A \u201cyucky\u201d decision that pitted the California Independent System Operator against the California Public Utilities Commission--and utilities against merchant generators--pays to keep power plants available for providing a future promise of \u201cflexible capacity.\u201d The payments for the plan--called \u201cat-risk retirement\u201d--are required, according to the grid operator, to support renewable power in the next few years. \u201cWe just passed it reluctantly,\u201d Bob Foster, CAISO board chair, said Sept. 13. \u201cIn the long run it\u2019s about protecting the state and protecting consumers.\u201d Noting a conflict between agencies that the new payments engender, as well as the lack of consensus, grid operator chief executive officer Steve Berberich characterized the decision as, \u201cA yucky option.\u201d The need for flexibility is increasing in the 2014-15 timeframe because renewable projects are expected to be flooding the market, according to Greg Cook, CAISO market design and infrastructure policy director. Grid support in ancillary services is required to ease renewable electrons\u2019 entries and exits to the grid. That flexible support most often comes from fossil fuel plants. The time frame in the next few years lines up with the time older fossil plant owners are finding it financially unsound to keep their facilities running. The new payments are an attempt at a \u201cfinancial bridge to cover resources\u2019 going forward costs,\u201d said Cook. He added under the program, there\u2019s no return on owners\u2019 capital investments in the plants. It allows the grid operator to contract for capacity it determines is needed two to five years in the future. It requires power plant owners to apply for a special designation only after they\u2019ve been unable to contract with a utility for a plant\u2019s output. Staff characterized it as a \u201ctemporary backstop.\u201d The provision is supposed to sunset, but there is no official date to do so in the grid operator\u2019s decision. \u201cIt\u2019s not a backstop, it\u2019s a front-stop,\u201d NRG Energy director of market affairs Brian Theaker said in promoting the plan for merchant generators. Utilities half-heartedly opposed it. \u201cYou\u2019re asking customers to pay for something with no performance requirement,\u201d said Roy Kuga, Pacific Gas & Electric vice president, energy supply. The payments unearthed conflicts between agencies. The CPUC asserts the program will lead to higher prices and agency conflict. \u201cWe\u2019re concerned CAISO can end-run around CPUC planning,\u201d Molly Sterkel, program manager, commission Energy Division, said. State regulators also note a potential clash with the flexible capacity issue they are grappling with in their long-term procurement planning docket. Despite its unanimous passage, the board agreed. \u201cIt\u2019s risking substantial costs on consumers if we don\u2019t get this right,\u201d said Foster. The issue grew out of Calpine\u2019s 525 MW Sutter power plant. Calpine threatened to close it down because it couldn\u2019t find buyers for the plant\u2019s output. In March, the commission compromised between the high cost of its power and the desire to keep it running, finally requiring utilities to try to negotiate short-term contracts for its power so it could stay on line. Contracts were executed to keep the plant on line until the end of this year. The commission last spring feared that if it didn\u2019t find a way to keep Sutter, that the grid operator would. The grid operator\u2019s \u201cat-risk retirement\u201d designation keeps plants in financial straits somewhere between operation and mothballs, according to staff. Meanwhile, the commission continues to address the issue in its own process.