AB 56 Specifics: The bill allows the CPUC to order any energy procurement based on shortcomings in the Integrated Resource Plans (IRPs) submitted by Investor Owned Utilities (IOUs), Direct Access (DA) providers and Community Choice Aggregators (CCAs). IRPs, as established by SB 350 (de León), were designed to be long-term planning documents submitted to the CPUC and updated every two years. IRPs were never meant to drive backstop procurement. This new authority granted to the CPUC in this bill has the following problems:
- By creating a new authority for the CPUC to order procurement on a potential deficiency 10 or 12 years into the future, the bill will financially harm ratepayers as Load Serving Entities (LSEs) like CCAs will no longer have a right to update their plans or procure the needed resources at competitive prices. This restriction can also prevent LSEs from reaching more aggressive GHG reduction goals.
- IRPs are not the proper mechanism for determining whether backstop procurement is needed to ensure sufficient system reliability resources. Utilizing the IRP process allows the CPUC to order any amount of procurement without reference to actual need. This is a significant drafting mistake that needs to be corrected. To accomplish the intended goal of system reliability and to limit CPUC-ordered procurement to a backstop function, the bill should reference the Resource Adequacy (RA) compliance process rather than the IRP process.
- The bill erroneously applies the costs of the backstop procurement entity to the distribution costs of customer bills. These costs are clearly related to generation, and in order to prevent a cost shift among customer classes, the costs must be applied to the generation side of the bill.
- Finally, the bill should clarify that all costs associated with creating and operating the new entity should be borne by the LSEs who utilize the services, and not by the LSEs who fulfill their compliance obligations.
For these reasons, CalCCA must remain opposed to AB 56.