CPUC staff proposes two reliability procurement paths: marginal ELCC framework and a new‑resources-only approach

California Public Utilities Commission staff presented two alternative reliability procurement designs at an IRP workshop, centered on marginal ELCC accreditation and a complementary ‘‘slice‑of‑day’’ alignment with the RA program.

“A marginal ELCC methodology is a way to put all resources on a level playing field,” consultant Aaron Burdick of E3 said. “No resource can provide perfect availability all of the time, and the ELCC methodology is a way to put all resources on a level playing field, measured relative to a perfect capacity generator, that accounts for all of their potential availability limitations.”

Staff described a four‑step ‘‘critical periods’’ framework: (1) use SERVM/Resolve to determine the system reliability need aligned to a 0.1‑days‑per‑year LOLE standard; (2) calculate marginal ELCCs for each resource type from a system portfolio; (3) sum marginal ELCC megawatts to establish the reliability procurement need; and (4) allocate that need to each LSE based on the LSE’s share of load during the identified critical hours.

Option 1 (scope: new and existing resources): staff would calculate a system Reliability Procurement Need (RPN) using marginal ELCCs and add a 2.5% buffer “to mitigate development risk,” staff said. Staff would release a 10‑year RPN in February (t through t+9) and provide binding allocations for the nearer term years (the first five years of the 10‑year horizon, with the first three years highlighted as obligation years in the proposal). Staff proposes a collective capacity reserve procured by investor‑owned utilities as a central procurement entity; staff proposed a minimum reserve of 1.5% and a maximum of 3.5% of the initial RPN to act as system insurance.

Option 2 (scope: new resources only): staff would define ‘‘new vintage’’ resources as those that will have come online no more than 10 years before the compliance year and would allocate the total new need to each LSE. Option 2 also envisions an expanded multiyear RA program covering additional years and overlaps with RCPP obligations; under this option, staff expects allocations for years t+0 through t+4 to be binding.

Compliance cadence: staff proposed two compliance filings each RCPP year: a December preliminary (nonbinding) showing and a June final (binding) showing. Staff emphasized the administrative distinction: December filings would be nonbinding but subject to administrative penalties for timeliness/accuracy; June filings would be final, binding and subject to both administrative and deficiency penalties.

Enforcement and penalty design: staff proposed a deficiency penalty tied to the net cost of new entry (Net CONE). “For deficient contracting sufficiency… we’ve calculated that as half of the net cost of new entry,” staff said; staff gave an example: “if we assume net cost of new entry of $15 per kilowatt month, for example, half of that would be $7.50.” Option 2 also contemplates an online sufficiency penalty equal to 1× Net CONE for deficient online sufficiency, which can be waived if an LSE cures the deficiency within 30 days of notification. Because RCPP is a new program, staff proposed a phased penalty rollout: early test years would be subject to administrative penalties only and deficiency penalties would phase in over time.

Staff cautioned that where RCPP overlaps with RA (slice‑of‑day) the two approaches are not automatically antagonistic; staff said the proposal uses marginal ELCCs for system‑level need determination, while slice‑of‑day rules would remain in effect where RA retains slice‑of‑day obligations. Neil Raffin, supervisor for IRP transmission and interconnection, noted the practical approach: “We’ve got an opportunity now to have both frameworks work, operating and working in parallel and learn from those.”

Staff asked stakeholders to comment on technical details, allocation mechanics and the interplay with the RA program in written comments and signaled further workshops or stakeholder sessions to work through open questions.