SB 881 Specifics
California’s Integrated Resource Planning (IRP) process, established by SB 350 (de León), aims to ensure the electricity sector can achieve greenhouse gas emissions reduction goals in a reliable, cost-effective manner. Load-serving entities (LSEs), including CCAs, ESPs, and IOUs, are required to regularly submit Integrated Resource Plans (IRPs) to the California Public Utilities Commission (CPUC) that detail their procured and planned energy resources.
CalCCA agrees that IRP is a critical planning tool and that compliance with the process should be enforced (CalCCA even supported the CPUC in its efforts to establish penalties for those that do not comply). We also agree that systems must be in place to ensure that the electricity sector continues to reduce GHG emissions so California can meet its climate goals. However, as drafted, SB 881 lacks critical boundaries and includes vague standards that not only infringe upon CCA procurement autonomy but would lead to increased costs to ratepayers.
SB 881, authored by Senator Dave Min (D-Irvine), allows the CPUC to order any energy procurement based on deficiencies in IRPs and impose penalties if energy providers depart from their plans – even when it is prudent to do so. IRPs 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 or penalize LSEs for updating their plans in response to policy changes, evolving market conditions, or newly-available technologies. We believe the new authority granted to the CPUC in this bill has the following problems:
- The bill does not specify LSE-specific GHG reduction targets.
- The CPUC’s new authority to order procurement to cure IRP deficiencies would undermine the rights of energy providers to update their plans and procure needed resources at competitive prices, harming ratepayers.
- IRPs are not the proper mechanism for determining whether additional 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.
- Subjecting CCA procurement to more significant oversight by the CPUC could actually increase GHG emissions. Just this past February, in its 2021 Preferred System Plan decision, the CPUC ordered procurement with a higher carbon intensity than what CCAs are already procuring.
- The expansion of the CPUC’s authority could prevent CCAs from reaching more aggressive GHG-reduction goals.
CalCCA has recommended bill amendments that would:
- Establish clear and actionable targets for each load-serving entity to realize the electricity sector greenhouse gas emissions reductions as required to meet the 2030 GHG reductions goals. The CPUC could reasonably establish these targets by 2024 with program compliance beginning as soon as 2027.
- Establish clear direction to the CPUC on penalties and procurement orders. Penalties should only be assessed on those LSEs that fail to meet defined targets by the established compliance deadlines. Procurement should be ordered on only those LSEs that fail to meet defined targets by the established compliance deadlines.
- Hold LSEs harmless for compliance failures that from unforeseen events and actions beyond the LSE’s control. LSEs could take every measure to ensure that resources are brought online but unforeseen events beyond their control, such as permitting delays or supply chain issues, could create delays. LSEs should not be penalized, and procurement orders should not be issued, in these types of circumstances.
We believe this approach captures the full intent of what the author of SB 881 wishes to accomplish – regulatory tools to make sure that all LSEs stay on track to meet GHG emissions goals – while maintaining CCA procurement autonomy, providing the clarity needed to ensure that all LSEs can properly plan and procure to meet the state’s 2030 GHG reduction goals and still minimize costs to ratepayers.