On April 25, the California Public Utilities Commission (“CPUC”) adopted a decision (“Decision”) in its Integrated Resource Plan (“IRP”) proceeding, R.16-02-007.

The Decision examined the first round of integrated resource plans filed by each of the load-serving entities subject to CPUC jurisdiction. The Decision approved the plans filed by 20 load-serving entities, found that another eight load-serving entities were not required to file integrated resource plans, and found that 19 plans were insufficient as they failed to address criteria pollutant issues. One load-serving entity—Commercial Energy of California, an energy service provider—failed to file an integrated resource plan at all. The Decision also provides specific guidance for plan development for each load-serving entity for the next IRP cycle.

CPUC staff also aggregated all of the resource plans into a single portfolio—after certain adjustments to render it feasible—defined as the Hybrid Conforming Portfolio, or HCP. Adjustments were necessary to ensure that the consolidated new resource procurement proposals did not exceed resource potential in a geographic area or existing transmission availability. Commission staff identified four regions where the proposed new wind resources exceeded assumed resource potential (Northern California, Solano, Southern California Desert, and Riverside East Palm Springs). Where resource potential was exceeded, staff adjusted the resources to come from nearby regions. There were also five regions where the proposed renewable buildout appeared to exceed assumed available transmission capacity (Central Valley North Los Banos, Greater Carrizo, Southern California Desert, Northern California, and Solano). Adjustments were made in these regions by converting the proposed projects to energy-only, or moving resources to nearby locations when transmission assumptions were exceeded. No resource selections for out-of-state resources that required transmission upgrades, however, were adjusted based on transmission limitations. The Decision requires load-serving entities to disclose the contractual and development status of their resource selections in future IRPs, in order to help avoid adjustment issues in the future, and to provide an updated filing with that information to the CPUC by August 16, 2019.

The HCP also assumes a 40-year life for fossil-fuel resources, absent an existing contract extending beyond that 40-year period.

The Decision finds, however, that the HCP is deficient as compared to the Reference System Portfolio, or RSP, that the CPUC adopted in its prior Decision 18-02-018, adjusted to incorporate the most recent assumptions from the California Energy Commission’s 2017 Integrated Energy Policy Report (“IEPR”) (the RSP had originally been based on assumptions from the 2016 IEPR). The HCP had higher greenhouse gas emissions than the RSP, and did not meet the CPUC’s greenhouse gas emissions goals. The Decision also found that the HCP offered less reliability than the RSP. Finally, the HCP also did not appear to come close to achieving the 60% RPS requirements in 2030, although the IRPs were submitted prior to that requirement becoming law as a result of SB 100.

The Decision adopted a modified version of the RSP, defined as the preferred system portfolio, or PSP, which is an updated version of the RSP, to include the 2017 IEPR assumptions and including an assumption of a 40-year life for fossil-fuel-fired generation.

The Decision recommended that the PSP be used by the CAISO in its 2019-2020 Transmission Planning Process as both the reliability and the policy-driven base cases, along with two sensitivities, one that assumed the majority of renewable development would be in-state, while the second would assume a substantial amount of out-of-state procurement, primarily wind from Wyoming and New Mexico.

The Decision finds that achieving the PSP by 2030 will require concrete procurement of specific resources, especially by community choice aggregators to meet their growing load. The Decision also notes the need for near- and medium-term reliability planning as part of the IRP process. For that reason, the Decision opens a “procurement track” to explore options for facilitating procurement for existing and new resources that may be necessary to maintain reliability or facilitate renewable integration. The procurement track will be focused on two types of procurement. First, it will focus on “backstop” procurement, in the event that load-serving entities fail to procure the resources identified in their IRPs as necessary to fulfill their responsibilities for procurement. Second, the procurement track will focus on procurement that may require collective action by multiple load-serving entities.

The Decision also requires that load-serving entities in Pacific Gas and Electric’s service territory include in their next IRP a section explicitly addressing replacement energy for Diablo Canyon with similar characteristics.