further analyses and modelling by the CEC using the 1-in-10 LOLE standard to provide situational awareness to and affirm the CPUC's mid-term decisions; and the adoption of the 1-in-10 LOLE standard for the IRP.
Emergency contracting, by nature, is more expensive since time-strapped utilities cannot wait for lower bidders when energy is urgently needed. The latest increases in the effective PRM for LSEs have led to a market rush, practically at any cost, to buy resources needed to meet RA and emergency procurement obligations. Energy sellers have seemingly taken note. While nowhere near the same extent as squeezes during extreme weather events, both system and local RA prices have increased significantly over the last few years, and are projected to be even higher for the coming summers.
This bill seeks to add more clarity and certainty in RA rules such that expensive, emergency procurement can be minimized by setting a system-wide RA goal as a 1-in-10 LOLE at minimum. The impact of applying the 1-in-10 LOLE to the PRM will remain uncertain until more modeling is done. Regardless, the 1-in-10 LOLE seems to be industry standard, and in alignment with the CPUC's and CEC's planning processes.
More granular resource planning and development in mid-term time frames will also be crucial to ensuring reliability and cost-effectiveness of California's electrical grid as climate change continues to exacerbate the frequency and magnitude of extreme heat events. Since the CPUC has outlined expectations that mid-term reliability resources be fully deliverable and qualify for RA to achieve compliance, this bill appropriately codifies and couches the practice of assessing mid-term reliability needs in the RA program.
According to the Author
"California has experienced reliability events twice in the past three years. Blackouts disproportionately impact California's most vulnerable populations. Grid outages are not only expensive—one event can cost the state over $2 billion —but also hinder emergency services, increasing their demand while impeding their response capabilities. AB 2368 aims to make California's electric grid more reliable and prevent future grid emergencies by directly tackling three significant gaps in California's electric reliability framework. First, it modernizes the Resource Adequacy (RA) program and establishes a reliability metric that is already widely used around the U.S. and the world, requiring the California Public Utilities Commission (CPUC) to benchmark the likelihood of blackouts or grid emergencies based on existing resource procurement. Second, the bill addresses a major blind spot in the CPUC's planning horizon; whereby reliability is not systematically or transparently assessed in the two-to-five year ahead timeframe to address shortfalls before it's too late. Third, the bill aims to harmonize the three separate procurement programs run by the CPUC by requiring the use of consistent standards and methods. The present lack of coordination means the California Independent System Operator's (CAISO) is not able to holistically assess resource sufficiency and anticipate future challenges. Together, these measures will modernize our reliability programs to better ensure a reliable electric supply for all Californians in the face of increased uncertainty from climate change and while we are transitioning our grid to 100% clean resources."
Arguments in Support
The Environmental Defense Fund writes, "California's electric grid experienced rolling blackouts in 2020 and has had multiple close calls since. There is a clear need to reform the framework that governs the planning and procurement of electric generation in California. We are pleased to see [this bill] introduced to modernize the Resource Adequacy program at the CPUC to meet the needs of our evolving grid. We support [this bill] because our Resource Adequacy programs should provide certainty to the grid operator so that it can maintain reliability under all but the most extreme conditions. California is an outlier amongst modern electric grids in that we do not use a transparent planning standard, such as the widely adopted 'one-in-ten loss-of-load expectation.' This bill's adoption of such a standard would be a major step for California. California's grid is predicted to have critical capacity shortfalls for the next three to five years, yet the state does not have a formalized planning process to evaluate reliability within this time frame. We appreciate that this bill is aimed at this gap, which under the status quo could lead to grid emergencies and even blackouts. [This bill] represents an important step forward in ensuring grid reliability."
Arguments in Opposition
None on file.
FISCAL COMMENTS
According to the Assembly Committee on Appropriations, the CPUC estimates annual costs of this bill to total $1.1 million for five new staff members – all regulatory analysts with differing areas of expertise to conduct reliability modeling and review and coordinate with the CAISO – and an additional $250,000 annually for a senior attorney to litigate potential tariff issues.
VOTES
ASM UTILITIES AND ENERGY: 16-0-0
YES: Petrie-Norris, Jim Patterson, Bauer-Kahan, Calderon, Chen, Connolly, Friedman, Holden, Joe Patterson, Reyes, Santiago, Schiavo, Ting, Wallis, Wood, Zbur
ASM APPROPRIATIONS: 15-0-0
YES: Wicks, Sanchez, Arambula, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Grayson, Haney, Hart, Jim Patterson, Pellerin, Ta, Villapudua
UPDATED
VERSION: April 16, 2024
CONSULTANT: Kathleen Chen / U. & E. / (916) 319-2083 FN: 0003243
Date of Hearing: May 15, 2024
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Buffy Wicks, Chair
ABPCA Bill Id:AB 2368
Author:(Petrie-Norris) – As Amended Ver:April 16, 2024
Policy Committee: | Utilities and Energy | Vote: | 16 - 0 |
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Urgency: No State Mandated Local Program: Yes Reimbursable: No
SUMMARY:
This bill makes a number of substantive technical changes to strengthen the state’s efforts to ensure there is adequate supply of electricity.
Specifically, this bill:
- Authorizes the California Independent System Operator (CAISO) to establish minimum planning reserve requirements for participating load-serving entities (LSEs) as deemed necessary and approved by the Federal Energy Regulatory Commission.
- Defines “short term” and “midterm” to mean a time period between the present to two years in the future and a time period between two-to-five years in the future, respectively.
- Requires the California Public Utilities Commission (CPUC), in coordination with CAISO, to establish resource adequacy (RA) requirements, which ensure short-term and midterm reliability and maintain a 1-in-10 loss-of-load expectation while advancing the state’s goals for carbon reduction and clean energy, for all LSEs.
- Requires LSEs to file an integrated resource plan with the CPUC that, in addition to existing provisions, ensures system and local reliability on a short-term, midterm and long-term basis, and, to that end, requires the CPUC to (a) ensure that all resources contracted for the midterm forward period by an LSE are reported to the CPUC and CAISO using resource counting rules that are equivalent to those used for resource adequacy, and to (b) assess every two years short-term, midterm and long-term reliability by conducting probabilistic reliability modeling and reviewing the results of that reliability modeling in a public proceeding.
- Exempts CAISO from CPUC’s ex parte communication rules when it consults with the CPUC on matters of reliability.
FISCAL EFFECT:
This bill will entail new work for the CPUC, specifically, conducting reliability modeling and reviewing the results every other year, as well as increased reporting and coordination with CAISO, with related costs likely in the high hundreds of thousands of dollars annually (California Public Utilities Commission Utilities Reimbursement Account). The CPUC estimates these annual costs to total $1.1 million for five new staff members—all regulatory analysts of differing areas of expertise and levels of knowledge and experience. In addition, the CPUC anticipates the potential need to litigate tariff issues, for which the CPUC would need a senior attorney at an annual cost of $250,000.
COMMENTS:
- Purpose. The author intends this bill to revise electric supply planning processes to ensure an adequate electric supply. According to the author:
AB 2368 aims to make California’s electric grid more reliable and prevent future grid emergencies by directly tackling three significant gaps in California's electric reliability framework. First, it modernizes the Resource Adequacy (RA) program and establishes a reliability metric that is already widely used around the U.S. and the world, requiring the California Public Utilities Commission (CPUC) to benchmark the likelihood of blackouts or grid emergencies based on existing resource procurement. Second, the bill addresses a major blind spot in the CPUC’s planning horizon; whereby reliability is not systematically or transparently assessed in the two-to-five year ahead timeframe to address shortfalls before it’s too late. Third, the bill aims to harmonize the three separate procurement programs run by the CPUC by requiring the use of consistent standards and methods…Together, these measures will modernize our reliability programs to better ensure a reliable electric supply for all Californians in the face of increased uncertainty from climate change and while we are transitioning our grid to 100% clean resources
- Background. Statute requires the CPUC, in coordination with CAISO, to adopt RA requirements. In simple terms, RA is a standard meant to ensure electricity providers subject to the CPUC’s jurisdiction—known as LSEs, which, in the context of CPUC jurisdiction means the investor-owned utilities (IOUs), community choice aggregators and electric service providers—have sufficient supplies of electricity available, if needed, to meet customer demand. Similarly, statute requires each publicly owned utility (POU) serving end-use customers prudently plan for and procure resources sufficient to provide reliable electric service to its customers. Despite these statutory requirements, in 2020, the electric system, under stress from extreme and prolonged region-wide heat storms, did not have the electric supply to meet all customer demand at all times. In response, the operator of the state’s electric grid—CAISO—instituted rolling power outages to prevent a larger failure of the system. In 2021, the electric grid was similarly stressed, and, in that instance, CAISO did not institute power outages.
As described above, this bill makes several technical, but substantial, changes to how the CPUC determines RA requirements. Writing in support of the bill, the Environmental Defense Fund asserts:
California is an outlier amongst modern electric grids in that we do not use a transparent planning standard, such as the widely adopted “one-in-ten loss-of-load expectation.” This bill’s adoption of such a standard would be a major step for California. California’s grid is predicted to have critical capacity shortfalls for the next 3-5 years, yet the state does not have a formalized planning process to evaluate reliability within this time frame. We appreciate that this bill is aimed at this gap, which under the status quo could lead to grid emergencies and even blackouts.
The committee is unaware of opposition to this bill.
Analysis Prepared by: Jay Dickenson / APPR. / (916) 319-2081
Date of Hearing: April 24, 2024
ASSEMBLY COMMITTEE ON UTILITIES AND ENERGY
Cottie Petrie-Norris, Chair
ABPCA Bill Id:AB 2368 (
Author:Petrie-Norris) – As Amended Ver:March 21, 2024
SUBJECT: Independent System Operator: outage: review
SUMMARY: Modifies several aspects of the resource adequacy (RA) program to ensure reliable electric service, including permitting the California Independent System Operator (CAISO) to establish a minimum planning reserve margin; requiring the California Public Utilities Commission (CPUC) adopt the 1 day-in-10 year (1-in-10) loss-of-load expectation (LOLE) as the minimum standard for the RA program; and directing the CPUC to regularly conduct a mid-term (2-5 year) assessment of reliability.
Specifically, this bill:
- Authorizes the CAISO to establish minimum planning reserve requirements for participating load-serving entities (LSEs) as deemed necessary and approved by the Federal Energy Regulatory Commission (FERC).
- Defines “short term” and “midterm” to mean a time period between the present to two years in the future and a time period between two to five years in the future, respectively.
- Requires the CPUC, in coordination with the CAISO, to establish resource adequacy (RA) requirements, which ensure short term and midterm reliability and maintain a 1-in-10 LOLE while advancing the state’s goals for carbon reduction and clean energy, for all LSEs.
- Requires LSEs to file an integrated resource plan (IRP) to the CPUC that, in addition to existing provisions, ensures system and local reliability on a short-term, midterm, and long-term basis. To accomplish this, the CPUC shall:
- Ensure that all resources contracted for the midterm forward period by LSEs are reported to the CPUC and the CAISO using resource counting rules that are equivalent to those used for resource adequacy; and
- Biennially assess short-term, midterm, and long-term reliability by conducting probabilistic reliability modeling and reviewing the results of that reliability modeling in a public proceeding.
- Exempts the CAISO from the CPUC’s ex parte communication rules when it consults with the CPUC on matters of reliability, as provided.
EXISTING LAW:
- Requires the CAISO to ensure the efficient use and reliable operation of the transmission grid consistent with the achievement of planning and operating reserve criteria that are no less stringent than those established by the Western Electricity Coordinating Council and the North American Electric Reliability Council. (Public Utilities Code § 345)
- Requires the CAISO to perform a review following a major outage that affects at least 10% of the customers of the entity providing the local distribution service that addresses the cause, the response time and effectiveness, and whether the transmission facility owner or operator’s operation and maintenance practices enhanced or undermined the ability to restore service efficiently and in a timely manner. Authorizes the CAISO, subject to approval by the Federal Energy Regulatory Commission (FERC), to order appropriate sanctions if it is found that the owner or operator prolonged the response time or was responsible for the outage. (Public Utilities Code § 349)
- Requires the CPUC, in consultation with the CAISO, to establish resource adequacy requirements for LSEs, facilitate the development or resources, equitably allocate costs of generating capacity, minimize enforcement requirements and costs, and maximize the ability of community choice aggregators (CCAs) to determine the generation resources used to serve their customers. (Public Utilities Code § 380)
- Requires LSEs to file an IRP to the CPUC that meets greenhouse gas (GHG) emissions reduction targets and clean energy targets; enables each electrical corporation to fulfill its obligations to serve its customers at just and reasonable rates; minimizes impacts on ratepayers’ bills; strengthens the diversity, sustainability, and resilience of the bulk transmission and distribution systems; enhances distribution systems and demand-side energy management; and maintains a diverse portfolio of energy resources. (Public Utilities Code § 454.52)
- Requires the CPUC to establish rules regarding ex parte communication on case categorization issues in its proceedings. (Public Utilities Code § 1701.1)
FISCAL EFFECT: Unknown. This bill is keyed fiscal and will be referred to the Committee on Appropriations for its review.
BACKGROUND:
Resource Adequacy (RA) – The RA process, overseen by the CPUC and CAISO, is designed to identify resources needed to ensure reliability. Following the California energy crisis of 2000-01, the California Legislature enacted AB 380 (Nunez, Chapter 367, Statutes of 2005) to prevent future incidents of widespread blackouts and rolling brownouts due to lack of electricity. This statute established the RA program to guide resource procurement and promote infrastructure investment by requiring that Load Serving Entities (LSEs) procure capacity so that capacity is available to the CAISO when and where needed. The program lives at the CPUC, which must work in consultation with the CAISO to establish RA requirements for all LSEs.
The RA market has experienced significant constraint recently, largely driven by resource retirements across the western U.S. and the growing frequency of extreme weather events. For example, in 2020, two extreme heatwaves impacted the western United States and strained electric system operations in California.[1] One of the heatwaves resulted in two days (August 14-15) of rotating outages in the CAISO territory from 6-9 p.m. These outages marked the first time in nearly 20 years that such rotating outages occurred in California.[2] This event led to extensive effort and collaboration amongst California’s energy agencies to understand the root cause of the event and to develop strategies, which are promulgated in a Final Root Cause Analysis report (heretofore referred to as the RCA),[3] to ensure such events do not recur, including making changes to the RA program.
The current RA program consists of system, local, and flexible requirements for each month of a compliance year. System requirements are determined for each LSE based on the CEC’s integrated energy policy report (IEPR) electricity forecast plus a 17% planning reserve margin (PRM) for 2024-25.[4] Due to higher energy demand in hotter months, the effective PRM increases to between 20-22.5% for the three large investor-owned utilities (IOUs) in the summers of 2024 and 2025.[5] Local requirements are determined based on an annual CAISO study using a 1-in-10 LOLE and an N-1-1 contingency.[6] Flexible requirements are based on an annual CAISO study that currently looks at the largest three-hour ramp for each month needed to run the system reliably. In October, LSEs must demonstrate that they have procured 90% of their system RA obligations for the five summer months (May-September) of the following year, as well as 100% of their local requirements, and 90% of their flexible requirements for each month of the coming compliance year. There is an additional monthly reporting requirement for RA, where LSEs must demonstrate they have procured 100% of their monthly system and flexible RA obligation.
Integrated Resource Planning (IRP) – SB 350 (de León, Chapter 737, Statutes of 2015) directed the CPUC to ensure that California’s electric sector meets its greenhouse gas (GHG) emissions reduction and clean energy goals while maintaining reliability at the lowest possible costs. In response, the CPUC has developed the IRP process, which repeats every two years to continually reassess the electricity sector’s contribution to the state-wide GHG reduction goals. To evaluate need, the CPUC takes a 10-year-ahead look and compares demand with existing generation, new resources, and retiring resources. In the most recent IRP decision, the CPUC adopted a 2023 portfolio that reduces 25 million metric ton (MMT) by 2035 as compared to the previously adopted 38 MMT by 2030 planning target.[7] The portfolio reflects the resource preferences of CPUC jurisdictional LSEs and includes an expectation that over 56 gigawatts (GW) of new clean energy resources – including solar, battery storage, and offshore wind – will be built to serve load by 2035, including 4.5 GW of offshore wind.
Mid-term reliability – One recommendation from the RCA was greater resource planning and development in mid-term time frames.3 Many signs point to the need for ensuring sufficient resources are available in the years between the RA’s scope (< 2 years) and the IRP’s scope (> 10 years): electric demand is projected to increase; the impacts of climate change are accelerating and creating new demands on the state’s electricity resources; more and more resources are reaching the end of their lifetime and retiring; and the building of new resources is being delayed from siting and permitting woes. Indeed following the unprecedented heat wave in August 2020, the CPUC has expedited action to develop additional resources that ensure reliability in case of more extreme summer heat events, and ordered the procurement of capacity totaling to more than 26,000 MW to come online between the years 2021 and 2027 during the IRP proceedings.[8]
Since these decisions are made with urgency and limited modeling, the CEC has begun to conduct further analyses and modelling to provide situational awareness to and affirm the CPUC’s decision. In their evaluation for the period 2023-26, for which the CPUC ordered the mid-term resource procurement of 11,500 MW of new net qualifying capacity to come online,[9] the CEC found that the ordered resource procurement appeared to be sufficient to meet a 1-in-10 LOLE target, indicating system reliability.[10]
COMMENTS:
- Author’s statement. According to the author, “California has experienced reliability events twice in the past three years. Blackouts disproportionately impact California's most vulnerable populations. Grid outages are not only expensive—one event can cost the state over $2 billion —but also hinder emergency services, increasing their demand while impeding their response capabilities. AB 2368 aims to make California’s electric grid more reliable and prevent future grid emergencies by directly tackling three significant gaps in California's electric reliability framework. First, it modernizes the Resource Adequacy (RA) program and establishes a reliability metric that is already widely used around the U.S. and the world, requiring the California Public Utilities Commission (CPUC) to benchmark the likelihood of blackouts or grid emergencies based on existing resource procurement. Second, the bill addresses a major blind spot in the CPUC’s planning horizon; whereby reliability is not systematically or transparently assessed in the two-to-five year ahead timeframe to address shortfalls before it’s too late. Third, the bill aims to harmonize the three separate procurement programs run by the CPUC by requiring the use of consistent standards and methods. The present lack of coordination means the California Independent System Operator's (CAISO) is not able to holistically assess resource sufficiency and anticipate future challenges. Together, these measures will modernize our reliability programs to better ensure a reliable electric supply for all Californians in the face of increased uncertainty from climate change and while we are transitioning our grid to 100% clean resources.”
- Warding off the squeeze. Emergency contracting, by nature, is more expensive since time-strapped utilities cannot wait for lower bidders when energy is urgently needed. During the 2020 rolling blackouts event, wholesale prices on California’s electricity market surged, some above $3,800/MW-hour, equating to roughly 100 times the typical cost.[11] The same thing happened during the extreme heat wave in September of 2022.[12]
The latest increases in the effective PRM for LSEs have led to a market rush too, practically at any cost, to buy resources needed to meet RA obligations. Energy sellers have seemingly taken note. While nowhere near the same extent as squeezes during extreme weather events, both system and local RA prices have increased significantly over the last few years, and are projected to be even higher for the coming summers.[13]
As the RCA recommended, more granular resource planning and development in mid-term time frames will be crucial in ensuring reliability and cost-effectiveness of California’s electrical grid, particularly as climate change continues to exacerbate the frequency and magnitude of extreme heat events. Since the CPUC has outlined expectations that mid-term reliability resources be fully deliverable and qualify for RA to achieve compliance,[14] this bill appropriately codifies and couches the practice of assessing mid-term reliability needs in the RA program.
- Getting in alignment. As mentioned above, the CAISO currently uses a 1-in-10 LOLE to assess local RA needs. However, system RA, also known as the PRM, is set at a threshold of 17% for most LSEs, and 20-22.5% for the large IOUs. This bill sets a system-wide RA goal as a 1-in-10 LOLE. While not explicitly requiring the 1-in-10 LOLE to be the PRM, the language in this bill does provide strong indication to the CPUC and CAISO to update the PRM to be a 1-in-10 LOLE. It is unclear to this committee at this time what the effect of making the PRM reflect a 1-in-10 LOLE would be; perhaps the PRM would decrease relative to 17% or it might increase. The consequence of a 1-in-10 LOLE increasing the effective PRM is further market constraint, and a further rush to procure more resources from a shrinking supply; in other words, the potential to increase costs. Such a consequence is counter to the author’s intent of this bill, which seeks to add more clarity and certainty in RA rules such that expensive, emergency procurement can be minimized as much as possible.
The impact of a 1-in-10 LOLE for the PRM was discussed during a CAISO RA modeling workshop in March 2024.[15] The workshop participants seemed to acknowledge that the 1-in-10 LOLE was industry standard practice. However, some raised concern that the implications of adopting a 1-in-10 LOLE for the PRM were unknown at the time. Given this uncertainty and the severe constraints in the RA market, stakeholders advocated for the CAISO to evaluate whether there is even additional capacity available for procurement prior to ordering any changes to the PRM, and even suggested whether a phase-in approach might be warranted for parties to meet their PRM more gradually.[16]
The 1-in-10 LOLE standard is a dynamic value that must be periodically computed. Whereas the historical PRM is a flat percentage value, not specific to LSE needs or season. Because of these inherent differences, the impact of applying the 1-in-10 LOLE to the PRM will remain uncertain until more modeling is done. Regardless, the 1-in-10 LOLE seems to be industry standard.[17] Moreover, the CPUC recently adopted the standard for the IRP,[18] recognizing it as crucial for assessing grid reliability. Thus, establishing the 1-in-10 LOLE standard in statute to assess short-term and mid-term reliability in the RA program as this bill proposes would provide alignment across institutions and between the RA and IRP processes.
- Prior legislation.
AB 205 (Committee on Budget), among other things, authorized the Department of Water Resources (DWR) to contract for, purchase, finance or otherwise secure electrical generation to create additional capacity during extreme energy grid events, and established the Strategic Reliability Reserve to fund these actions. Status: Chapter 61, Statutes of 2022.
SB 618 (Bradford) required, explicitly, the IRPs of all LSEs to contribute to a diverse and balanced portfolio of resources needed to ensure a reliable electricity supply, meet certain environmental goals, and prevent cost shifting among LSEs. Status: Chapter 431, Statutes of 2017.
SB 350 (de León), among other things, increased the RPS and directed the CPUC to develop a process by which LSEs submit IRPs to the CPUC for review or for certification. Status: Chapter 737, Statutes of 2015.
REGISTERED SUPPORT / OPPOSITION:
Support
Clean Energy Buyers Association
Microsoft Corporation
Opposition
None on file.
Analysis Prepared by: Kathleen Chen / U. & E. / (916) 319-2083
CBS News; “Another record-breaking heat wave is building in the West”; September 2020. https://www.cbsnews.com/news/labor-day-weekend-heat-wave-forcast-western-united-states/. ↑
CAISO, CPUC, CEC; “Preliminary Root Cause Analysis: Mid-August 2020 Heat Storm”; October 2020. ↑
CAISO; Final Root Cause Analysis Mid-August 2020 Extreme Heat Wave; January 2021. ↑
The 17% PRM represents an increase relative to the 16% PRM applicable in 2022 and the 15% applicable from 2005-21. CPUC; “Fact Sheet on Decision in Phase 3 of the Implementation Track in the Resource Adequacy (RA) Proceeding (R. 21-10-002); July 2023; https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/resource-adequacy-homepage/fact-sheet-on-ra-d2306029-on-implementation-track-phase-3.pdf ↑
The 20-22.5% effective PRM represents an increase relative to the 15% effective PRM before 2022. ↑
N-1-1 Contingency: A sequence of events consisting of the initial loss of a single generator or transmission component (Primary Contingency), followed by system adjustments, followed by another loss of a single generator, or transmission component (Secondary Contingency). ↑
D. 24-02-047, R. 20-05-003, CPUC; Decision Adopting 2023 Preferred System Plan and Related Matters, and Addressing Two Petitions for Modification; February 2024. ↑
D. 19-11-016 ordered 3,300 MW to come online 2021-23, D. 20-12-044 ordered 7,500 MW to come online 2023-25, D. 21-06-035 ordered 11,500 MW to come online 2023-26, and D. 23-02-040 ordered 4,000 MW to come online 2026-27. ↑
D. 21-06-035, R. 20-05-003, CPUC; Decision Requiring Procurement to Address Mid-Term Reliability; June 2021. ↑
CEC; “Midterm Reliability Analysis”; September 2021. ↑
NY Times; “California Expresses Frustration as Blackouts Enter 4th Day”; August 2020; https://www.nytimes.com/2020/08/17/business/energy-environment/california-blackout-electric-grid.html. ↑
Energy Institute at Haas, UC Berkeley; “How High Died California’s Electricity Prices Get?”; September 2022; https://energyathaas.wordpress.com/2022/09/12/how-high-did-californias-electricity-prices-get/. ↑
CPUC; 2021 Resource Adequacy Report; April 2023. ↑
CPUC; “Energy Division Staff’s Responses to Frequently Asked Questions on Mid-Term Reliability Procurement Decision (D.) 21-06-035”; August 2021; https://www.cpuc.ca.gov/-/media/cpuc-website/divisions/energy-division/documents/integrated-resource-plan-and-long-term-procurement-plan-irp-ltpp/d2106035_faq_20210824.pdf. ↑
https://stakeholdercenter.caiso.com/Comments/AllComments/a79881e1-374a-4d13-aa17-cbbf7e631b3a ↑
Comments from the Six Cities in CAISO RA proceeding March 14 workshop, https://stakeholdercenter.caiso.com/Comments/AllComments/a79881e1-374a-4d13-aa17-cbbf7e631b3a ↑
FERC, The Brattle Group, Astrape Consulting; “Resource Adequacy Requirements: Reliability and Economic Implications”; September 2013. ↑
D. 24-02-047, CPUC ↑
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