A California Senate committee has advanced a bill that would allow load-serving entities to trade capacity on an hourly basis to meet the state’s slice-of-day resource adequacy requirements.
The Senate Energy, Utilities and Communications Committee voted April 7 to pass Senate Bill 1138 by Sen. Steve Padilla (D). The bill now heads to the Senate Appropriations Committee.
SB 1138 would require the California Public Utilities Commission to allow load-serving entities (LSEs) to satisfy 25% of their resource adequacy requirements by trading energy capacity with other LSEs “in the same unit of time used to denominate resource adequacy compliance requirements.”
In the case of the CPUC’s slice-of-day RA requirements, that unit of time is hourly. The slice-of-day framework requires LSEs to demonstrate sufficient capacity to meet the peak forecast demand in each hour of the peak day in each month.
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Load-serving entities covered by the bill include investor-owned utilities, community choice aggregators and electric service provides.
Padilla accepted a committee amendment that would allow the CPUC to adjust or eliminate hourly trading if it turns out to be hurting reliability.
CPUC implemented the slice-of-day framework in 2025 as part of an RA reform process. It was the first program of its kind in the U.S.
Although the new framework better aligns the RA program with system reliability needs, “RA products must transact monthly even though the obligations are unique to each hour,” said Lauren Carr, senior manager of regulatory affairs for the California Community Choice Association, the bill’s sponsor, which in 2025 released a study outlining the benefits of hourly trading of RA. (See CalCCA Study Touts Benefits of RA Trading at Hourly Level.)
As a result, LSEs must buy more RA than they need, and RA prices are driven up, Carr told the Senate committee. Those added costs fall on ratepayers, who could have saved $180 million in 2025 had hourly trading been in place, Carr said.
For the Clean Power Alliance, a Southern California CCA, resource adequacy accounted for about a quarter of energy costs in 2025 — or around $287 million, said CEO Ted Bardacke. CPA could have saved $10 million in 2025 through hourly trading, which is roughly the CCA’s budget for customer programs.
“This is real money that could be invested if we could just be more efficient,” Bardacke said. “Please allow us to be more efficient.”
A CalCCA analysis found that through hourly load obligation trading, LSEs could have avoided $105 million in excess RA purchases for summer 2025. And the reduced demand could reduce RA costs by an additional $77 million per year through downward pressure on prices, CalCCA said.
In February 2026, CPUC addressed the hourly trading issue through a Report on Transactability within the Slice of Day Resource Adequacy Framework.
The report acknowledged potential benefits of hourly trading but said “several factors limit the extent to which these theoretical savings could be realized in practice.”
“Portfolio outcomes are highly dependent on individual LSE load profiles, resource characteristics, and contracting strategies,” the CPUC report said.
And from a feasibility perspective, hourly trading would complicate the RA compliance process, the report said.
“Given the limited evidence of need, uncertain magnitude of benefits, and heightened implementation risks, staff concludes that the potential gains do not outweigh the added complexity and risk of unintended consequences,” the report concluded. It recommended continued monitoring of market performance as the slice-of-day framework matures.
CCAs responded by saying the report underestimated the potential cost benefits of hourly trading.
