CPUC to Clarify Resource Adequacy Next Week

The California Public Utilities Commission may quell a controversy over power reserves that?s raged behind the scenes for months in a vote set for April 7. At issue is how to interpret the commission?s October 28, 2004, interim opinion on resource adequacy that requires load-serving entities to meet a 15 to 17 percent reserve requirement. The commission?s opinion was ambiguous on a key point?whether the requirement applied every hour of every month of the year based on annual peak load, or just during more limited peak periods, such as the summer months. Southern California Edison has led the charge for a narrow interpretation of the decision, joining with The Utility Reform Network and business groups. They are concerned that an unnecessarily broad interpretation will require utilities to procure needless excess capacity, which will drive up the cost of electricity. On the other side is the California Independent System Operator, which is concerned about having adequate resources at its command to ensure reliability. In light of ongoing negotiations?including an all-party conference this week hosted by CPUC president Mike Peevey?many parties were unavailable for comment. ?We recognize that the resource-adequacy reserve should follow the load curve,? said Gregg Fishman, CAISO spokesperson. He said the system operator believes that applying the reserve requirement on a monthly basis according to the monthly peak load will ensure system reliability without requiring needless expenditures by utilities. That stance closely reflects a draft decision by CPUC administrative law judge Mark Wetzell on March 7 recommending applying the resource-adequacy requirement on a monthly basis rather than an annual or seasonal basis. This would ?minimize the likelihood of a requirement to replace capacity at times that it is not truly needed,? Wetzell said. In its latest filing, Edison?along with the Office of Ratepayer Advocates, TURN, Pacific Gas & Electric, and various business groups?backed an interpretation that would require the 15 to 17 percent reserve margin to be based on the actual load for each hour of the month, instead of the monthly peak load. TURN attorney Mike Florio said that a potential agreement between Edison and CAISO emerged at an all-party conference March 30. Under a joint proposal, he said, the resource-adequacy requirement would apply to each hour of the month based on actual hourly load?not on the peak hour of the month. In exchange, Florio said, the utilities would accept a 100 percent year-ahead must-offer obligation for local resources, which would help CAISO meet its concern about reliability. If the compromise is accepted, Florio said, the commission may reschedule the item and hold one more public workshop on the issue. A CPUC official declined to comment.

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CPUC to Clarify Resource Adequacy Next Week

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