The California Public Utilities Commission on Thursday instituted a package of demand response programs to promote sharper reductions in electricity usage during times of strained supply and ordered additional procurement to increase CAISO’s planning reserve margin.

The orders are intended to head off capacity shortages this summer and next like those that plagued the state last year. They apply to the state’s three large investor-owned utilities: Pacific Gas and Electric, Southern California Edison and San Diego Gas & Electric.

“This proposed decision directs PG&E, SCE and SDG&E to take up multiple actions to avert the potential need for rotating outages in the summers of 2021 and 2022 by adopting or modifying programs aimed at decreasing energy demand and increasing energy supply during peak demand and net-peak demand hours,” CPUC President Marybel Batjer said in Thursday’s voting meeting.

Shortages last summer occurred in the net-peak hour, after solar ramped down in the evening but demand remained high during heat waves.

Meanwhile, CAISO on Wednesday approved changes to market rules and bolstered resource adequacy in response to problems identified in a root-cause analysis of the blackouts it ordered Aug. 14-15 during a brutal Western “heat storm.” Labor Day weekend last year also saw energy emergencies amid triple-digit temperatures across the West. (See CAISO Says Constrained Tx Contributed to Blackouts.)

The ISO moved its changes through at a record pace; the process for the stakeholder initiatives took just three months. The CPUC also fast-tracked its orders to implement them this summer, leaving some stakeholders and ratepayers dissatisfied with a process that designated diesel generators and other fossil fuel resources as emergency resources.

The commission heard about an hour of public comment Thursday morning, most of it critical of the package. The potential health impacts of fossil fuel emissions on low-income communities was a main concern.

Batjer acknowledged the commenters’ dissatisfaction in her remarks, saying commissioners also shared it.

“We came to where we landed in this proposed decision after many restless days and nights grappling with the question of what plans we should have prepared in the worst-case weather and reliability scenarios,” Batjer said. “Let me underscore there will be backup generation only if needed as a last resort,” and only during short periods when demand outstrips supply.

The commission ordered the IOUs to procure an additional 2.5% of capacity to increase the state’s planning reserve margin from 15% to 17.5%, a move requested by CAISO. The change represents an additional 450 MW each for PG&E and SCE and 100 MW for SDG&E.

The CPUC also enacted a new Emergency Load Reduction Program to lower demand during the peak and net-peak hours of emergencies.

“The pilot program will compensate customers for voluntarily reducing demand on the power system when called upon to do so by the CAISO in the event of a grid emergency,” the CPUC said in a statement. “This program will serve as a layer of insurance on top of existing resource adequacy plans and will give grid operators a new tool among the existing demand management programs to address unexpected power system conditions.”

The moves came on top of the CPUC’s November 2019 order to the IOUs to procure an additional 3,300 MW of capacity to compensate for summer deficiencies and its order in February for the IOUs to procure more incremental capacity that can come online to serve demand this summer. (See Summer Readiness Sought by CAISO, CPUC.)

CAISO Summer Readiness

CAISO’s Board of Governors approved two stakeholder initiatives — Market Enhancements for summer 2021 and the first phase of the ISO’s Resource Adequacy Enhancements.

The board plans to take up the second phase of the RA enhancements — which deal with unforced capacity, must-offer obligations, and export and wheel-through priorities — in April.

The market changes seek to increase incentives for hourly imports and provide more accurate pricing signals during times of tight supply. CAISO proposed the measures after its analysis showed prices in mid-August remained too low to attract imports and additional capacity. (See CAISO MSC Weighs Summer Market Changes.)

The RA changes will establish a minimum state of charge for battery storage resources, require generators to find substitute capacity in advance of planned outages and streamline the process by which new storage resources connect to CAISO’s grid. The ISO expects approximately 1,500 MW of new battery storage to come online by summer, bringing total capacity to around 2,000 MW. Storing excess solar during daylight hours is seen as key to preventing evening load shed. (See CAISO Readies RA Enhancements for Summer.)

“The enhancements are designed to better equip our energy markets and power grid for extreme weather, while complementing the efforts of California’s regulatory authorities and utilities to develop new clean energy resources,” CAISO CEO Elliot Mainzer said in a statement. “We are committed to strong collaboration with our many state and regional partners to achieve reliable system operations this summer and beyond.”