California's Resource Adequacy Reforms Are Here

The California Public Utilities Commission has reformed its Resource Adequacy program in an effort to ensure a reliable power supply statewide. 

The Commission recognized significant delays development projects face due to supply chain delays, labor shortages, interconnection queue limitations and rising costs. It adopted an approach that could help developers mitigate risk in contracts with load serving entities by allowing new resources to be shown for compliance earlier. During the summer months of peak electricity demand, the Commission will allow resources under development to help load serving entities meet their compliance obligations and contribute to reliability earlier. 

In More Detail: What the California Public Utilities Commission Decided

Effective immediately, for June through September month-ahead filings, new resources that are not online in time to meet the deadline for a given Resource Adequacy compliance month will be considered to have met the compliance deadline if the resource achieves commercial operation and is online and deliverable at any time prior to the start of that compliance month.  The compliance deadline for all other resources continues to be 45 days before the beginning of the compliance month.

The California Independent System Operator – CAISO – locks supply plan submittals 30 days prior to the compliance month, so the CPUC’s new extended cure period will not be included in CAISO’s current monthly Capacity Procurement Mechanism (CPM) process.  The decision encourages coordination between the CAISO and the Commission’s Energy Division so that the newly online Resource Adequacy resources can appear in the CAISO markets and be accounted for in any CPM designations for the applicable compliance month. 

Clarifying Key Requirements of the ‘Slice of Day’ Framework

The Commission’s decision also confirms that the “Slice of Day” (SOD) framework will go into effect for the 2025 compliance year. 

In light of the near-term start date, the Commission modified and clarified important requirements of the SOD framework. For example:

• Resource counting for hybrid and co-located resources: No longer discounting hybrid and co-located resources where grid charging restrictions apply, all hybrid and co-located resources will now be valued as the sum of the Qualifying Capacity of the two components limited by the Point-of-Interconnection and the state-of-charge test built into the SOD compliance tool. 
• Wind and solar resources: Wind and solar resources will shift from having seasonal exceedance values to monthly values. Exceedance values are calculated from historical data based on technology type and region. They will be updated every three years instead of annually. 
• Energy-only resources: Energy-only resources will contribute to energy sufficiency for all paired storage resources on a pro-rated basis that accounts for the net qualifying capacity of the storage resources.

Still to be Determined: Details of a Future Unforced Capacity Mechanism

The Commission’s decision acknowledges various outstanding questions regarding details of a future Unforced Capacity (UCAP) mechanism that would evaluate thermal power plants and storage resources. 

For example, there is not yet consensus on whether the mechanism should be applied on a resource-specific basis or as a class average. Even so, the Commission reinforced its support for developing a UCAP mechanism that could be implemented as soon as 2026.