Order Instituting Rulemaking – Emergency Reliability (Extreme Weather Events)

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Background

In August and September of this year, California experienced record-high temperatures that coincided with extremely high loads across the entire west. The California Independent System Operator (CAISO), which manages the electricity grid, ordered rotating outages. In the aftermath of the blackouts, the California Energy Commission (CEC), the California Public Utilities Commission (CPUC) and CAISO put together a joint root cause analysis report that was submitted to the Governor. The report admitted to lapses in supply planning and grid management, and promised to take steps to avoid a repeat next summer.

Description

On November 19, the CPUC adopted Rulemaking 20-11-003 (Rulemaking), a proceeding to take actions that will ensure a reliable energy grid if an extreme weather event occurs in summer 2021.

In the new Rulemaking, the CPUC will address how to increase energy supply and decrease demand during peak hours if a heat storm occurs in the summer of 2021 so the state does not experience rolling outages again. Through the Rulemaking, the CPUC will implement temporary changes to exiting processes, programs, rules for demand responses and other initiatives that may impact grid reliability.

The Rulemaking will consider several options, including, but not limited to:

  • Evaluating mechanisms for encourage load shifting by compensating customers for switching to back-up generators.
  • Engaging customer groups in load reduction programs, such as event-based demand response programs, and revising existing supply-side reliability demand response programs.
  • Directing investor owned utilities (IOUs) to develop new supply-side resources that can be brought online in 2021.
  • Directing load serving entities, including CCAs, to bring additional capacity online by procuring incremental capacity from existing resources, implementing efficiency upgrades to existing generators and retrofitting existing generators.

Although the Rulemaking was just adopted, it is far-reaching and fast-moving. CCAs can expect to be required to procure incremental capacity, and CalChoice has already responded to a request from the CPUC about additional capacity coming online in the coming year.

Next Steps

The scope of the proceeding is broad and presents many issues intended to explore potential solutions to address the balance of supply and demand during stressed operating conditions, such as extreme weather events. CalChoice and CalCCA will participate in the proceeding to help define the scope and work at tailoring the directives to keep focused on the underlying issues without sacrificing CCA procurement autonomy. The Proposed Decision, which follows multiple other procedural activities, is expected April 2021.