Power Sources

CPUC adopts IRP process tied to GHG reduction targets

The California Public Utilities Commission on Feb. 8 adopted an integrated resource planning process designed to implement the state’s greenhouse gas emission reduction targets.

The first year of the two-year process is designed to evaluate appropriate GHG emission targets and identify the optimal mix of system-wide resources capable of meeting these GHG planning targets. The second year is designed to consider the actions each electricity provider proposes to take to meet the GHG targets.

The process applies to utilities, community choice aggregators, and electric service providers.

The PUC’s decision implements the provisions of SB 350, the Clean Energy and Pollution Reduction Act, which became law in October 2015 and established a GHG reduction target of 40% below 1990 levels and 80% below 1990 levels by 2050.

The PUC will conduct modeling and analysis during the two-year planning period, set GHG emissions targets and consider the IRP filing that will be required from all load serving entities. Each of those entities will be required to include at least one scenario that conforms to the PUC’s planning direction.

At the end of each two-year cycle, the PUC will authorize the procurement necessary over the next one to three years to meet the targets identified in the IRP process.

The PUC will also refer the GHG planning target to the California Air Resources Board for assignment to the electricity sector. The PUC has set electric sector GHG reductions at 42 million metric tons by 2030, which represents a 50% reduction in electric sector GHG emissions from 2015 levels and a 61% reduction from 1990 levels.

The PUC decision uses a GHG planning price of $150 per metric ton of carbon dioxide equivalent in 2030 and requires the use of that price as part of the development process for individual IRPs.

To provide a general planning direction for load serving entities, the PUC has adopted a portfolio of energy resources to meet the 2030 GHG reduction target. The portfolio includes about 10,200 MW of new renewable energy resources and 2,000 MW of new battery storage resources by 2030.

The PUC said that it did not include the capture of federal tax credits, which are set to expire or decline over the next several years, in the calculation of renewable procurement activities. Instead, the PUC said it opted for “a steady approach to ongoing procurement of GHG-beneficial resources over the planning horizon to 2030.”

The PUC decision also lays out additional planning activities to be undertaken in 2018, prior to the beginning of the next IRP cycle, including additional production cost modeling and analysis to calibrate models to evaluate in aggregate the individual IRPs into a preferred system plan, the development of a common resource valuation methodology, and additional analysis on the possible effects on the availability of the state’s natural gas fleet.