Accelerated Resource-Adequacy Requirements Squeak Through CPUC

The California Public Utilities Commission this week accelerated the 15-17 percent planning reserve margin mandate from 2008 to June 2006 as urged by Governor Arnold Schwarzenegger. The directive to utilities and energy service providers is intended to shore up the amount of extra power supplies to provide a cushion against blackouts. The plan, approved on a 3-2 vote October 28, determines that all load-serving entities need to show that they can supply 100 percent of resources needed to serve customers one month ahead of when power will be needed. However, key elements of resource-adequacy requirements still need to be defined. The deliverability of power, or whether the resource can actually serve the load for which it is intended, remains unresolved. Failure of power to be ?deliverable? undercuts the entire concept of resource adequacy, the commission conceded. Accelerating the resource-adequacy time line is an expensive but needed ?insurance policy,? said Mike Peevey, CPUC president. He noted that the state may face power shortages next summer. A minority of commissioners ?are playing Russian roulette with the state?s future,? he added, invoking the high cost of blackouts. Reporting requirements to monitor terms and prices of power contracts are mandated. The provision is aimed at addressing concerns that quickly ramping up power plants during critical times could carry a high price tag. Utilities and electricity service providers will have to submit load forecasts based on their best estimates of the number of future customers and the amount of power they might consume. The need to turn over forecasts has sparked worries by investor-owned utilities that the information could be gamed. At the meeting, commissioner Geoffrey Brown, while endorsing the accelerated plan, stressed that the potential for market manipulation needs to be taken seriously. To help guard against gaming, the plan tapped the California Energy Commission to review load forecasts along with historic loads and compare them with other measures of consumption. Commissioner Loretta Lynch?s failed alternative decision would have maintained the original 2008 deadline. Along with commissioner Carl Wood, Lynch cast a dissenting vote on the plan. On the theme of utilities taking matters into their own hands, Pacific Gas & Electric and San Diego Gas & Electric drew criticism from Wood. In PG&E?s case, the utility made arrangements to install two 230 kV lines in an interconnection agreement with Sunrise Power Company before the CPUC granted preapproval. ?It?s hard to be polite about it: this argument doesn?t pass the giggle test,? Wood said, referring to PG&E?s defense that preapproval wasn?t necessary because it was a ?temporary? installation. ?It?s ?temporary? only in that all buildings are temporary and life itself is revocable.? In the other instance, SDG&E in October requested approval of a lease agreement with Ramco Generating for a 46 MW peaking power project. The request included plans to switch the location of the plant to the utility?s own property. The Ramco project was part of a package of SDG&E power contracts including the Otay Mesa compact that the commission approved in June. Wood noted that SDG&E filed with the city of San Diego to place the Ramco project on its property in Miramar in April yet didn?t file an application with the commission until October. Because SDG&E stalled, the commission has had to ?cut off the rights of intervenors, forgo any meaningful consideration of the appropriate use of this utility property, and force through a decision on the merits a mere 23 days later,? Wood charged. Despite his objections, commissioner Lynch cast the only dissenting vote on the deal. Both Lynch and Wood cast minority votes on PG&E?s easement with Sunrise.

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Accelerated Resource-Adequacy Requirements Squeak Through CPUC

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