Reuters: Regulatory News: California regulators propose changes to bolster power supplies

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California regulators propose changes to bolster power supplies Jul 10th 2013, 23:02 HOUSTON, July 10 | Wed Jul 10, 2013 7:02pm EDT HOUSTON, July 10 (Reuters) - Two California utility regulators have proposed changes designed to bolster power supplies as the state increases its reliance on renewable power and shuts down older fossil-fuel plants. The California Public Utilities Commission (PUC) and the California Independent System Operator (ISO) will hold a workshop on July 17 to present the proposed changes, which include a new capacity auction. Written comments from stakeholders are due by July 25, the ISO said on its website. The proposal, called the Joint Reliability Framework, follows more than a year of talks and a long-term resource adequacy summit held by the agencies in February. The agencies said they "share a strong interest in ensuring that California and the entire ISO grid have sufficient capacity resources, in the right locations and with the right capabilities." The state's electricity consumption rose 2.9 percent in 2012, the highest since 2008, because of warmer weather and an economic recovery, the ISO said earlier this year. The permanent shutdown of Southern California Edison's San Onofre nuclear plant has also strained the grid and increased operating time at older natural gas plants. The future of nearly 11,000 megawatts generated by older gas plants located along the coast is uncertain as the state works to reduce the use of ocean water for cooling. Renewable power, such as solar and wind generation, now accounts for 5 percent of the state's power supply. California has set a goal of supplying one-third of its electric needs with renewable resources by 2020. The electric grid is undergoing fundamental changes, the agencies said. These include unprecedented levels of intermittent renewable energy and the retirement, repowering or replacement of older gas-fired power plants. "This transformation presents challenges to traditional mechanisms that have ensured electric grid reliability," the agencies said. The Joint Reliability Framework proposes three major changes to the procurement and planning process used by both agencies: - Changing a one-year resource adequacy obligation for power suppliers to a three-year obligation; - Developing a multi-year, ISO-run capacity auction to replace an existing backstop procurement mechanism; - Creating an annual long-term reliability assessment focused on four and 10 years out, with information on installed capacity and procured capacity. Over the past decade, California has had adequate electricity supplies, but market participants have told the ISO there is not enough information about future power resources to create the price signals needed to encourage new generation. The ISO took special steps last year to keep a Calpine Corp power plant from shutting prematurely. "The ISO does not have assurance that resources needed in the future will be available when and where they are needed," the agencies said in the proposal. The market also does not facilitate competition from programs that curb power use at times of high demand, participants have said. The PUC and ISO will present the proposal at a Federal Energy Regulatory Commission conference in Sacramento at the end of the month. No implementation timeline was outlined and the changes will require action by state regulatory agencies. Link this Share this Digg this Email Reprints

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