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Clean Energy RFOs in California

Affirming its commitment to reducing greenhouse gases in the state while concomitantly lowering energy costs for consumers, the California Public Utilities Commission (PUC) instructed Pacific Gas & Electric Company (PG&E) to issue requests for offers (RFOs) through which to procure battery storage capacity (or capacity from other preferred clean energy resources).

The commission stated that the subject RFOs are for the explicit purpose of acquiring capacity to replace that currently provided by three natural gas-fired power plants. The three units were identified as the Feather River, Yuba, and Metcalf facilities, with all owned by Calpine.

The commission noted that the three have been designated by the California Independent System Operator (CAISO) as reliability “must run” plants. It observed as well that CAISO has applied to the Federal Energy Regulatory Commission for federal recognition of the units as must run facilities, a move opposed by PG&E and the PUC, because the output from must run generating stations is inevitably priced at a premium, to the detriment of consumers. Seeking to ascertain whether there are alternatives to the three Calpine units for procuring cleaner, less expensive energy, such as battery storage, the PUC authorized PG&E to solicit bids for such resources via an RFO construct.

However, although directing the utility to pursue an RFO, the PUC stressed that the company need not actually execute a contract with any of the bidders. The commission explained that should any of the RFO responses indicate that battery storage or some other resource would not be costeffective in reducing or eliminating the need for the three power plants, it clearly would not be prudent to move forward with a contract thereto. Re Pacific Gas & Electric Co., Resolution E-4909, Jan. 11, 2018 (Cal.P.U.C.).