On February 21, 2019, the California Public Utilities Commission (“CPUC”) issued a decision (D.19-02-022) to postpone the implementation of a resource adequacy (“RA”) central procurement structure, while adopting multi-year local requirements to be procured by individual Load-Serving Entities (“LSE”). Public Utilities Code section 380 mandates that the CPUC, in consultation with the California Independent System Operator (“CAISO”), establish RA requirements for all LSEs, which includes investor-owed utilities (“IOU”), energy service providers, and community choice aggregators (“CCA”).

The CPUC’s Track 2 proceeding was designed to consider central buyer structures and other features in order to implement multi-year local RA requirements for 2020. The instant decision states that “[w]hile the Commission continues to find that a central procurement structure is the appropriate framework for implementing multi-year local requirements, a lack of consensus exists among parties as to the appropriate central buyer and central procurement mechanism.” Parties to the proceeding have diverging views on the central buyer structure—namely whether the IOUs, a special purpose entity (e.g., a new state agency or private entity), the CAISO, or a centralized capacity market should serve this function.

Notably, one of California’s three large electric IOUs opposes the idea of distribution utilities serving as the central buyer, while the other two have indicated a willingness to do so only on an interim basis. Further, the CAISO has rejected the idea of voluntarily assuming the role of central buyer. Accordingly, the decision directs further workshops to identify a central buyer and to resolve various implementation details prior to the 2020 RA compliance year, including how much of the required local RA will be procured by the eventual central buyer and whether individual LSEs will continue to receive local RA requirements. The facilitation of these workshops over the next six months will rotate between a representative of a CCA, IOU, and electric service provider.

For now, the decision adopts a minimum three-year forward RA requirement, and modifies the Year 3 minimum requirement to 50% while maintaining the existing 100% procurement requirement for Years 1 and 2. The decision contemplates a future decision addressing the central buyer designation and implementing the central procurement structure in the fourth quarter of 2019.

Decision (D). 19-02-022 is available here. The CPUC’s Track 1 decision in the RA proceeding (D.18-06-030) is available here. The CPUC’s docket for Rulemaking (R.)17-09-020 is accessible here.

For further information on our CCA practice, please contact: Michael Postar; Lisa S. Gast; Peter J. Scanlon; Sean M. Neal; Bhaveeta K. Mody; or Lauren M. Perkins.