The California PUC approved a decision relating to capacity imports and compliance with the Resource Adequacy requirements applicable to retail suppliers and other LSEs (R.17-09-020)

A final order was not issued, but the PUC voted to approve an agenda proposed decision on which the PUC voted, which is discussed below

Retail supplier parties opposed a provision in the proposed decision, arguing that the requirement, discussed below, for firm energy to flow for import RA contracts is a wholly new requirement that did not previously exist. Retail suppliers stated that this must-flow requirement would essentially force all RA Imports to offer into the CAISO energy market as a price taker and incur losses when the prices outside of the CAISO are higher, leading to higher customer costs

The agenda proposed decision adopted by the PUC stated, "One of the goals of the RA program is to ensure that sufficient energy flows into California when the system is peaking in order to maintain grid reliability. As such, we find that the import requirements in D.04-10-035 and D.05-10-042 are critical to the objectives of the RA program and affirm those requirements in this decision. In addition, we underscore that a contract for an import energy product that is available only when called upon in the CAISO’s day-ahead market or residual unit commitment process does not qualify as an 'energy product' that 'cannot be curtailed for economic reasons.'"

Furthermore, the agenda proposed decision adopted by the PUC stated, "In affirming the existing requirements for import RA contracts, we clarify that a non-resource-specific RA import is required to self-schedule into the CAISO markets consistent with the timeframe reflected in the governing contract. However, this requirement does not apply to resource-specific RA imports, including dynamically scheduled resources, since resource-specific imports have a physical resource backing the assigned RA capacity and therefore, do not carry the same concerns about speculative supply as with non-resource-specific imports."

"Accordingly, the Commission affirms the requirements for RA import contracts established in D.04-10-035 and D.05-10-042, with the clarification that an 'energy product' that 'cannot be curtailed for economic reasons' is required to be self-scheduled into the CAISO markets, consistent with the timeframe established in the governing contract. The Commission agrees with the CAISO that import RA resources should be accounted for in the current MCC buckets and align with identified reliability needs, consistent with existing requirements," the agenda proposed decision adopted by the PUC stated

However, the final decision does not include an original proposal that energy must flow during the AAH window.

"We are persuaded that adding the requirement that energy flow during the AAH window could alter the integrity of the 2004/2005 decisions and be perceived as an additional requirement. Accordingly, we have modified the decision to remove the requirement that energy must flow during the AAH window," the proposed decision adopted by the PUC stated

The agenda proposed decision adopted by the PUC included the following orders:

1. The requirements for Resource Adequacy import contracts established in Decision 04-10-035 and Decision 05-10-042 are affirmed: Qualifying capacity for import contracts is the contract amount, provided the contract: (1) is an Import Energy Product with operating reserves, (2) cannot be curtailed for economic reasons, and (3a) is delivered on transmission that cannot be curtailed in operating hours for economic reasons or bumped by higher priority transmission or (3b) specifies firm delivery point (i.e., not seller’s choice).

2. For non-resource-specific Resource Adequacy (RA) imports, an “energy product” that “cannot be curtailed for economic reasons” shall self-schedule into the California Independent System Operator markets, consistent with the timeframe established in the governing contract. This requirement shall not apply to resource-specific RA imports, including dynamically scheduled resources.

3. A contract for an import energy product that is available only when called upon in the California Independent System Operator’s day-ahead market or residual unit commitment process does not qualify as an “energy product” that “cannot be curtailed for economic reasons,” as required by Decision 04-10-035 and Decision 05-10-042

More specifically, The proposed decision adopted by the PUC stated, "In this decision, the Commission affirms the RA import requirements, as set forth in D.04-10-035 and D.05-10-042. The Commission does not seek to delay affirmation of the RA import requirements, or consider alternative approaches to the import RA rules at this time, although future processes for considering such proposals are discussed below. For these reasons, we decline to address comments based on the above recommendations at this time."

The proposed decision adopted by the PUC stated, "[T]he Commission finds that D.04-10-035 and D.05-10-042 established the requirements for import contracts to count as RA and finds insufficient record for modifying those requirements at this time."

The proposed decision adopted by the PUC stated, "One of the goals of the RA program is to ensure that sufficient energy flows into California when the system is peaking in order to maintain grid reliability. As such, we find that the import requirements in D.04-10-035 and D.05-10-042 are critical to the objectives of the RA program and affirm those requirements in this decision."

The proposed decision adopted by the PUC stated, "In addition, we underscore that a contract for an import energy product that is available only when called upon in the CAISO’s day-ahead market or residual unit commitment process does not qualify as an 'energy product' that 'cannot be curtailed for economic reasons.'"

The proposed decision adopted by the PUC stated, "In affirming the existing requirements for import RA contracts, we clarify that a non-resource-specific RA import is required to self-schedule into the CAISO markets consistent with the timeframe reflected in the governing contract. However, this requirement does not apply to resource-specific RA imports, including dynamically scheduled resources, since resource-specific imports have a physical resource backing the assigned RA capacity and therefore, do not carry the same concerns about speculative supply as with non-resource-specific imports."

The proposed decision adopted by the PUC stated, "Accordingly, the Commission affirms the requirements for RA import contracts established in D.04-10-035 and D.05-10-042, with the clarification that an 'energy product' that 'cannot be curtailed for economic reasons' is required to be self-scheduled into the CAISO markets, consistent with the timeframe established in the governing contract. The Commission agrees with the CAISO that import RA resources should be accounted for in the current MCC buckets and align with identified reliability needs, consistent with existing requirements."

The proposed decision adopted by the PUC stated, "To address comments regarding the inflexible nature of self-scheduled resources, we note that the CAISO’s current Availability Assessment Hours (AAH) are 4:00 p.m. to 9:00 p.m. The Availability Assessment Hours are a set of five consecutive hours that correspond to the operating periods when high demand conditions typically occur and when availability of RA capacity is most critical to maintaining system reliability. In order to avoid the self-scheduling of imports during periods of negative pricing, the Commission encourages LSEs to utilize the MCC buckets and self-schedule their resources during periods of high demand."

The proposed decision adopted by the PUC stated, "In addition to the MCC buckets, LSEs can manage the potential market inefficiencies that may result from self-schedules in other ways. For example, LSEs can opt to rely on RA imports to a lesser degree in the Spring and other offpeak months, when negative prices are more likely to occur. This would result in more reliance on resource-specific RA from within California rather than import RA energy products."

The proposed decision adopted by the PUC stated, "In considering parties’ comments, the Commission finds that D.04-10-035 and D.05-10-042 sufficiently provide the rules requiring transmission capacity for RA import contracts. Accordingly, we affirm the requirements adopted in D.04- 10-035: Qualifying capacity for import contracts is the contract amount, provided the contract: (1) is an Import Energy Product with operating reserves, (2) cannot be curtailed for economic reasons, and (3a) is delivered on transmission that cannot be curtailed in operating hours for economic reasons or bumped by higher priority transmission or (3b) specifies firm delivery point (i.e., not seller’s choice)."

The proposed decision adopted by the PUC stated, "In light of the affirmation of the RA import requirements in this decision, we consider how RA import contracts should be treated on a going forward basis. Many parties support grandfathering in existing contracts. However, we note that the requirements at issue date back to Commission decisions from 2004, and thus are not new requirements. Therefore, we find it unnecessary to grandfather existing contracts."

The proposed decision adopted by the PUC stated, "The Commission agrees that in order to demonstrate compliance with the RA import requirements, LSEs subject to the RA program should provide documentation as part of its annual and monthly compliance filings, in the form of either contract language or an attestation from the contracting import provider or the scheduling coordinator for the resource. The Commission also agrees that it is reasonable for Energy Division staff to review each contract or attestation, as well as review whether these resources ultimately scheduled energy into the CAISO markets, to verify compliance. Energy Division will use import data obtained from the CAISO to verify monthly compliance. The Commission directs Energy Division to report on the annual aggregated data in its annual RA report. Accordingly, we adopt these requirements here."

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