Seeking Common Ground on Muni Reserve Requirements

The grid operator is working with public power agencies within its control area to assess the adequacy of their supply cushions. A new law, AB 380 by Assembly speaker Fabian N??ez (D-Los Angeles), requires munis to meet the planning reserve and reliability criteria set by the Western Electricity Coordinating Council. Unlike investor-owned utilities, public power agencies are not mandated to meet the state's 115-117 percent resource-adequacy requirements. The issue for munis is not the development of resource-adequacy criteria to increase grid reliability but whether the California Independent System Operator "translates it into a program that makes sense to us," said Tony Braun, California Municipal Utilities Association attorney. Public power agencies come in many sizes and shapes and have varying power portfolios. In addition, CAISO and the California Public Utilities Commission are developing different resource-adequacy models, with the latter targeting investor-owned utilities and direct-access providers. A one-size-fits-all reserves standard for munis won?t work because supplies may come with operational limits that should be factored in, Braun explained. For example, a power portfolio may be largely hydropower and/or come from power plants that have operational limitations because of emissions rules. "We need a workable transition," he added. One of the key issues for CMUA is liquidated damages, which they want credited toward a muni's supply-adequacy account. "They are not homogenous contracts," Braun said. The CPUC has proposed disqualifying these deals for resource-adequacy purposes for private utilities and other non-muni providers. Firm liquidated damages clauses allow a contracted supply to be replaced with cash. Objections have been raised over allowing them to count for reliability purposes because it is difficult to pinpoint the underlying supply. "It's not putting steel in the ground," said Steve Schleimer, Calpine vice-president. Another major issue for CMUA will be the grid operator's development of local capacity requirements, which will aim to ensure that the power gets to where it is needed. Deliverability of power supplies is a key component of the CPUC's resource-adequacy rules, but developing criteria to ensure that power flows to the local pockets is no easy task. "Munis are generally resource adequate of their own volition," said Gregg Fishman, CAISO spokesperson. The grid operator is trying to figure out how to account for reserves of munis not regulated by the CPUC or the Federal Energy Regulatory Commission, he added.

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Seeking Common Ground on Muni Reserve Requirements

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