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March 01, 2013
Brattle Principal Hannes Pfeifenberger Presents on Resource Adequacy Concerns in California Energy Market at Long-Term Resource Adequacy Summit

Brattle principal Hannes Pfeifenberger recently discussed the structural challenges with California’s current resource adequacy framework, and presented options for its improvement, before the Long-Term Resource Adequacy Summit on February 26, 2013 in San Francisco. Co-hosted by the California ISO (CAISO) and California Public Utilities Commission (CPUC), the Summit provided a forum for key decision makers and stakeholders to discuss the current status of California’s energy market construct for long-term resource adequacy, as well as identify alternatives to the existing framework, based on experience from energy markets in other regions. There has been a recent debate as to whether the current structure in place is attracting and sustaining investment, while California pursues its energy efficiency, demand response, and renewable energy goals. During his presentation, Mr. Pfeifenberger discussed the evolving resource adequacy challenges currently facing the state, while it assures sufficient supply for system and local reliability needs, a policy priority since the power crisis of 2000-2001. He points out that enhancements of the resource adequacy framework are needed to meet these new challenges, including the potential retirement or reinvestment of approximately 16,000 MW of existing generation and a 33% renewables standard by 2020, in a cost-effective way. Leveraging significant experience from energy markets over the last several years, Mr. Pfeifenberger proposed several options for reforming the current framework to resolve inefficiencies and meet challenges and objectives at lower costs. These options include: a non-discriminatory, flexible Long-Term Procurement Plan (LTPP); a centralized resource adequacy capacity auction to improve market liquidity and transparency; and a 3-4 year forward procurement, which would provide forward visibility into resource adequacy and retirement decisions. The Summit generated mutual agreement among stakeholders in implementing a potential 3-5 year forward capacity construct, and it is anticipated that CAISO will initiate a stakeholder process in order to deliver a proposal before the CPUC by the end of 2013. Mr. Pfeifenberger’s presentation can be downloaded using the link below.