California Public Utilities Commission Takes Action to Prevent Outages During Summer 2022 and 2023

Stoel Rives - Renewable + Law
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Stoel Rives - Renewable + Law

On October 29, 2021, the California Public Utilities Commission (CPUC) issued three proposed decisions intended to address potential electric capacity shortfalls in 2022 and 2023.  The proposed decisions, if approved, would implement a variety of demand-side and supply-side policies designed to ensure that in the event of extreme weather during the summer of 2022 and/or 2023, California has sufficient electric capacity to avoid outages.

Background

In August 2020, the California ISO experienced outages during the evenings of August 14 and 15, and only extraordinary efforts, including voluntary conservation efforts by California energy users, allowed the California ISO to avoid outages the following week.

After those outages, the CPUC and the California Energy Commission (CEC) have been working towards addressing potential capacity shortfalls during extreme weather events during the summer.  In November 2020, the CPUC opened a rulemaking (R.20-11-003) to ensure reliability in the event of extreme weather during the summer of 2021.  In February 2021, the CPUC adopted a decision directing procurement of additional capacity (D.21-02-028), and in March, adopted a decision directing additional demand-side and supply-side actions to increase supply and decrease load during extreme weather events (D.21-03-056).

California managed to avoid outages during the summer of 2021, although it was helped by relatively mild weather in August and September.  A stack analysis performed by the CEC this summer, however, showed the potential for capacity shortfalls of up to 4,350 megawatts (MW) for summer 2022.  In August, the CPUC implemented a second phase to R.21-11-003, to ensure reliability during the summers of 2022 and 2023.

Proposed Decisions to Address Summer 2022 and 2023 Reliability

On October 29, 2021, the CPUC issued a proposed decision in R.21-11-003 that would implement a variety of demand- and supply-side policies and procurement to ensure there is sufficient capacity for the summers of 2022 and 2023.  The proposed decision evaluates the CEC’s stack analysis in light of recent events, including the continued availability of the Redondo Beach Generating Station (834 MW), in light of the extension of its once-through-cooling policy compliance deadline, and determined that capacity needs for 2022 and 2023 were in the range of 2,000 to 3,000 MW.  The proposed decision would implement a variety of demand response program changes and supply-side measures designed to speed procurement of additional capacity, and advance the on-line dates for that capacity.

The CPUC issued two other proposed decisions on October 29, 2021 that were also focused on addressing summer 2022 and 2023 reliability.  In R.19-09-009, the CPUC’s microgrid rulemaking, the CPUC issued a proposed decision that would authorize San Diego Gas and Electric to procure up to four new energy storage microgrid projects providing a total of 160 megawatt-hours of capacity to meet capacity needs in 2022 and 2023.  The proposed decision would also authorize Pacific Gas and Electric to augment its temporary generation program at sites that can interconnect to address capacity shortfalls in 2022 and 2023.  And, in its energy efficiency rulemaking, R.13-11-005, the CPUC issued a proposed decision that would approve and fund several initiatives to reduce demand through various energy efficiency actions.

Comments on all three proposed decisions are due on November 10, with reply comments due on November 16.  The earliest that the proposed decisions could appear on a CPUC voting meeting agenda would be for the CPUC’s December 2, 2021 voting meeting.

Timing Challenges

Although the CPUC is working diligently to address potential capacity shortfalls for 2022 and 2023, the limited time remaining to get that additional capacity on-line creates significant challenges.  The CPUC is also currently considering an advice letter filed by Southern California Edison on October 21, 2021 (Advice Letter 4617-E), which requests approval of three utility-owned energy storage projects intended to come on-line by August 1, 2022.  In its advice letter, Southern California Edison claimed that it had been unable to find projects by third-party developers that could be on-line by the same date, due to interconnection and permitting challenges.  Interconnection in particular remains a long lead time item for project development, especially in light of the California ISO’s recent tariff amendments, which extended the interconnection cluster study process by approximately a year for projects that entered the interconnection queue this year (cluster 14).  The California ISO recently commenced its Interconnection Process Enhancements 2021 stakeholder initiative to work towards solutions to speed the interconnection of resources in cluster 14 and future clusters, and is scheduled to issue a straw proposal in that proceeding on November 22, 2021.  It remains to be seen, however, how quickly the California ISO can implement revisions to its interconnection processes, and how effective those changes will be in accelerating the interconnection process.

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