By Jason Fordney

CAISO, Pacific Gas and Electric, and Calpine have settled their differences over the terms of the reliability-must-run agreements keeping three Calpine gas-fired plants operating instead of retiring.

FERC is likely to issue a decision on the agreements by April 30, Administrative Law Judge H. Peter Young said Tuesday after certifying the uncontested settlements that would reduce the annual revenue the plants receive. The controversial out-of-market RMR payments are opposed by the California Public Utilities Commission and were reluctantly approved by the CAISO Board of Governors in November. (See Board Decisions Highlight CAISO Market Problems.)

The new settlements filed March 21 cover two different FERC dockets, one Calpine’s Metcalf plant (ER18-240), and another for the company’s Feather River and Yuba City plants in Northern California (ER18-230).

“In general, the offer of settlement would substantially reduce Metcalf’s RMR service rates and would change the MEC facility’s operating status,” Young said of the Metcalf settlement. (See FERC Orders Hearing, Settlement Talks for Calpine RMRs.)

The Metcalf settlement would reduce the plant’s annual fixed revenue requirement to $43 million from about $72 million through 2020 if it retains its RMR status, and make the plant operator responsible for routine repairs and capital expenses. It would set recovery for planned 2018 capital items to $8 million, to be recovered in 12 installments of $675,000 beginning on Jan. 1, 2018.

If the RMR agreement is extended, capital recovery would remain at about $8 million per year. The settlement would also grant the plant $8 million in 2019 and 2020 if the revised agreement is not renewed and the unit shuts down.

The settlements would also take all three plants from Condition 2 (eligible for full cost-of-service payments) to Condition 1 (eligible for only a portion of their revenue requirement) status, and impose a must-offer requirement, which the ISO’s Department of Market Monitoring has recommended for all RMR units. CAISO is working to revise its RMR program to establish a must-offer requirement for resources. (See CAISO, Stakeholders Debate RMR Revisions.)

The Feather River and Yuba City settlements would reduce each plants’ 2018 revenue to about $3.5 million from the previous $4.4 million, with a 2% hike for 2019 and 2020 if the RMRs are renewed. They would also impose a must-offer requirement on the plants.

After CAISO approved the RMRs last November, the CPUC issued an order directing PG&E to use energy storage to meet the needs currently served by the plants. (See CPUC Targets CAISO’s Calpine RMRs.) The storage resources must be online before 2019.