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Commission hears warnings on interconnection delays, rising PPA prices and AI data‑center load growth
Summary
Municipal utilities, CCAs and developers warned the commission that supply‑side constraints, long interconnection queues, and growing data‑center demand are raising procurement costs and resource adequacy prices; one CCA presented an hourly‑slice trading proposal it says could cut RA costs.
Multiple witnesses told the commission that the market for new generation and storage faces a supply‑and‑demand imbalance that is increasing procurement costs and causing delivery delays.
Mario DeBernardo of the Southern California Public Power Authority and Derek Dolphy (CMUA) said developers are offering fewer competitive proposals than before the pandemic because demand — from CCAs, IOUs, large commercial buyers and emerging AI/data‑center customers — has increased while interconnection timelines, permitting delays and supply‑chain constraints have lengthened. “We are experiencing a supply and demand imbalance,” DeBernardo said, noting project interconnection and permitting delays and higher equipment costs.
Beth Vaughn (CalCCA) said the state’s current procurement and resource adequacy rules and frequent regulatory changes have created planning uncertainty and, at times, high short‑term market purchases. She cited modeling showing that a trading approach tied to hours of obligation — rather than the current monthly aggregation — could have avoided about $105,000,000 of excess RA purchases last summer and could lower RA costs by an estimated $77,000,000 per year going forward; she said the commission rejected a proposed decision advancing that approach and CalCCA would pursue other channels.
Witnesses also raised a specific near‑term concern: project delivery and interconnection timelines are increasing (transformer and equipment lead times and queue delays were highlighted) and developers and utilities told commissioners some delivery dates may be delayed by multiple years, which raises costs.
Commissioners asked whether the state and its regulators are having enough public discussion about the potential load impact of large AI‑era data centers; several witnesses said the conversation is nascent. A PG&E representative had told commissioners earlier in the hearing that interconnection applications suggested the potential for very large data‑center demand in parts of its territory and that regulators and planners should study the consequences.
The witness group recommended clearer, more stable procurement rules, faster interconnection timelines, and pilot finance mechanisms for transmission projects and stressed the importance of federal tax incentives for keeping project costs down. They also urged the commission to examine rules that make hourly RA obligations hard to meet through trading.
